Why people and process are the keys to revenue cycle innovation

Mike Duke: I said, “So what did you get implemented?” He said, “We still haven’t done anything.” And I said, “So the organization has spent $12 million or more at this point and there’s no tangible value?” And the answer was, “Yes. It’s embarrassing but yes.”

Erika Grotto: Real talk about revenue cycle improvement, today on HFMA’s Voices in Healthcare Finance podcast, sponsored by Red Dot. Hello and welcome to the podcast. I’m your host, Erika Grotto. If you’ve been listening for a while, you’ve probably heard Michael Bumann, the CEO of our sponsor organization Red Dot talking with me about the value he brings to healthcare organizations that are struggling with their motor vehicle accident claims. Today I’m going to be talking with one of the people Red Dot works with to help organizations tap into that revenue they’re missing out on because of these incredibly difficult accounts. But he’s got a lot to say about all kinds of topics, so I think you’re going to like this conversation. Mike Duke is a partner within the commercial healthcare segment at Guidehouse and the author of The McPherson Principle, a novel focused on revenue cycle improvement and automation techniques. He’s also a returning guest to Voices in Healthcare Finance. We first had him on in October 2020 discussing denials management, so if you missed that one, I’ll post a link in the show notes to that episode. If you know Mike, you know he’s a straight talker, so I was really looking forward to digging into revenue cycle improvement with him and find out more about what he sees as the best way forward.

Revenue cycle is facing some significant challenges, and there are a lot of ideas about how to face those challenges, but one I tend to hear over and over is, implement some sort of technology, as if the technology alone is going to fix everything, which I think everybody knows is not the case. What we really want—at least, I think—is innovation, new ways of thinking, maybe some new processes that we can support with tools that include new technologies. What do you think about this? How can we leverage innovation, without making “innovation” shorthand for “buy some software?”

Duke: This has been a question that I’ve faced throughout the last 30 years, quite honestly. Are we implementing technology for technology’s sake or are we implementing it for furthering the business potential? And that’s really irrespective of healthcare, but healthcare falls into that trap quite a bit. So there’s a lot of things where the technology is the next silver bullet. Let’s put it in and then we’ll figure out if we can get any benefit out of it. So it’s an incredibly valid question and probably always will be. An example is, I had a good friend in the industry that called me one day and said, “Hey, Mike, I’m going a little crazy here. We’re implementing over $12 million worth of analytic solutions and we have no idea what the first-use case of that is.” And so I gave him some ideas, and this might be some high-ROI places to start. Called me back almost a year later, and we got to talking a little bit about the solution. I said, “So what did you get implemented?” He said, “We still haven’t done anything.” And I said, “So the organization has spent $12 million or more at this point and there’s no tangible value?” And the answer was, “Yes. It’s embarrassing but yes.” So it happens a lot. My opinion is—and this is coming from an IT guy, I started out my career as a tech guy, really focused on the technology, but I, over time, have become more of an operator—and if the solutions are not business focused and from an operator’s perspective, so the people on the ground that have to do work. If their opinions and thoughts are not deeply integrated into whatever’s being deployed from a tech-enablement standpoint, then all you get is the tech, and you don’t get the enablement. I’ve been part of projects where IT, unfortunately, led everything, and the user interaction was, hey, once we deploy it, you guys test it and try to break it. Well, by that time, you’ve already spent too much time and energy and emotional capital to get the whatever the solution is in. So the modifications are minor from a user feedback standpoint, but I’m highly committed to looking at it from a business value perspective, and I really don’t care about the technology, whether it’s an EMR, whether it’s automation tools, analytics, whatever it might be. I start with the business benefit in mind and then work backwards to the most appropriate technology enabler that we can find or afford, is really the way I approach it.

Grotto: I’ve heard similar things to that before, not just healthcare. I’ve definitely had experiences in my career where there’s some new system that’s supposed to solve all the problems that solves maybe one problem and creates ten more. So I can definitely sympathize with people who are going through this. But do you think that the process then should be, maybe an internal analysis and bringing in stakeholders to discuss what challenges you’re trying to overcome and then trying to find the technology to support what you want to do? Is that the way to go about it?

Duke: Unfortunately, technology is sold as a feature. You know, I’ve got this feature-rich piece of technology that will really help you if you kind of use it for the feature. Where I think it should be, again, exactly to your point is, what’s the benefit I’m trying to achieve, and then do those features support what problem I’m trying to solve? And unfortunately, I think a lot of us get caught up in the eye candy of technology. It’s like, it’s got really cool graphs. It’s got—look at this, I can hover over things or I can click here, or a salesperson will tell you that, you know, a human doesn’t even have to be involved, it’s all in the black box kind of thing. And I think, be real mindful of not giving a lot of credence to the features of whatever the technology solution is, but focusing more on what’s the benefit I hope that it drives and then be incredibly diligent around making sure working backwards from there on how you want to design, configure or select that specific piece of technology.

