4 tactics to improve profitability with revenue cycle predictive analytics

The financial challenges of running an independent practice fall into two main categories: revenue loss and rising expenses. Together, this duo of difficulties threatens your practice’s profitability and puts your autonomy at risk.

We’ll explore how you can leverage revenue cycle predictive analytics to address both of these challenges, helping you put a stop to revenue leakage and better control avoidable costs.

Financial challenges: the current climate

COVID-19 exacerbated an already-difficult financial environment for independent physicians, and though the pandemic itself has ended, its impact on revenue persists.

In a 2022 report, 29% of physicians said their finances had worsened year over year. The top contributing factors were as follows:

• Lost revenue/increased expenses due to COVID-19
• More time spent on uncompensated tasks
• Lower reimbursements
• Higher overhead
• Difficulty collecting from patients

Though these challenges were heightened by the global pandemic, they’ve been brewing for a long time. Reimbursement stats offer a striking example: Over the last two decades, physician payments from Medicare have fallen by 26%.

Insurers are also taking longer to pay out reimbursements. In the first quarter of 2023, it took more than three months to collect on 31% of inpatient health insurance claims and 32% of outpatient claims submitted to commercial payers.

For many private practices, the adverse effects of COVID-19 coupled with the long-term decline in incoming revenue has proved too much to withstand. For the resilient providers that remain, tactical steps are necessary to create a secure financial position that will stand the test of time.

4 ways to improve cash flow and reduce expenses with revenue cycle predictive analytics

 

1. Reduce accounts receivable

Though you’ve technically ‘earned’ the balances sitting in accounts receivable, they don’t materially affect your income statement until they’re collected. And unfortunately, in healthcare, the longer a bill goes unpaid, the more likely it is that you’ll never fully collect. To minimize revenue loss, private practices must focus on cutting down the number of days balances linger in A/R.

Revenue cycle predictive analytics offer actionable intelligence to help you submit cleaner claims. By pairing these insights with an automated claims management solution, you can build eligibility verification into the claim creation process so coverage errors never stop you from capturing payment. Superior claim scrubbing catches the top denial-causing mistakes pre-submission, while an advanced rules engine allows for automatic custom edits that are unique to your practice.

A clean claims rate of 99% or better¹ means fewer bills sit in A/R weighing down your balance sheet.

2. Decrease denials

The second way to accelerate revenue capture is to prevent reimbursement-stalling claims denials. Reducing denials increases your first-pass yield, which means you not only collect the correct payment faster, but accomplish this with fewer resources.

An end-to-end revenue cycle analytics solution allows you to pinpoint the root cause of denials in real time. Once you know where the bulk of denials are originating, you can take action to prevent them from occurring.

For example, if you discover that a large portion of your denials are coding related, more training or better technology may be in order for your coding staff. If patient eligibility errors frequently cause claims rejections, it’s a signal to take steps to improve your eligibility verification process.

This tactic also has the secondary benefit of boosting staff satisfaction. Since denial management is one of the most challenging RCM tasks, making it easier for team members will save time and labor while increasing employee engagement.

3. Monitor payer activity

Complex insurer policies aren’t just a headache; they drain resources, cause tangible revenue loss, and have an adverse impact on patients.

Practices can navigate these confusing and ever-changing requirements with automated, ongoing monitoring of payer activity. An all-in-one RCM analytics tool can instantly catch payer rule changes that are spurring denials. With this intel, providers can implement custom claims edits to address these requirements and avoid the resulting runaround.

Another useful feature of a comprehensive RCM analytics application is the ability to identify payer trends over time with at-a-glance payer scorecards. These insights empower providers to renegotiate payer contracts to be more mutually beneficial, further reducing reimbursement timelines and strengthening revenue.

4. Increase staff efficiency

Your RCM staff have an outsized impact on the financial health of your practice. It pays to make tasks easier for them.

With user-friendly performance scorecards, it’s easy to see where process breakdowns are slowing down staff and causing revenue leaks. These breakdowns can inform a number of actionable decisions, including:

• Upgrading technology to make processes more efficient
• Providing additional training to increase speed and accuracy
• Bringing in third-party claims expertise
• All of the above

The bottom line is, you can’t make meaningful changes to help staff if you don’t understand their challenges. Your revenue cycle analytics can reveal these areas of concern, empowering you to correct them.

Take action to strengthen profitability with Inovalon

Implement the tactics we outlined above with Claims Management Pro and RCM Intelligence. This pair of applications is responsible for an average 15% increase in operational cash flow, a 40% reduction in denials, and a five-day improvement in GDRO (gross days receivable outstanding).²

Learn more about Claims Management Pro and RCM Intelligence and how to put them to work for your practice.

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Sources:

1. Inovalon internal reporting, Claims Management Pro, July 2022
2. Inovalon internal reporting. Average of customer results, February 2023

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