HIT Necessities for Struggling Hospitals

Hospital CFOs are again reporting that their budgets are thin and that they are facing such a financial drain that they are unable to afford much needed new IT solutions like revenue cycle management software, and that their organization’s financial problems likely will last until at least 2016.

According to a new study published by Black Book Rankings, expenses from investments in electronic health records, health information exchanges and patient portals are currently occupying the majority of hospital’s budgets. In fact, 94 percent of the 2,300 hospital CFOs, CIOs and business office managers surveyed said that implementations of IT systems, particularly EHRs, are impacting their organization’s financial positions and are keeping them from making new, much-needed IT investments.

Strapped hospitals are in need of new solutions to help improve their revenue streams and to dig themselves from near financial ruin because other IT priorities, like meaningful use, continue to take precedence. CFOs at fiscally healthy hospitals, though, say that they are moving ahead with new solutions, like implementing RCM, as they are preparing for the switch to new payment risk models. Ninety-one percent of these individuals said their organizations are fully committed to next generation revenue cycle management solutions and that they are currently in the middle of implementations or plan to outsource or purchase the new software sometime in 2015.

The Black Book study was conducted between June and October 2014 and 590 hospital and inpatient organizations from 45 states responded to the survey. According to the research firm, the hospital RCM software and services industry grew 13 percent in the last year mostly because of business shifts, reimbursement and payment reforms, accountable care participation, physician practice acquisitions, self-pay collection issues and declining margins for hospitals.

“Most hospitals have no choice but to look for next generation solutions to keep their organizations solvent,” said Doug Brown, managing partner of Black Book, in a statement. “Increased self-pay volumes, lack of pricing transparency, no patient financial responsibility/estimation technology and other reimbursement challenges are driving many marginally performing healthcare organizations to the brink.

“Hospital viability has never been more thoroughly secured to a single organizational venture as revenue cycle management transformation,” he added. “And chief financial officers in struggling hospitals are in a very perilous position as the risk models are still being charted while limited funds remain for next generation RCM tools.”

The Black Book report says that hospital CFOs face pressure from approaching payment reforms, poor reimbursements and other financial burdens, and, therefore, lack the resources to move their revenue cycle management plans forward. Shockingly, though, things may be so bad for some of the under-performing hospitals in the U.S. that more than 60 percent of the CFOs in struggling organizations actually expect to be fired within the next year because their organization are focused too heavily on fee-for-service models.

Regarding their financial burdens, more than 55 percent of those surveyed said their hospital’s bad debt comes from outstanding patient balances and can be traced to the proliferation of high-deductible patient health plans; larger plan co-pays; and consistently high numbers of uninsured patients.

Perhaps most eye-opening is that most of the problems reported here could likely have been avoided had these organizations taken a more thorough or active approach to previous IT implementations. Respondents said many of their previous IT implementations were hindered while attempting to bring in solutions that did not fit their organizations or were poorly budgeted.

Health systems small and large should set a clear plan – even borrowing or copying others’ best practices — when undertaking a system implementation or integration. However, even with a plan in place, evolution of the plan should continue.

Despite best practices and proven workflows, leaders must steer clear of cookie-cutter and easy-out approaches. Examine and review their processes, and identify ways that they can reach their goals without setting themselves up for the overwhelming disappointment, and hurdles faced by many. With a plan, and possibly a partner in place, organizations can reach their goals without fear of failure.

For more on managing successful implementations or for guidance on creating a plan for moving a difficult IT task forward, the following resource may provide some insight: Engineering Effective Implementation Plans: Best practices approaches.