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BI for Healthcare
Revenue Cycle Management

by Dan Everett, BI Specialist, SAPThursday, September 22, 2011

Business intelligence can improve performance across multiple areas of a healthcare business. In this article I will focus on revenue cycle management.

While the cost of delivering care continues to rise, getting reimbursement from patients and insurance companies is increasingly difficult for doctors and hospitals. Complex coding and billing requirements, combined with the reluctance of patients to pay their portion of healthcare costs is increasing the number of days before receiving payment on accounts and decreasing margins. BI can help ensure accurate claims submissions, improve payment collection processes, accelerate cash flow and increase profitability.

The following are common areas where BI can aid in revenue cycle management.

Service Line Analysis

Healthcare providers often organize their employees, facilities, equipment and supplies along service lines. Service lines are generally grouped into three categories of service:
1. Diseases such as cancer, heart disease, etc.
2. Populations such as the elderly, children, etc.
3. Interventions such as radiology, surgery, etc.

Business intelligence can help measure and monitor service line income and expenses, identify root causes of trends and variances, compare volume and margin across service lines and forecast future revenue and profit. Understanding the drivers of service line performance can help healthcare organizations identify procedures that are not financially sustainable, evaluate improvement opportunities, and make fact-based decisions about which services to expand and how to expand them.

Accounts Receivables Analysis

Accounts receivables analysis in healthcare is no different than in other industries.  It’s about better measuring and managing the order (or service) to cash cycle by monitoring metrics such as cash receipts, days’ sales outstanding, invoice disputes and accounts receivable aging.

Business intelligence can help healthcare businesses keep track of the effectiveness of their collection processes, prioritize accounts by ability and likelihood to pay, determine which accounts to collect in-house and which to send to third-party agencies, forecast collected amounts and compare against account receivable balances. Benefits include reduced write-offs, increased cash flow and improvements in working capital.

Claims Denial Analysis

Unlike typical businesses where payment for goods or services comes directly from the person or company receiving the goods or services, healthcare providers have to deal with third-party insurance companies to get paid. Claims denial analysis is essentially invoice dispute analysis. However, it is often more complex than a typical invoice dispute because insurance companies require pre-authorization for certain services and have complex coding categories that must be used in the invoices.

Business intelligence can help measure and monitor reasons for denial, denial appeal status, provider and payer responses to authorizations and concurrent denials, physicians and departments involved in the denial process, level of care determinations and revenue lost or at risk. Understanding which payers are denying claims and why helps healthcare organizations reduce revenue leakage by decreasing coding and billing errors, which in turn decreases disputes and increases cash flow by speeding up claim turnaround time.

The following screenshots show how data can be explored to analyze profitability in healthcare businesses.

Click on the image to enlarge.

This screen shows gross profit for fiscal year 2009 sorted by hospital. Manor Mesa Medical Center was the worst performing so we're going to filter for just that hospital.

Click on the image to enlarge.

Now we've sorted by diagnosis group and can see that stroke is where the hospital is losing the most money. So we will filter on stroke.

Click on the image to enlarge.

This screen shows the service lines associated with the stroke diagnosis group at Manor Mesa in 2009. It's apparent that ICU service was the biggest drain on profitability.

Click on the image to enlarge.

Finally we have filtered on ICU and sorted by physician name. In the top right we can see the patients as well as the diagnosis. All it took was a few mouse clicks and we are ready to have a fact-based discussion with the head of the hospital on how to maintain financial viability.

I would love to hear your thoughts. Do you think BI can improve revenue cycle management? How are you using BI to better manage revenue?

About the Author

Dan Everett is a Director of Solution Marketing for SAP and has more than 15 years of experience in business intelligence and analytic technologies. For more information, contact Dan at dan.everett@sap.com or see TDWI’s What Works in Healthcare

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