In this episode, we are joined by Matt Seefeld, Exec. Vice President at MedEvolve to discuss five trends that will impact how medical practice executives manage their businesses going forward.
Highlights of this episode include:
- A holistic approach to revenue cycle management
- How virtualization changes the work landscape
- Tighter margins drive greater need for real-time data insights
- Front-end financial clearance takes center stage
- Patients will continue to demand better financial experiences
Mike Passanante: Hi, this is Mike Passanante, and welcome back to the award-winning Hospital Finance Podcast. As providers face opportunities and challenges ahead, a holistic approach to revenue cycle management will be paramount to success and sustainability. Today, I’m joined by Matt Seefeld, executive vice president at MedEvolve, to discuss five trends that will impact how medical practice executives manage their businesses going forward. Matt, welcome to the show.
Matt Seefeld: Oh, thanks for having me. I really appreciate the time.
Mike: So, Matt, you recently wrote an article, which I think had five really exceptional trends in there that sort of really meld together the whole idea of what’s going on in revenue cycle right now. And I’m going to ask you to walk us through each of those and give us your thoughts on them. So the first trend is, “Virtualization changes the work landscape.” What were you getting at there?
Matt: Well, COVID brought a lot of challenges to this world, and it brought a lot of challenges to healthcare as well because you kind of had forced isolation. You think about, people were used to going into business offices or sitting in their cubicle. When they needed something from someone else, they make a phone call, maybe send an email, a Post-it note, shout over a cubicle, right, etc., etc. And then what happens is everybody has to go home. Now, I know in a lot of the hospital settings and ambulatory practices that we work in, they didn’t necessarily send everybody home, although many of our clients did actually have at least a hybrid there. So when you start to think about the work-at-home model, you start to think about, “How effective are you at communicating the things that you need someone else to do? And is that trackable?” Right? And that’s really been a big thing to healthcare practices, right? When you think of the complexities of revenue cycle, how many people touch a claim from the point of scheduling to the point of zero balance? It’s not just one person. Well, ideally, right, you schedule it, you deliver the service, the claim goes out the door, it gets paid, everybody’s happy, the patient pays her bill, blah, blah, blah. We know that that’s not reality. There’s a lot of hands that touch a revenue cycle. And how are you tracking the hands that are touching revenue cycle? How are you tracking the turnaround times? If I’m sitting there waiting, on average, six or seven days for my coding team to get back to me, that’s six or seven days in AR that I’m not getting paid. And so when you think of the work-at-home model, and now even if you’re back in the office, you still need good ways to virtually communicate with each other, and especially on the reporting and analytics side.
Mike: Yeah. No doubt. Matt, the second trend you got into was, “Tighter margins drive greater need for real-time data insights.”
Matt: Yeah, margin, right? No margin, no mission. And I think the hospitals feel this the most because you have some part of your revenue you don’t control, right? Your emergency department and your bad debt expense associated and charity associated with it. And so you really have to protect the good revenue, right? You’ve got to protect every dollar in good revenue. When I ask clinics a lot and health systems what their debt collection rate is– so if you bill $1 and you expect $0.50, are you getting $0.50? The answer is no, you’re not. What are you getting? Most folks can’t answer that question. So that’s a scary world to be in when you don’t understand what your net collection rate is. And if you do know your net collection rate and it’s not at benchmark of 96 to 97 percent of what you expect, then the question is, “Why? And is there money being left on the table?” And then there usually is and that’s around bad debt management, that’s around denials, [inaudible] write-offs, administrator write-offs. Potentially underpayments as well, which I know you guys at BESLER know well. So these are all different things that you have to have real-time analytics. I can’t tell you. I started my career 21 years ago in healthcare revenue cycle and now I’m still here, right? And I’m amazed at how the basic patient accounting and practice management systems still think monthly reporting packages is the way to go. In MedEvolve here, we had to change that landscape because half our business is services, right? I needed to have real-time transparency into every single one of my clients’ revenue cycles to know if I have to start asking questions. So that’s what we’ve invested a lot of time, money, and resources into the last two years.
