By Joel French, CEO of SCI Solutions
In a Black Book survey with respondents from 590 hospitals across 45 states, 60 percent of CFOs said they expected to be fired by 2016. Surveyed CFOs said they have been unable to transition their revenue cycle management software because their hospitals are so financially strapped after misjudged EHR, HIE and patient portal expenses. 94 percent of CFO respondents who self-identified as “struggling” reported that delayed or failed implementations of IT systems – particularly EHRs – have had a material adverse impact on the financial position of their organizations.
Underpayments, denials and write-offs resulting from a failure to obtain insurance authorizations are adversely impacting hospital financial performance. EHR investments have resulted in successful automation of employed physician practices, an important objective. However, they have failed to curtail network leakage, resulting in an average of more than 25 percent of revenue from employed physician orders and referrals going to competitive or non-aligned providers. EHR investments have digitized the internal workings of hospitals, yet despite years of unprecedented spend, large hospitals dependent upon high-margin transfer cases from feeder community hospitals for high acuity specialty and tertiary services cannot electronically process those transitions with ease. Notwithstanding all these years of EHR spend, health systems still cannot intelligently load balance their capacity to appropriately synchronize it with demand. As Moody’s Investors Service has reported, nonprofit hospitals’ income declined for the second straight year in 2013. Inpatient admissions and surgical procedures no longer contribute needed revenue growth, as volumes are rapidly being reclassified and transitioning to outpatient settings. As this shift occurs, hospitals must utilize technologies that connect the broader community of independent providers. EHRs won’t typically meet this need – nor were they designed to.
For many CFOs, CEOs and board trustees, IT remains an enigma. They observe peer organizations spending lavishly on EHRs, and the federal government has provided temporal incentives, so leap to the conclusion “this must make sense.” The perspective of history shows HITECH Meaningful Use incentives have greatly enriched a few large vendors and has replaced analog processes within health systems with digital ones, but measured against the rightful standard of risk adjusted return on spend, this has been a colossal waste. Thoughtful healthcare executives are redirecting resources away from endless EHR vendor spend to implement a referral destination strategy that grows outpatient revenue. Today’s cost-effective and cloud-based solutions can quickly connect referring providers to facilitate care coordination and grow outpatient volume. Those who adopt these tools will realize revenue growth and operational effectiveness; key performance measures that may justify payment of their executive bonuses. Those who don’t may experience further financial performance deterioration and, some would argue, should be fired.