Deciphering value in new tools and strategies is a constant challenge for healthcare leaders. At the HealthLeaders RevTech Exchange, they came togetheer to discuss the best strategies and biggest hangups.
New technologies like AI may have a bright future in healthcare, but many revenue cycle executives say the ROI just isn’t there yet. And they’re having some tough conversations with vendors and their own staff about how to move forward with new ideas.
At this week’s HealthLeaders RevTech Exchange in Nashville, some 30-40 healthcare leaders discussed a variety of strategies for embracing new tech. Those strategies almost always focus on defining and seeing ROI, and that factor alone can make or break a new technology contract or scuttle a promising program before it begins.
“Some very good products don’t justify the expense” said Jonathan Davis, Executive Director of Patient Access and Revenue Cycle Analytics at Yale New Haven Health. RCM execs may not have the budget or the time and resources to spend on new ideas that take too much time to develop value or don’t have clear value to begin with.
RCM executives are in a tough spot right now, caught between the value-based care movement and business strategies that still adhere to episodic care. Their definition of value often clashes with clinical leadership, and it’s in technology that those differences hit the spotlight. ROI for a new tool that improves clinical outcomes is far different than the ROI for a tool that improves administrative efficiency.
At the same time, a new tool that greatly improves clinical outcomes won’t be useful to a hospital that can’t keep its door open because of unsustainable revenues. So the delicate balance of priorities continues.
[Also read: 8 Tips for Effective Revenue Cycle Technology Management.]
Several exchange attendees said they follow a technology ROI threshold of 3:1, meaning a new product or program has to produce in revenue three times what it cost to launch the project. No one touches anything with a 1:1 return, and a 2:1 return won’t hold up against unexpected and additional costs.
So the technology has have an immediate and impactful ROI, particularly at a time when so many health systems and hospitals are skating on thin margins. One of the first places to cut expenses is in innovation, putting the pressure on executives to be sure they’re finding the right vendors with which to partner.
Lynn Ansley, Vice President of Revenue Cycle Management at the Moffitt Cancer Center, says healthcare executives are becoming more critical in their evaluation of vendors. They’re asking for more details about products and avoiding ambiguity at all costs, and they’re looking at shorter contracts—three years was mentioned more than once—so that they can back out if the ROI isn’t there.
In many instances, RCM executives are asking for a detailed proof of concept from vendors, requiring them to map out how their product will benefit the health system and even asking for assurances or guarantees. That’s not unlike the shared risk that we see in arrangements between payers and providers.
And if there are multiple vendors vying for the same contract? How about a “bake-off,” in which they put their products up against each other to determine who’s better at proving ROI. Some health systems are even working with two vendors that offer the same tools, so that both are accountable and giving their best effort.
This is crucial, exchange attendees said, because payers often seem to be ahead of the game in tech adoption, particularly with AI. Some even said their health systems are moving fast to adopt AI just to stay in the game with payers.
“You show up at the contract table with any payer and they know more about your business than you do,” one executive pointed out.
In terms of staffing, which is a sore spot at every health system and hospital, RCM execs are defining ROI in automation and AI tools not by how technology can replace humans, but by how it frees up staff to handle more important tasks.
“There are other things that we need smart people for,” notes Ansley.
And they’re countering staff concerns that AI will replace them by pointing out that those upskilling opportunities often come with salary increases. That, in turn, helps with staff retention and hiring.
Finally, RCM execs are looking at a future that sees them playing more of a role in the patient’s healthcare journey. That means not only collaborating with clinicians to advance the right technology purchases but highlighting the role that revenue cycle staff can play in helping patients understand and fulfill their financial obligations.
The HealthLeaders Exchange is an executive community for sharing ideas, solutions, and insights. Please join the community at our LinkedIn page.
To inquire about attending a HealthLeaders Exchange event, email us at [email protected].
Eric Wicklund is the associate content manager and senior editor for Innovation at HealthLeaders.
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