But my point is, is that you can’t live in pivot tables. You can’t live in Excel. You can’t wait till the two weeks into the next month to figure out how your prior month went. It’s too late. Healthcare is moving too fast, right? And so you have to have something more at your fingertips to make sure that you’re basing decisions for the business on facts, not feelings, right? You need to be objective in your decision-making, not emotional. And you need to be able to be objective. You have to have real-time data that tells you a story consistently. And you know whether you have to ask questions, redesign process, realign people, or possibly invest in new technology with the ultimate goal of improving margin, right? By reducing your costs to collect, a lot of that is labor dependence, as well as making sure that your net revenue is maximized, right? If you can pull on both sides of the triangle there, your margin is going to be really solid and you’re going to be able to do a lot more with that money, including invest in more technology, look at better ways you can help patients, looking at all types of things that you can do. Buying technology that might improve the patient experience, which we’ll talk about here in a little bit. But there’s a lot of things you can do with cash flow.
Mike: And Matt, the next trend probably couldn’t be worded better. “Front-end financial clearance takes center stage.”
Matt: Yeah, yeah. I feel like, again, this is my two-decades plus of, I guess, a little callousness coming out is everyone seems to focus on the AR and the back office, right? And then people forget about the work drivers that have to go into place to make sure that you financially clear patients prior to the service, right? What do I mean by that? It’s pretty straightforward. It’s the verification of demographics, and now, in this day and age, you have to get a mobile phone and you’ve got to get an email because we as consumers want to communicate that way. We don’t want a robo-dial phone call. We don’t want, necessarily, even a paper statement hitting our mailbox anymore, right? So demographic verification is really, really important. Verifying benefits and eligibility. Seems straightforward, like a no-brainer. Our number one first pass denial code at MedEvolve, on behalf of hundreds of clients, is COB eligibility, if you can believe that. Number two, by the way, is no authorization, right? Which is really the third component, is making sure that you’re authorized or have a referral in place for services that are required based on the payer. And the fourth and fifth item is really taking center stage now around patient debt. 20 years ago, if you collected from the patient or didn’t, it didn’t make a huge difference. About 5% of provider income was coming from the consumer. So 95% coming from insurance, we focus there. That’s flipped, right? Not entirely flipped, but 50 to 55 percent and growing is coming from the consumer now. And I’m still amazed at how health systems and provider groups are not good at collecting from the patient. They’re not good at asking for money. They’re not good at making sure that before you schedule another patient visit, collect what they already owe you. So I know that seems crazy, right? But that is the reality that we’re living into right now.
And so if you’re not doing these things on the front-end through either scheduling– most cases, it would be a good preregistration processing department, you’re really limiting yourselves. And what happens is you end up with a lot more work to be done on the back-office side, which increase your cost to collect. And you’re also allowing your labor, right, to be not just limited in their productivity, but also limited in their effectiveness. Because one of the big components, whether you’re looking at front office financial clearance or you’re looking at back-office AR management, is you got to have the right work drivers in place, right? When I come in the morning to clear patients, I need to be delivered the work list to me in an automated fashion. And I need to be held accountable for the actions that I’m taking to generate the positive financial outcome on the back office. And so it’s not just about transparency anymore. It’s about workflow automation, which we’ll talk about here in trend four, to make sure that people are actually doing the job that they say they’re doing with the outcomes you expect them to get.
Mike: Yeah. And probably no one working in hospital revenue cycle or physician group revenue cycle would argue with number four, and that’s, “Reducing administrative burden is critical to strategy.”
