What are the “pros & cons” of centralized revenue cycle processing?

Provider organizations that have become multi-facility entities often consider centralizing revenue cycle and/or AR processing. The strategy is usually aimed at lower operating cost, performance improvement and better customer service. Nearterm has a lot of experience assisting clients with centralization (and decentralization) initiatives, like healthcare revenue cycle management consulting, so we could write volumes on this topic, but in lieu of that, this BLOG offers a just few “bite sized” observations that you might find interesting.

Centralized Revenue Cycle Processing in Healthcare

Homogeneous Volumes:

Banking, financial services, retail industries and others have been very successful with centralized billing, payroll, collection processing. If they can do it, we can do it, right? Not so fast. Every transaction processed through their clearing houses looks the same. A VISA charge transaction is the same in every state and for that matter, all over the world – homogeneous volumes. However, when two or more hospitals having different operating systems, contracts, policies and patient types consolidate, the volumes are different – heterogeneous. There are technical solutions but cost, lead time and maintenance of these conduits can be material in the centralization decision. If the organization does not achieve like volumes in the proposed processing environment, arguably, it has just combined things under the same roof, still functioning as before and with little or no gain of efficiency.

Distributed Impact:

There are two ways to capture the benefits of distributed impact through centralization of hospital revenue cycle processing; management and technology. Consolidation of organization structure usually results in a budget that improves compensation offerings available to build a new management team. This enables you to attract stronger talent and benefit from their expertise across the newly centralized operation. Likewise, surviving technology represents an opportunity.

Business Relationships & Communication:

Relationship challenges are often underestimated. We are referring to the multiple relationship and accountability changes that occur when for example a hospital moves billing and collections to a centralized business office (CBO). Who is responsible for AR performance? If the hospital is allocated CBO expense, does it have control over CBO budget? How are data collection and data entry problems that begin in access handled to the extent that they impact CBO performance? There are many questions to resolve well ahead of the decision to centralize. We recommend report design that clearly delineates accountabilities between entities and detailed policy statements about accountability. Drafting these and using them as compatibility “tests” prior to the decision may reveal crucial development opportunities that if addressed, promote a harmonious and successful transition.

Summary of the Centralized Model vs. Decentralized Model in Healthcare:

Centralization and consolidation of revenue cycle processing can be a very effective way to meet the challenges facing provider organizations in these changing times. Many have done it successfully. We also know that many “centralized” organizations would like to “decentralize” and would say they should never have done it in the first place. Generally, the key is consensus about expectations, timeline and accountability established as part of the decision process, not the implementation process.

The above are intended as broad overview. Nearterm Revenue Strategists are always ready to work with you in considering AR processing venue and any other Revenue Cycle initiatives under consideration. Contact Us today to improve your revenue cycle!

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Posted By: Nearterm Houston

One thought on “What are the “pros & cons” of centralized revenue cycle processing?”

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