Grotto: In just about every episode that I’m recording these days, I’m speaking with my guests about workforce shortages because it applies to pretty much any topic that I can get into on this podcast, and it’s a big issue right now in healthcare, not just in clinical settings but in rev cycle teams and kind of everywhere across the board. We know, because of these shortages that will not get solved quickly–there’s not going to be a giant wave of new people coming in who are equipped to do the jobs that we need them to do. We’re going to have to change the way we do the work. There are, again, a lot of ways we could do that. Technology could be one of those things. Repurposing staff could be something. But it’s clear that we’re going to have to start thinking creatively about how we do the work we do. Where do you think some opportunities lie for the industry in that regard?

Duke: I think we need to look at other disciplines to some extent. There’s a couple approaches that may solve some of these staffing issues. One, even if we get a new wave of inbound FTE resources, there’s no guarantee that they’re going to be competent, and if they do become competent, it’s going to take some time. So it doesn’t solve the problem they want, even if we had that luxury, which we don’t. Blending outsourcing to some extent for specific things like we always have—self-pay has been prevalent throughout the industry on outsourcing, and some other things where we send accounts to attorneys who are incredibly complex and court-related and those things. But finding a partner that also leverages technology to drive down their costs because then, in relation, that will drive down your vendor costs if your deals are structured appropriately. So we talked a little bit about the technology enablement solving a problem, but some of that outsourcing needs to be a consideration for what tools and technology they use so they’re not just throwing a handful of people at it that has a high cost factor. So that’s kind of one, if you go that route, of leveraging partner companies to do some of the work, make sure they’re incredibly efficient, not just effective, at what they do. But the second piece of that is, you stated that we’re going to have to look at different ways to perform work and do business, and I think that’s right. You know, my book, The McPherson Principle, that’s one of the reasons that I wrote that, was to put concepts in place, but in a story format, so that most everybody that functions at least in revenue cycle can relate to it and say, OK, that’s an idea, let me see if I can apply that to our organization. For example, the concept of manufacturing throughput is not widely considered when it comes to revenue cycle activities and performance. Well, throughput is just the consistent pass through of raw materials to a finished product, and all of the steps and stages in between not unlike the point of scheduling all the way through claim adjudication. And so if we start measuring things on throughput, it gives us a different lens in which to view how efficient our organization is on handling a process, in this case revenue cycle. That’s one of the reasons why I wanted to take a look at a new metric where—it’s called the Operational Efficiency Ratio, but it’s really around that throughput concept. But what it forces you to do is say, you know what, if I want to increase my throughput, I’ve gotta do two things. I’ve gotta make the process as automated as humanly possible, so think long and hard about the entire chain of, again, from scheduling to claim adjudication, where can I squeeze time out of that process? And that becomes a neat exercise when you elevate beyond just one piece of the process, which is called “local optimization.” So if I just look at the billing function or the DNFB or one of those, and I wholly optimize that piece but I don’t fix the upstream and I don’t fix the downstream, likelihood that the entire throughput of revenue cycle activities changes very little. However, if I look at the entire ecosystem and I take a percentage out of everywhere along the way, all the activities, all of a sudden, I’ve got significant change in my throughput. And so using new metrics, looking at other industries and the way that they perform something that’s similar I think is a new approach that we need to take. And then leveraging, again, some of those technologies like automation to drive a percent here, a percent here, a percent here, and then all of a sudden, you’re up to 20% improvement, that’s the mindset that I use when I go through my clients’ activities to try to drive something that’s incredibly material for them—lessens the need for human intervention, but then when we do push it through a knowledge worker, it’s real work that increases morale but then also provides more significant value for that cost of that individual. And so as the results come in, obviously it’s higher financial…

Grotto: This seems like it might be a good time to talk about our sponsor a little bit, Red Dot. You had described them at one point as a tool in your toolbox when you’re working with clients. Can you talk a little bit about that?

Duke: So Red Dot—good guys over there. They’ve got a pretty neat way of going about the motor vehicle accounts and the focus on the patient portion of those. And so what they look at when they outsource that activity are really three key characteristics, and they want to try to grow the bottom line, and they’re going to do that in a unique fashion by, while they acquire those MVA accounts, what they do is they fund them up front with the “no recourse.” So that’s a cash infusion, and then, so you get that from any of the backlog accounts that you have. But then they do that on an ongoing basis with new accounts that come in. So that helps to improve the bottom line immediately and then over time, which is a nice concept. They’re really focused on the patient relationship, and that’s becoming more and more important almost every day, in what we do in patient satisfaction. And their approach allows them to produce some really positive outcomes. For the patient, they take some of the confusion away, a lot of different things to help resolve these claims. And then from a staffing standpoint, internally, some of the things we’ve seen of joint clients is they really do help the morale of the staff because these are complex cases, and they take a lot of time to resolve and all those things. And over time, if you keep looking at the same thing with no result, it kind of beats up on your morale. So by removing those challenging accounts and letting the internal staff work on those things that they can readily advance is a morale booster too. So the team over there, Michael over there is fantastic. We talk regularly, but I have no hesitation putting them in front of just about every client that that makes sense.

