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Black Book: Revenue cycle management investment heats up

By Jennifer Bresnick

Investment in revenue cycle management (RCM) technology is gaining steam as hospitals attempt to combat falling profits, fewer patients, and rising levels of debt, says a new survey by Black Book Rankings.  Ninety-three percent of chief financial officers (CFOs) at struggling hospitals have prioritized investments in RCM software, coding and collections solutions, and infrastructure to support the move to value-based reimbursements, confirming earlier predictions that the time to upgrade outdated RCM solutions is now.

“Most hospital CFOs have no choice but to leverage next generation financial system solutions including software and outsourced services in order to keep their organizations solvent,” said Doug Brown, Managing Partner of Black Book Market Research. “The reimbursement challenges ahead to get paid may require several new applications, and the frank reality is that outdated, understaffed and failing current solutions could quickly close a marginally performing hospital for good.”

With 96% of hospitals stating that the organization’s basic needs outweigh anything on a CFO’s wish list, financial officers are searching for a variety of solutions to mitigate ongoing negative margins.  Many are turning to accountable care, with 91% of struggling hospitals seeking to implement value-based reimbursement infrastructures even while the majority of their revenue continues to come from fee-for-service models.  More than eight in ten of these struggling organizations are also putting initiatives like population health management, physician practice acquisition, and patient engagement on hold while they attempt to retool their business processes.

In sharp contrast, 80% of financially viable institutions with a positive outlook on their long-term sustainability are pushing ahead with those same projects.  These hospitals have already initiated the implementation of physician portals, analytics dashboards, and patient engagement solutions for 2015.

“Trends in Medicare reimbursement, declining inpatient volumes, rising expenses and bad debt have most hospitals across the country struggling to avoid a financial stability crisis,” said Brown. “With so many organizations facing operating margins below the minimal thresholds for long-term financial stability and sustainability, boards and CEO’s are moving financial support solutions and outsourcing initiatives to the top of their 2015 capital expenditure priorities.”

ICD-10 software and computer assisted coding products from 3M topped Black Book’s list of excellent client experience in financial services, followed by solutions from Allscripts, Conifer Health Solutions, Costflex, and Crowe Horwath.  The complete list of financial solutions rankings can be found here.

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