Overcoming talent shortage in the healthcare revenue cycle

Strategies to help healthcare institutions navigate through the current challenges and prepare for the widening gap.

As the US population ages, the focus on healthcare is now more intense than ever before. The Biden Administration is looking to fund as much as $400 billion over the next eight years in home and community-based care (HCBS) for the elderly and disabled to improve accessibility and working conditions of the poorly paid healthcare staff involved in care delivery. As the headwinds come in from an aging population, it is clear that the number of healthcare workers needs to increase significantly in the coming years.

Overcoming talent shortage in the healthcare revenue cycle

A study by human resources consulting firm Mercer predicts a shortage of more than 400,000 home health caregivers and 29,400 nurse practitioners by 2025. Over the next two decades, almost all healthcare consulting firms feel that there will be a huge gap in the supply of physicians, nurses, and other healthcare professionals.

The American Association of Medical Colleges (AAMC) predicts a shortage of 122,000 physicians by 2032. This grim prediction was accompanied by the observation that the 65+ population will grow as much as 48% by the year 2032. At the same time, many physicians who are part of the workforce will retire by then.

The shortage of personnel is not just limited to clinicians and caregivers; it also transcends to the supporting ecosystem of healthcare educators, administrators, revenue cycle professionals, and technology professionals. Furthermore, these shortages can be even more chronic in rural areas and remote territories.

Current Headwinds: Margin pressures, labor crisis, declining federal funding, and more…


Hospital margins will continue to be impacted by COVID-19 in 2021.

A Kaufman Hall research study indicates that 2021 hospital revenue would likely be down between $53B and $122B due to the lingering effects of COVID-19. The potential impact of COVID-19 on hospital operating margins throughout 2021 will be negative for US hospitals overall; anywhere between 35.2% to 49.1% of hospitals could end up with negative margins, and rural hospitals could end up with as much as 38% lower margins than pre-pandemic levels. Factors driving these scenarios include recovery rates of hospital volumes, i.e., return of inpatient, outpatient, and ED volumes, COVID-19 vaccination progress across the nation, and decline in COVID-19 cases. 

CARES Act Funding – just a fraction of the mounting losses of hospitals

The Coronavirus Aid, Relief, and Economic Security Act or, CARES Act, was passed by Congress on March 27th, 2020. This bill designated $2.2 trillion to provide swift and immediate economic relief to the American people negatively impacted by the COVID-19 pandemic.

Per a report by the American Hospital Association, the CARES act allocated a total of $178 billion in relief funds to all providers, of which $148.4 billion has been disbursed to date. Of that money, only $70 billion has gone to hospitals.

These funds provide relief to hospitals and health systems to mitigate these financial losses due to a reduction in inpatient volumes. The government has only covered a small portion of the $323.1 billion+ in losses hospitals will experience between 2020 and beyond.

Increasing costs of healthcare

With the US healthcare costs increasing from 5% of GDP to over 18% in 2018,  the United States has one of the highest healthcare costs in the world. Per the Centers for Medicare and Medicaid Services (CMS) project, by 2028, these costs will rise to $6.2 trillion, or about $18,000 per person, and represent about 20 percent of GDP. These projections do not consider the pandemic's high testing and treatment costs and the long and short-term financial impact of such outbreaks.

While many factors are causing healthcare costs to go up, the most notable factors are:

  1. Aging Population. Individuals over 65 accounted for 16% of the population in 2018, which will go up to over 20% by 2030. This will cause an expansion in Medicare enrolment from 60 Million in 2018 to 75 Million people by 2030. Per the Congressional Budget Office, the cost of Medicare will go up from 3% of GDP in 2019 to 6% by 2049.

  2. Increasing costs. The costs of healthcare services rise faster than the overall inflation in the economy. The consumer price index of medical services has gone up by 3.5% per year over the last 20 years, vs. the CPI was going up by just 2.5%. Amongst the key drivers for costs are increasing prices due to new and innovative technology leading to better and more expensive procedures, and complex, unconnected healthcare provider-payer technologies leading to a high amount of administrative waste, consolidated, branded hospital experience leading to the creation of large monopolies fuelling price growth. It must be noted that the healthcare payment cycle and administrative processes are one of the chief contributors to the overall costs of healthcare in the economy.

Work from home and spiraling accounts receivable numbers

Per an article in Becker's Healthcare, as many as 140 rural hospitals have closed since 2010. And with the federal government mandate that all healthcare workers be vaccinated is likely to compound the current crisis. With many hospitals having a bad cash flow situation, the state of receivables worsened as hospitals implemented work-from-home models in a hurry. As COVID-19 creates a new, remote RCM administration workforce, many people have adapted to the new normal and are reluctant to return to the office-based model. What's more, the competition for billers and coders has shifted from local to national. Except for front-end registration personnel, most hospital administrative personnel moved to the work-from-home model, even as frontline healthcare professionals, i.e., doctors and nurses, battled the pandemic. The inefficiencies of the adoption of the new working model led to spiraling accounts receivables for most institutions.

The revenue cycle labor supply shortage

Revenue cycle roles from front-end revenue cycle staff, patient experience representatives, back-office specialists, coders, coding specialists, and accounts receivable and denial management experts are in short supply.