Matt: Yeah, people process technology. It’s something that I learned my first year of consulting, and it’s something I carry with me, is that if you don’t have people aligned correctly and process align with people and technology to support that, you’re really limiting yourself in terms of your rev cycle performance. And a big trend now is around workflow automation, right? You hear all the buzzwords: machine learning, AI. I mean, these are cool little taglines that you have. But a lot of this stuff exists and can actually make your teams work much smarter. 80% or more of claims on open insurance AR don’t need to be touched today. And I’ve seen it, by the way, as high as 90%. But that doesn’t mean that you don’t have to work it tomorrow, but you don’t need to touch it today. So why are you looking at it? And so being able to install work drivers, right, cloud-based work drivers that carve claims out, the stuff that’s nonsense, and delivers the stuff that needs to be looked at to your FTEs managing that revenue cycle. And again, we’re talking about front-end financial clearance. We’re talking about the back-office side, which would be your insurance, your patient debt, and then, of course, your underpayments, as well as your credit balances for patient insurance. So you have to have the work drivers, and then you have to have staff that are effective. And I used to think that it was about productivity. And now, through AI and a lot of things that we model here at MedEvolve, I’ve learned it’s more about effectiveness than productivity. I have a lot– I can have a lot of productive people that aren’t effective. I don’t need them. I could also have people who aren’t as quite productive, but they’re really effective at getting outcomes, right?
And one example for us is that we’ve developed an algorithm that looks at exhausted claims. So I want to be able to go in and say, “On my open AR today, how many claims out there have been touched more than five times with no financial outcome?” We can answer that in seconds now, which has been extremely powerful because I can now move that into another work list for a supervisor, for example, or a team lead to start to review and say, “Is this a payer issue, or is this a staff issue, or is it a combination?” So being much more informed on the decisions that you’re going to make as an organization is key. But look, workflow automation, I mean, we hear about it in every other industry out there. Ironically, healthcare continues to lag 10 to 20 years from mainstream. Some would argue even more. It’s time to wake up now because you can’t keep throwing labor– bodies– at problems. And I hate when I hear that. It’s like, “I have an AR problem, so I hired five more people.” Well, first of all, the probability of all five of those being highly productive and effective are slim to none. So you just hired– fully burdened, right, salary benefits, the whole nine yards of somebody, and you may end up turning over three of those five people within three to six months. So don’t throw bodies at the problem. Look at your work drivers. Look at the way you automate work. Try to get rid of that administrative side. The labor cost in the revenue cycle continues to drive that cost to collect up. And I’m not talking about medical supplies and all the other things that the clinicians have to use to deliver the service. I’m just talking about rudimentary labor costs associated with getting claims out the door and paid. And there’s a big opportunity in the health systems, and especially practices, independently-owned physician groups, to really start looking at this in a much deeper level.
Mike: And the fifth trend works really well hand in hand, I think, with the third trend around front-end financial clearance, and that’s, “Patients will continue to demand better financial experiences.”
Matt: Yeah, absolutely. The consumer? Price transparency is probably the first thing that comes to mind. “What am I going to owe? Give me an estimate.” And then flexible payment options. “If I have a $5,000 deductible and I end up in an urgent care in January–” which is what happened to me for a headache that wouldn’t go away. I had to do a CT scan. Everything came back normal, which was good, but it was a $2,000 bill. And so to be able to go to my healthcare provider and say, “Hey, what kind of payment plans could you offer?” And then they had a nice, reasonable payment plan. They put my credit card on file, so every month, it just gets debited. They don’t have to worry about calling me or sending statements. That’s the type of relationship that we need to really perpetuate here in healthcare. The days of just assuming someone’s going to write these big checks because they owe it are not– they’re over, right? I mean, with COVID, how many other fears are out there? Right? “Am I going to lose my job? Am I going to get another job? Is there going to be another stimulus check? Am I going to keep getting unemployment benefits? Will I have food on the table? Can I pay my electric bill?” All those things are going through the consumer’s minds right now, and as always, the healthcare bill gets left behind. So I think that patients will demand that, the transparency and then the flexibility.
