In an unprecedented resource constrained era, reallocating staff and partnering with a specialty complex claims partner yields higher returns

On the long road to financial recovery, healthcare providers need to rethink how to best utilize resources to better recover cash

By Kemberton | November 29 2021

The great financial bleed

It’s been well-documented just how much of an overwhelming impact Covid-19 continues to have not only on hospitals and health systems nationwide, but also on patients and employees. Staggering revenue losses and rising costs associated with treating Covid-19 patients, vaccine mandates, and other unprecedented interruptions to hospitals’ revenue — along with a sluggish return of patient volumes to pre-pandemic levels — have created “the perfect financial storm” for healthcare providers, in which margins are likely to rebound much more slowly than they fell.

Latest data projects that healthcare providers will end the year with an astounding $54 billion net-income loss. Despite the extensive measures already taken by hospitals to curtail losses, revenue cycle challenges associated with the pandemic will likely continue into 2022 and beyond.

Although these factors depend on the unique environment, location, and population mix of each healthcare provider, the main challenges contributing to negative operating margins revolve around:

  • Loss of income

As Covid-19 cases continue to surge throughout the country, some facilities may not have enough resources to handle the rising costs of testing and treatment. In a new HealthAffairs study, direct healthcare costs during the pandemic are estimated to total $654 billion. In addition, margins are projected to finish the year 11% below pre-pandemic levels, stemming in part from a higher-cost case mix.

  • Rising costs

As hospitals are required to treat a higher volume of high acuity patient cases that require longer lengths of stay, organizations face higher expenses for medical and safety supplies needed to care for them. Other expenses including labor, drugs, purchased services, and personal protective equipment also continue to increase across the board.

  • Resource constraints

The height of the pandemic saw healthcare workers furloughed or subjected to pay cuts as hospitals and health systems struggled to keep costs in check. The more recent vaccine mandates for healthcare facilities that receive Medicare and Medicaid reimbursement has also led to thousands of employees being fired or suspended for not complying, raising even greater concerns over staff shortages at already-overburdened hospitals. In total, the healthcare workforce has lost more than 500,000 people since February 2020.

Margins continue to be squeezed, reimbursements are declining, and labor shortages are at critical mass — putting many health systems at extreme financial risk.  As hospitals continue to struggle, it’s time to look closer at areas of the balance sheet that are often dismissed as too complex to properly tackle.

Against this backdrop, healthcare organizations must shift gears and resources to other areas of accounts receivable (A/R) to uncover greater revenue opportunities that may be otherwise delayed or lost. Prioritizing the improvement of revenue cycle management processes, dubbed the most efficient way for providers to create much-needed economic lift, is no longer a “nice-to-have” goal to be addressed at some point in the future. To optimize all available revenue streams today, healthcare providers must bring complex and difficult A/R to the top of the list of RCM priorities — the specialized revenue cycle, which encompasses claims involving motor vehicle accidents (MVA), workers’ compensation (WC), Veterans Administration (VA), and Complex Denials.

Why outsource complex A/R?

Specialized revenue cycle claims are grueling, resource intensive, and time-sensitive proving to be a distraction from healthier, more viable A/R. Suitably trained or available staff with concentered expertise is scarce and becomes an unnecessary burden on aging and receivables.

Cost may be a concern when considering outsourcing any function, but healthcare organizations that have outsourced complex A/R work to a specialized revenue cycle partner like Kemberton have found it to be a far more cost-effective option to recover lost or stale dollars. A major regional health system, for example, saw a 150% improvement in fully paid claims — realizing an additional $50M in revenue per year.

At the same time, outsourcing allows the healthcare organization to redirect resources toward revenue cycle operations that are more likely to yield higher returns. Working with the right specialized revenue cycle partner allows healthcare organizations to:

1. Tackle complex coverage claims efficiently

For most healthcare providers, the specialized revenue cycle, including discovery and coordination of benefits amongst payers, is too costly, time-consuming, and resource-intensive to efficiently pursue. Claims involving complex medical coverage requires specialized knowledge to process — with a combination of technology, legal expertise, experience working with specific insurers, and continuous attention to stringent requirements, deadlines, and follow-up guidelines.

As the flow of work can be inconsistent, complex claims may be a perfect candidate for outsourcing, rather than investing in the technology or labor to develop these specialized resources internally.

2. Get ahead of staffing challenges that inhibit performance

The unexpected disruption due to Covid-19 has made it challenging to staff roles effectively across all RCM functions. In addition to furloughs and the transition to remote work operations, suspensions, and exodus of employees due to the vaccine mandate also impact providers’ ability to address staffing challenges.

Meanwhile, the challenges continue for existing RCM teams, most of which are not adequately staffed or equipped with the specialized knowledge required to effectively pursue complex A/R. Increasing rework volume not only increases providers’ costs to collect, but it also adds pressure on internal staff with a seemingly never-ending task list.

3. Utilize available resources on more viable claims

The likelihood of collecting the full amount owed on accounts, significantly decreases the longer it ages, highlighting the urgent need for providers to move stagnant complex claims before it’s too late. By enlisting the support of a specialized revenue cycle partner, healthcare providers can reallocate available staff to their core competencies and pursue the more straight-forward, more viable, higher dollar claims involving commercial and government health insurance payers, which represent over 95% of providers’ claim volume.

Find hidden dollars within your A/R: How Kemberton can help

  • Advanced insurance discovery through proprietary technology
  • Expedited payment recovery with automated workflows
  • Improved AR days and reduced bad debt reserves through cash infusion
  • Alleviated burden on staff by reallocating resources where most needed
  • Enhanced patient satisfaction with lower out-of-pocket costs
  • Full coordination of benefits with revenue recovery from all appropriate payers

When considering revenue cycle outsourcing, there’s a unique difference in revenue capture between traditional claims and specialized complex claims. Traditional business offices are not designed to properly handle the process flow or the specialized regulatory, legal, and third-party liability knowledge required for specialized complex claims. The level and intensity of the work efforts required makes it almost impossible to adequately staff for specialized complex claims internally.

This is where Kemberton goes to work for you. With state-of-the-art proprietary technology and a distinct economies of scale advantage, our complex coverage revenue cycle specialists work as additional resources and an extension of your team to efficiently maximize reimbursement on complex claims. Contact us to learn more.

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