Grotto: Yeah. I think that what you just described kind of illustrates some of the things that we’ve been talking about, about using your own staff in a smarter way, by sending these complex claims that your staff has a really hard time with, for someone else who understands them to take care of. And also understanding or knowing that your patients are going to feel well taken care of, that’s a really important thing right now. It’s a really important thing always, but there’s a lot of attention on it right now. So it sounds like all of those things that you’re talking about really come to fruition in a partnership with Red Dot.

Duke: Absolutely. And we talked a little bit about generically making sure that your partners have an incredibly efficient process in which to do that, and Red Dot’s one of those. And that’s why I enjoy working with them. Their focus on what they do is a little bit unique, not just, OK, we’ll take these accounts from you because they’re hard and we’ll give them to 50 of our people. That’s not really the way they work it, like a traditional outsourcing arm. And that was also interesting to me because I could put them in front of a client knowing they’re driving down their internal costs and sharing some of that savings with the client. It just makes for a better relationship.

Grotto: Well, Mike Duke, thank you so much for talking with me today.

Duke: Happy to do it, and I’m excited to talk about anything you guys want. Call me anytime, I’d appreciate it.

Grotto: Red Dot is the best technology-enable acquisition solution for hospital self-pay motor vehicle accident accounts. Hospitals can now leverage Red Dot’s solution to improve their bottom-line revenue while dramatically improving their patient relationships by avoiding debt collection activities. Red Dot: Good for hospitals, good for patients. To learn more, visit reddotmgmt.com.

Voices in Healthcare Finance is a production of the Healthcare Financial Management Association and written and hosted by me, Erika Grotto. Sound editing is by Linda Chandler. Brad Dennison is our director of content strategy. Our president and CEO is Joe Fifer. Thanks again to our sponsor Red Dot for helping make this podcast possible. We really appreciate their support. And if you would like to talk to our podcast team, we want to talk to you. You can reach us anytime at [email protected].

On this episode of HFMA’s “Voices in Healthcare Finance” podcast, Michael Duke, author of The McPherson Principle and a partner within the commercial healthcare segment at Guidehouse, discusses how people and process should take precedence over technology in revenue cycle.

The technology conundrum

Duke advised against thinking about technology solutions as problem-solving “silver bullets.” He said some organizations tend to implement technology for its own sake and don’t think about its usefulness until after the fact. His advice is to look at technology from the perspective of an operator, a person who is doing on-the-ground work, rather than letting IT lead the way.

“If [operators’] opinions and thoughts are not deeply integrated into whatever’s being deployed from a tech-enablement standpoint, then all you get is the tech, and you don’t get the enablement,” he said.

Duke said the best approach is to start with the desired benefit and work backwards to find the right solution.

“Unfortunately, technology is sold as a feature. I’ve got this feature-rich piece of technology that will really help you if you use it for the feature,” he said. “Where I think it should be is, what’s the benefit I’m trying to achieve, and then how do those features support what problem I’m trying to solve?”

Workforce adjustments

Duke also addressed the workforce shortages that plague not only clinical teams but all sectors of healthcare. It’s important for healthcare organizations to continue to think through bridging the gaps left by workers who retire or resign.

“Even if we get a new wave of inbound FTE resources, there’s no guarantee that they’re going to be competent, and if they do become competent, it’s going to take some time,” he said.

Leveraging relationships with vendor partners can be useful, but it’s important to be familiar with the tools and processes those partners are using to ensure they’re efficient, Duke said. Another crucial process, regardless of vendor relationships, is ensuring that internal work is being done efficiently. A concept known in manufacturing as “throughput” can be helpful particularly in revenue cycle, he said. Looking at the entire process from start to finish and making small improvements can add up to big ones overall.

“If I just look at the billing function or the DNFB [discharged not final billed] … and I wholly optimize that piece, but I don’t fix the upstream, and I don’t fix the downstream, the likelihood — that the entire throughput of revenue cycle activities change — is very little,” he said. “However, if I look at the entire ecosystem and I take a percentage out of everywhere along the way, all of a sudden, I’ve got significant change in my throughput.”

Efficiency in motor vehicle accident accounts

Duke addressed specifically the issue of efficiency in motor vehicle accident accounts. Red Dot, the sponsor for this episode of the podcast, handles these accounts exclusively, which Duke said alleviates pressure on revenue cycle staff because motor vehicle accident claims are notoriously difficult to adjudicate.

“By removing those challenging accounts and letting the internal staff work on those things that they can readily advance is a morale booster,” Duke said.

Red Dot’s commitment to continuous improvement of its own processes also serves their clients, he said.

“We talked a little bit about making sure that your partners have an incredibly efficient process … and Red Dot’s one of those,” he said. “They’re driving down their internal costs and sharing some of that savings with the client.”

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