Hospitals are actively buying physician practices in the hopes of being prepared for the future as reimbursement strategies shift to payments based on bundled services and incorporate increased risk sharing. Most hospital organizations have learned a great deal from the mistakes made in the last buying binge in the 1990’s and now structure deals to include incentive payments and performance bonuses to better align financial goals with the acquired practices. While they are better at one part - structuring smart deals - after the deal is closed, however; hospitals often struggle to put in place the IT and billing infrastructure required to successfully manage a large geographically-distributed outpatient network. And as margins are very thin in most healthcare systems, the risk associated with blowing up the reimbursement cycle is high. Effectively managing the revenue cycle for owned and affiliated practices can mean the difference between success and failure in building a system prepared to provide integrated care to a defined population. There is no question that the stakes are high. The issues are particularly acute as we factor in the transition to ICD-10. Most hospitals are concentrating scarce IT resources on making sure that the myriad systems they have deployed within the hospital won’t break on October 1, 2014. If they have yet to consolidate their physician network on a flexible cloud-based system, they will also be facing a situation where many disparate systems in use by the physicians in recently-acquired practices will simply not be ready for the transition. With CMS warning practices to have 6 months on hand in order to survive the transition, hospitals are wondering where they are going to get all that capital. In an effort to take the pulse of hospital administrators as they try to juggle buying practices, providing services to these practices and gaining control over the money flow, MDeverywhere recently completed a survey of hospitals in our database. The responses sum up to this theme - there is a great deal of anxiety about how hospitals are going to effectively manage the revenue cycle processes and requirements of the practices that they now own.
In our survey, while more than half (52%) of respondents are buying practices, more than 40% report that time and resources are an issue in correctly managing the billing for these practices. And 85% believe that significant money is being left on the table by high rates of denials. It is hard enough for a hospital to even break even when they own a physician practice - high rates of denied claims make that impossible. Managing these processes is made all the more difficult by disparate systems deployed in their acquired practices - more than a quarter reported that their outpatient network deployed more than three systems. The disparate (and many times outdated systems) also lead to a lack of information, inability to effectively aggregate data and to track metrics. In fact, many don’t even know their denial rates. The greatest sense of dissatisfaction and concern we found in our survey lies with an inability to effectively “track billing statistics/trends for their physicians.” It is clear from our findings that hospitals are intent on acquiring physician groups from a strategic perspective but then struggle to provide effective billing support in a complex environment of outdated legacy systems that provide little visibility and lack effective revenue cycle tools. Download a PDF version of this article.