Best Practices for Sourcing amp Managing Revenue Cycle Vendors 2 Operating Expenses Contractual adjustments and discounts Charity amp BD Profit margin needs to be 35 for growth ID: 601578
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GET MORE, SPEND LESSBest Practices for Sourcing & Managing Revenue Cycle VendorsSlide2
2
Operating
Expenses
Contractual adjustments
and discounts
Charity
& BD
Profit margin needs to be
3.5
%
for growth
2%Slide3
Agenda
3Key spending and cost to collect trends
C
onventional approaches no
longer
sufficient
8
proven practices for
revenue cycle vendor managementSlide4
A Kodak Moment
4
1996:
4
th
most valued brand
Captured 90% of the market
Employed 140,000 workers
2012: Filed for bankruptcySlide5
Blockbuster Success/Bust
5
2004:
60,000 employees
Market value of $5 billion
9,000 stores worldwide
2010: Filed for bankruptcySlide6
State of the Industry – Third Party Spend
6$30B spent on revenue cycle companies
$100M by 2024
> 35% of budget spent on third-parties; fastest growing segment of spend
Cost to collect surprisingly high
2009
2012
2015
$30B
2024Slide7
Reliance is Increasing Dramatically
7Slide8
Conventional Approaches
8Inconsistent and misleading
Metrics are not yield-based
Varied calculation methodologies
TRADITIONAL
METRICS
WIIFM
Structured for status quo; not incremental
Penny wise and pound foolish
DEAL
STRUCTURES
Decentralized & inconsistent
Often a one-time event; out of sight
Lack of time and tools
VENDOR
MANAGEMENTSlide9
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Vendor Management Best Practices
Process Audit
Inventory Reconciliation
Invoice Certification
Consolidated Reporting
Contract
Management
Beware of SourceNegotiateActionable
GovernanceSlide10
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#1 Process Audit
50-60% of accounts not worked appropriately
501r non-compliance
Excessive follow-up – FDCPA violation
Notes not reflective of activity
Accounts off-shored in violation of contractSlide11
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#2 Inventory Reconciliation
Overdue for bad debt placement/
next
party
Inaccurate patient statements/avoidance of patient complaintsClosure of accounts for Medicare cost reports
Excessive use of account holdsUntimely placement retrievalSlide12
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#3 Invoice Certification
5-7% of invoices are duplicates
Uncover and resolve contract ambiguities (found insurance,
MCA mom &
baby,
crossovers)
Multiple vendors invoicing for the same payment Fees for non-payment transactionsPayer take-backsSlide13
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#4 Consolidated Reporting
Time spent making sense of disparate reports
Verifying calculations methodology
Status quo level of performanceSlide14
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#5 Contract Management
Avoid cost of living increases
U
nmitigated evergreen provisions
Old technology and functionality
Outdated contracts (greater than 3 years)Slide15
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#6 Beware of Source
Not all vendors are created equal
Great presentation does not equal great execution
Look out for conflicts
Positive and negative referencesSlide16
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#7 Negotiate
Outdated pricing; as high as 80% more than market rates
Lack of service-level agreements in contracts; scope not defined or no longer relevant
Ambiguities regarding contingency fees and transaction typesSlide17
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#8 Actionable Governance
Centralized and consistent management
Quarterly performance reviews and goal setting
Bi-weekly “chalk talks” to review and resolve issuesSlide18
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Prioritize High Yield Efforts
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Thank you