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Safety-Net Hospitals Face Mounting Revenue Cycle Challenges

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The financial challenges inherent to safety-net hospitals have only been magnified by the COVID-19 pandemic, the mass job departures known as the Great Resignation and rising inflation.

Safety-net hospitals, which are essential in providing care to vulnerable populations, already have the deck stacked against them with inconsistent government support and competition from more prosperous healthcare providers. But resource crunches, surging costs and staffing shortages have many safety-net hospitals fighting for their survival.

One solution that can help safety-net hospitals and other understaffed, underfunded healthcare providers like community hospitals and critical-access hospitals is revenue cycle management (RCM) outsourcing that utilizes a customized combination of skilled human resources and advanced technology to improve administrative and operational performance across the revenue cycle continuum and throughout the patient journey.

Safety-Net Hospitals: A Defining Problem

The challenges safety-net hospitals experience begins with their name: there is no accepted definition of a safety-net hospital at the federal or state levels.

Most providers that consider themselves safety-net hospitals share a mission of serving low-income patients regardless of insurance coverage or ability to pay. As such, most safety-net hospitals serve high numbers of uninsured and Medicaid-backed patients, which means they function with slim profit margins and rely heavily on public funding.

Aside from their foundational mission, safety-net hospitals vary greatly. As the 2021 Frontline-NPR documentary “The Healthcare Divide” observed, safety-net hospitals may be rural or urban and public or private.

This lack of a universal definition for safety-net hospitals leads to revenue cycle instability in the best of times. It contributes to funding issues, claims delays and limited payments among other performance obstacles.

In a climate where safety-net hospitals are also struggling with the lingering effects of the pandemic, a deepening labor shortage, skyrocketing costs (including the loss of 340B drug discounts) and tightening budgets, the absence of a standard definition to aid with funding and open revenue streams has many of these providers either shuddering or on the brink of closure.

Safety-Net Hospitals Hit Hard by Staffing Shortage

The impacts of the healthcare labor crisis have been widely detailed, but recent analyses reveal that the effects of staffing shortages on safety-net hospitals have been especially severe.

A January article in The New York Times indicated that safety-net hospitals are facing the worst of the current nursing shortage. Already stretched financially thin, these hospitals are not able to compete with larger, mostly for-profit healthcare providers who can pay higher wages to nurses.

The scarcity of nurses not only affects the patient experience, but it also disrupts hospitals’ revenue cycles. In many instances, nurses are responsible for manual data capture that propels the patient journey and advances the revenue cycle.

In February, Health Leaders Media reported on a four-year study that found understaffing at safety-net hospitals played a role in worsening patient outcomes. And the cited study was conducted before the pandemic and labor crisis struck.

Meanwhile, dozens of community critical-access and safety-net hospitals have closed since the pandemic’s onset. A recent Modern Healthcare article examined how staffing shortages, particularly at safety-net hospitals, are widening care deserts.

Surviving safety-net hospitals are turning to multiple approaches to address workforce shortfalls and other financial restrictions, and to restore performance, boost revenue and enhance patient care. An increasingly popular solution is outsourcing across needs-based areas that include patient-access services and other RCM utilities.

A 2021 evaluation of staffing shortages in safety-net hospitals conducted by the California Health Care Foundation (CHCF) found that safety-net hospitals were more susceptible to shortages across multiple positions due to their size, location and pay competition. The CHCF review also found that these hospitals are more likely to partner with contract-based service providers than other public and private hospitals.

And many of the safety-net hospitals exploring outsourcing aren’t seeking one-to-one staffing replacements, but rather a union of scalable personnel and information technology that can collectively fill gaps and improve performance throughout the revenue cycle and patient journey.

Safety-Net Hospitals and RCM

Strategic revenue cycle management is perhaps more important for safety-net hospitals than other healthcare providers who don’t serve high loads of uninsured and underinsured patients. This view has only been strengthened by the pandemic, which has seen safety-net hospitals’ overall financial stability sink as care demand rises.

What safety-net hospitals need in an RCM outsourcing partner is one that incorporates evidence-based performance improvement (PI) through every stage of the revenue cycle and patient care with goals of elevating both financial performance and patient outcome. This includes healthcare-focused call-center services; certified medical coders with accuracy and performance benchmarks; knowledgeable billing and claims management; and AI-enabled technology with automation capabilities.

A 2020 study by the American Hospital Association (AHA) probed safety-net hospitals’ use of evidence-based performance improvement. Although there are several PI models, the research found that hospitals that engaged in some form of evidence-based PI sustained better financial and patient outcomes. The research further suggested that challenges facing safety-net hospitals, including budgetary constraints and workforce shortages, will likely prompt those hospitals to more heavily invest in PI as a way to increase efficiency and improve care quality.

A recent RevCycle Intelligence article investigated how one safety-net hospital successfully sustains a patient-centered revenue cycle through a tactical allocation of personnel and technology. The approach optimizes revenue collection in part by streamlining key revenue cycle pain points such as prior authorization and accelerating the hospital’s conversion to electronic health records (EHRs).

Outsourcing RCM services can help hospitals ease the workloads of their in-house teams, and in turn reduce some common issues such as medical coding errors that have arisen with overburdened healthcare workers and impede revenue collection. And the technology deployed by a comprehensive RCM platform offers a step toward interoperability as well as deep, real-time analytics that leaders of safety-net hospitals and similar providers like community and critical-access hospitals can leverage to make confident, data-driven decisions about administrative and operational functions.

GeBBS Healthcare Solutions: Powering the Future of Healthcare

GeBBS Healthcare Solutions is a leader in technology-enabled RCM services that deliver measurable results.

GeBBS has earned national acclaim for its innovative healthcare IT and expert human resources, which can be scaled to meet a provider’s unique RCM needs and goals. GeBBS is rated one of Modern Healthcare’s Top 10 Largest RCM Firms, Black Book Market Research’s Top 20 RCM Outsourcing Services and Inc. 5000’s Fastest-Growing Private Companies in the United States.

Contact us today at gebbs.com to schedule a free demonstration and learn how we can help you address your current challenges and grow into the future.

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