On the flip side of that, too, though, is that you as providers also need to hold your patients accountable. And what I mean by that is you can’t deliver free care. Now, if you’re a health system, and you have a lot of good financial counseling program in place, and you can do screenings and look at federal poverty guidelines, and you can do charity write-offs of adjustments, that’s awesome, right? And there’s going to be a subset of your population that are going to end up being bad debt, as in they had never had an intention to pay their bill. But for the rest of us who have intentions to pay our bills, you need to make sure that we’re paying our bills before you continue to treat patients. One of the analytics we look at MedEvolve, and we’re in the surgical specialty space, is we look at the amount of money that’s coming back through the doors. So already scheduled, patients who are scheduled over the next six months, who already owe balances? Tens of millions of dollars in our client base is walking through the doors over the next six months. And you think about that, that is the stuff that’s on the AR. That’s the stuff that ends up getting sent to bad debt, where you’re going to pay 25-30 cents on the dollar for a collection agency to catch, right? And so you have to hold folks accountable for the services you rendered. There is no more free care.
I always make jokes that in the 19th century, I could walk into the grocery store, get my basket of goodies, and then have them just kind of tick a check box on a piece of paper and say, “Hey, just put that on my tab. I’ll get you. I promise I’ll get you.” You can’t do that in healthcare anymore. If you continue to do that healthcare, you’re going to end up out of business, which actually, in turn, hurts society and hurts your community because there won’t be the healthcare services, and the consumer is going to have to drive a lot further to get that. So it’s a double edge. The reason I kind of bring that up with trend five is that there has to be empowerment on both ends. There’s empowerment for the consumer to have price transparency and flexible payment options. There has to be empowerment of the clinic, though, and the health system, hospital, whatever you are, to make sure that your patients are paying their bills, right? And that’s a big movement right now. And I’m starting to get the sense that more practices are starting to go that route, where they’re calling on– well, here. I’ll just tell you one tactic I recommend for your listeners, regardless of what type of provider group you are, is start calling on those balances. Or better yet, send a mobile text, an email out saying, “Hey, we’re looking forward to seeing you on May 15th. You owe us 350 bucks. Click here to pay,” right? “Or get on a payment plan.” That’s one tactic.
Another tactic that I actually really like is call these scheduled patients, make it more of a service call, remind them they owe money, try to get the payment right then and there, but also verify demographics and eligibility. Do another set of financial clearance when you have me on the phone. “Do you still have Blue Cross?” “I do.” “Do you still live at this address?” “I don’t; here’s the correct address.” “I don’t have an email on file. What’s your email? What’s your mobile phone?” So it gives you a chance to engage with your client, your future client, but it also gives you a chance to clear that patient. Look, there’s nothing worse than getting hung up in a denial as a patient, right? It’s like, “Well, I gave you my insurance, but you didn’t actually enter it correctly. Therefore, there’s a denial. So now I’m getting sent a statement because that’s just the way your business office works. Now I’m frustrated. Now I’m calling your call center. I’m irritated. It’s taking up time. It’s costing money, and the cost to collect goes up.” So lots of themes there around the patient. But it’s really important for folks to know that in this day and age, you have to be very patient-centric, which also includes holding them accountable.
Mike: Well, certainly no one thing we need to be doing to get it right, so great. Great.
Matt: That’s true.
Mike: Great, great perspectives today, Matt. If someone wanted to find out more about MedEvolve, where can they go?
Matt: Yeah. Yeah. So we’re a privately-owned company headquartered in Little Rock, Arkansas. Medevolve.com is our URL. But certainly, if any of your listeners want to hit me up, I’m on LinkedIn. Matt Seefeld, you can search me out. I’m happy to answer questions or clarify anything as well. So we’ve had to do a lot of interesting things at MedEvolve here the last couple of years to really improve our cost to collect on behalf of a lot of our revenue cycle outsourcing clients. So it’s been a big, big move for us to look at how we leverage AI, workflow automation, and transparency, analytics solutions to be better service partners for our clients, but then also make sure that we’re making margin and we can continue to sustain ourselves.
Mike: Matt Seefeld, thanks for joining us today on The Hospital Finance Podcast.
Matt: Oh, I appreciate the time. Thank you.
Mike: If you have a topic that you’d like us to discuss on The Hospital Finance Podcast, or if you’d like to be a guest, drop us a line at email@example.com.