Health workforce issues existed before the COVID-19 pandemic, but increased needs and provider burnout have further complicated the situation. With elective surgeries now in huge demand, there is a high demand for billers and coders. This hyper-competition for healthcare clinical and non-clinical staff has been intensifying since the opening up of restrictions post-COVID-19 lockdown. Another issue is that revenue cycle personnel are facing an unprecedented backlog of accounts receivable. The challenges have shifted significantly from being on the verge of layoff to working on a high volume of claims and complex denials. Many are on the brink of burnout and looking at moving to higher-value jobs. These factors contribute to a surge in demand for personnel, and existing training programs for billing, coding and even HIPAA security requirements are falling short. Hospitals are not ready to face multiple headwinds they are facing right now – shortage of both clinical and administrative personnel, lack of training capabilities, and an A/R situation of an unprecedented magnitude.

Latest Vaccine Mandates intensify the labor crisis. Even as the hospitals struggle with the staffing shortage, an unintended consequence of the vaccine mandates is that as many as 17 million healthcare workers will be affected, and a significant percentage of them will be the administrative staff.

Demand for workflow and workforce management technology

Further, technology is needed to track the productivity of remote staff, which almost all hospitals and most revenue cycle companies have lacked. Operational data is critical to the transformation of the hospital revenue cycle. The data of the performance and productivity of people managing each component revenue cycle process is an important determinant of the efficiency and efficacy of the overall revenue cycle and collection efficiency. However, most administrators look at merely the revenue cycle KPIs and not metrics that indicate the processing efficiency at each component process level. The current application infrastructure does not support the workflow efficiency that hospital administrators now seek.

Revenue Cycle Outsourcing

Solutions for hospital revenue cycle leaders to cope with the current labor crisis

Short-term fixes

Traditional solutions such as cross-training the workforce, efficient workforce planning, and keeping a bench of employees can provide short-term fixes. These strategies do not work as efficiently in the revenue cycle as they may in other industries, due to the specialized nature of one’s work requiring more management.

Outsourcing: A reliable strategy that delivers

Across industries, outsourcing has been a key strategy to address staffing shortages and get access to a pool of highly qualified resources. Not only can you eliminate your manpower issue quickly, but you can also shift focus to the outcomes you seek. Healthcare-focused outsourcing firms have defined productivity and performance standards for all key functional areas. What's more, they work with you on SLA and outcomes-based relationships that keep your A/R in control.

Benefits of outsourcing in Health care

  • Management by the numbers and on-time deployment. By outsourcing, key workforce management tasks such as employee hiring, training, operations management, and people administration move to a best-in-class management environment governed by the numbers.

  • Cost Reduction. By outsourcing, healthcare organizations can reduce the overall cost-to-collect and improve margins. Further, healthcare organizations can reduce facilities, infrastructure, and technology costs as well. Additionally, front-end, clinical documentation improvement, medical coding, billing, and collections personnel are available on demand. Scaling up headcount during demand peaks is not an issue as well.

  • Plug Revenue Leakage. What's more, the financial improvements you achieve are often much higher than the fees you pay to your outsourcing partner. For instance, discharges not fully billed are a common problem in inpatient and emergency department settings. It is not uncommon to find success stories where the outsourcing services provider has plugged revenue leakage to a magnitude 2x of the annual fees paid for outsourced coding services.

  • Technology. Progressive healthcare organizations adopt outsourcing to deliver exceptional patient care while the partner provides great revenue cycle outcomes.

    • Workflow and workforce management. For instance, Access Healthcare brings a technology-enabled delivery model, where they measure the productivity and performance of their agents at a granular level. The unprecedented focus on transactional efficiency and iterative quality improvement initiatives drive greater financial outcomes for hospitals or healthcare systems.

The rise of the machines – Robotic Process Automation, AI, Conversational AI, ML, and more such acronyms

  • Tools for human productivity improvement. Another way to combat staffing shortages is to eliminate repetitive tasks by applying automation and improve human productivity by equipping the team with the right workforce and workflow management tools. A study by Access Healthcare identified that the time spent by agents on productive tasks is less than 4 hours in an 8-hour shift. Access Healthcare developed a tool called echolock that sensitizes the workforce on achieving their daily targets in a non-intrusive manner. The tool provided dashboards to help people understand how much of their workday was spent on productive vs. unproductive tasks. While the tool itself did not automate anything, the renewed focus on productivity improvement reduced the enterprise's cost structure by 7% within one month of deployment. This money can be crucial for hospitals to survive and thrive.

  • Use cases across the revenue cycle chain. Robotic process automation, AI, and machine learning are redefining how business processes will be performed in the future. Several use cases and stories of successful adoption of revenue cycle automation tools exist today. The ability of these tools to eliminate repetitive and laborious tasks is driving increased market adoption.

Conclusion

Revenue cycle leaders in hospitals and healthcare systems are facing multiple headwinds and trying to battle an ever-widening talent gap. They must make prudent choices as they strive to do more with less. Outsourcing and automation are two critical strategies that can help them bridge the talent gap. What's more, the unrelenting focus of the outsourcing services providers on managing the business processes by the numbers can improve reimbursements as well. Access Healthcare's best practice delivery engine provides the people, processes, and technology to help you do more with your revenue cycle.

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