Executives at the Healthcare Financial Management Association conference expressed serious concern that worsening economic conditions, an uptick in health insurance claim denials and the complexity of managing multiple vendors are impeding the hospital sector’s prospects.
Health system chief financial officers and others focused on money matters gathered at the four-day event in Nashville, Tennessee, to share insights over those challenges and about the potential of new payment models and technologies to boost business.
Claims denials
The top issue for health system finance leaders was why insurers deny claims.
Covenant Health, an integrated health system based in Knoxville, Tennessee, is building a tool to track denials and identify trends in insurers’ medical policies. This will allow the company to optimize patient records and reimbursement coding to reduce denial rates, said Bob Stearnes, director of patient accounting.
Novant Health, a Winston-Salem, North Carolina-based nonprofit system, uses ChatGPT to analyze insurance rules and compare them to accounts receivable. This process, combined with analyses of medical records, helps the company identify areas where it is missing out on reimbursement and determine the causes, said April York, vice president of patient financial services and revenue cycle innovation. The tool also helps clinicians to sumbit claims and appeals more efficiently and the health system to improve coding and win more appeals, she said.
Vendor management
As healthcare organizations continue to lean heavily on vendors for technology, social services and administration, finance executives are centralizing and streamlining operations and contractual relationships to reduce costs.
Vanderbilt University Medical Center in Nashville hired a contractor to manage its vendors because it lacked the infrastructure to gauge the productivity of its outsourcing. As a result, the teaching hospital was overspending, said Heather Dunn, vice president and chief revenue cycle officer. By outsourcing vendor management and contract negotiations, Vanderbilt is able to better track return on investment, she said.
Similarly, NorthShore-Edward-Elmhurst Health in Illinois centralized its vendor management as it expanded, resulting in significant savings and quality improvement, said Gregory Arnold, senior vice president of system revenue cycle.
NorthShore University Health System of Evanston and Naperville-based Edward-Elmhurst Health merged last year to create a chain with more than $5 billion in annual revenue. The company has a single team overseeing vendor relationships, allowing leaders to leverage the health system’s scale for better pricing and to track progress internally, Arnold said.
Recession worries
Amid economic uncertainty, health system finance executives said they are preparing the best they can for what might lie ahead.
HCA Healthcare Chief Financial Officer William Rutherford said the Nashville-based for-profit health system hired consultants to study how previous downturns affected business. Leaders are looking at how HCA and other companies successfully responded to past economic challenges to inform how the company could navigate a recession. HCA conducted similar exercises in 2019 concerning major policy reform proposals, including a possible repeal of the Affordable Care Act, he said.
“We have to be data-driven in how we’re assessing the environment and how we’re thinking about the impact on the organization,” Rutherford said. “Preparation, planning and communication are all critical.”
Richard Silveira, chief financial officer of Massachusetts-based Cape Cod Healthcare, anticipates reduced funding from government programs in the future, primarily due to large-scale disenrollments of Medicaid beneficiaries during eligibility redeterminations.
Coupled with inflation, the health system may have to cut costs and leverage its scale to negotiate discounted rates with vendors, he said.
Thomas Arnold, chief financial officer at Piedmont Healthcare, an Atlanta-based nonprofit system, said he believes a recession may alleviate labor market pressure for hospitals and reduce workforce costs.
Alternative payment models
Finance executives also discussed strategies for deploying alternative payment models and increasing profitability through value-based care.
Vanderbilt University Medical Center recently introduced a bundled-payment program for substance use disorder, adding to programs for maternal health, weight loss, spine surgery and orthopedic care. These models offer comprehensive care coordination and wraparound services, allowing the hospital to take on more risk while gaining market share, said Dr. C.J. Stimson, chief medical officer for employee health plans and senior vice president of value transformation.
Corewell Health, a nonprofit integrated health system based in Grand Rapids, Michigan, is also exploring alternative payment options and has developed an internal process to identify high-risk patients for better care management, chief financial officer Matthew Cox said. For example, if a high-risk patient being treated under value-based care gets a flat tire on their way to a medical appointment, Corewell will pay for alternative transportation or repairs, he said. “We treat those patients very differently because we own the total cost of care,” he said.
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