What is a Legacy A/R Work Down?

A legacy accounts receivable work down project entails working with a vendor partner to address the outstanding A/R left in your legacy patient accounting system during or after a system conversion.

Meduit's Legacy A/R Work Down program helps hospitals and health systems maintain cash flow and save significant time and money during a patient account system conversion. 

  • Programmatically place aged inventory from your legacy system at a set age (e.g. 60, 90, 120 days) until all aging buckets within the legacy A/R are placed and being worked so you enjoy a steady and predictable increase in monthly revenue and a reduction in existing A/R, leaving your staff free to focus on current active inventory and preparing for your system conversion.
  • Assign dedicated managers and representatives to take a systematic and multi-level approach to managing your accounts and denials, with team members specifically assigned to address specific payers, balance ranges, and aging to maximize reimbursement. 
  • Our executive-level dashboard reporting provides real-time and trended information that allows a holistic view of your data from multiple sources, so you always know exactly where your accounts stand.
  • Once your conversion is complete, Meduit can continue to provide a stopgap strategy for your aging A/R on an ongoing basis.

What is Creating the Need?

Of the many emerging trends in the healthcare industry, one in particular is swiftly becoming the status quo. Hospital merger and acquisition activity jumped 70% from 2010 to 2015, and the trend is continuing upward toward a much more consolidated market. 

M&A is becoming increasingly critical to success as hospitals focus more on providing coordinated and cost-effective care in the face of lower reimbursement and more payer disputes. As more hospitals and systems consolidate there is a greater need for a unified patient accounting system, but many are unprepared for the hidden costs of a patient account system conversion.

For years, Epic was the largest of the patient account systems on the market, and with more than 19 million patients across the globe with records in an Epic system, it still accounts for EHR use in more than a quarter of the country’s hospitals. More recently Cerner has scooped up the largest market share with licenses in more than 25,000 facilities in 35 countries. Both systems bring more integrated care and a better patient interface to the majority of hospitals and health systems in the United States. However, implementing either of these systems brings the same interruptions to an organization’s revenue cycle: incompatible accounts, reduced cash flow, and aging AR in the legacy system.

Both Epic and Cerner, as well as most other major patient account systems on the market, no longer offer the ability to convert accounts from legacy systems. In the past, moving to a new system was a true conversion where all existing accounts were dumped into the new system, but trying to make old files fit into new processes proved to be problematic and many of the major players have decided to no longer make that an option.

As a result, the legacy systems are packed with AR that needs to be worked. This may not create such stagnation in the revenue cycle if it did not require so much focus to train and prepare for an entirely new system with new processes. Unless the organization increases its staff during a conversion it is impossible to train and prepare for the new system, work existing accounts, and maintain a process for following up on older accounts.

How Can a Legacy A/R Work Down Help?

A legacy A/R work down project alleviates the unexpected costs of implementing a new patient account system while maintaining steady cash flow, reducing aging A/R, and freeing your staff to focus on current accounts and the conversion.

Implementation of a new Electronic Health Records system (EHR) is an expensive endeavor. Up-front costs can be enormous, but there are also many hidden costs that can be extremely problematic for hospitals and physician groups during the conversion process. Outsourcing legacy support can take some of the strain off your revenue cycle and your staff.

You’ve considered the sticker price of the new system, the cost of training your staff, and possibly even accounted for some of the overtime that comes with implementation. However, there are commonly unanticipated costs that you may not have accounted for: IT support, lost productivity despite the extra hours being logged and reduced cash flow and productivity throughout the lengthy implementation process.

Because of the wide variety of EHR systems available, and the myriad ways they can be implemented depending on organizational needs, the cost of purchasing and implementing a new system varies widely. Health systems have reported costs as high as $1.5 billion on implementation and infrastructure to establish a new system. Additionally, implementation typically lasts more than a year. Sometimes it can take as many as four or five years to get back to pre-conversion production levels. During this time there is a significant learning curve for users that will naturally slow them down. All the extra time spent working in the EHR will inevitably mean you see less patients, and that decreased productivity can last for years.

This revenue decline poses significant financial problems for many practices even before considering what is potentially the largest unexpected patient account conversion cost: the A/R loss from your legacy system.

Legacy A/R: Use It Or Lose It

To maintain the integrity of the new system, most major patient account systems no longer offer the ability to convert accounts. In the past, moving to a new system was a true conversion where all existing accounts were dumped into the new system, but trying to make old files fit into new processes proved to be problematic and many of the major players have decided to no longer make that an option. This includes Epic – which accounts for EHR use in more than one quarter of the country’s hospitals – and Cerner – which has scooped up the largest market share with licenses in more than 25,000 facilities in 35 countries.

As a result, legacy systems are packed with A/R that needs to be worked and organizations are faced with significantly reduced cash flow during a time of extremely high costs. This may not create such a stagnation in the revenue cycle if it did not require all of a team’s focus to train and prepare for implementation. Too often healthcare organizations attempt to use their internal staff to support the legacy system while also training and implementing the new one, but there are only so many hours in a day and this often leads to decreased productivity on all fronts.

The Greatest Cost of All

Although implementation of a new system can reduce revenue and increase costs, there is an even more impactful cost to many organizations: staff burnout and resignation.

Implementation teams can spend hundreds of hours preparing for and implementing a new EHR system. Consider that this extreme time commitment is in addition to the normal workload of seeing and treating patients. This doesn’t leave much time for legacy A/R follow ups.

With so much on their plate often there also comes a point where staff members feel so overwhelmed or burnt out that they resign. In some instances, key staff members will not even let it get to that point. Many employees who are nearing the end of their careers, or who have already gone through a conversion, will simply refuse to do the work and leave before implementation even begins. In either case you risk losing employees with significant institutional knowledge, which is a much greater loss then a few legacy accounts. 

Benefits of EBO Outsourcing

More hospitals and health systems are outsourcing their business office processes than ever before.

With the creation of more integrated health systems also comes growth for revenue cycle management software and services. In fact, investments in this area are expected to increase upwards of 50% over the coming years. Healthcare providers have begun to target inefficiencies in their revenue flows by adopting RCM products. However, during implementation these products can actually lead to a significant decrease in cash flow and aging of accounts receivables.

Extended business office solutions used to be a strategy for cutting costs. Then for a time the EBO growth trend slowed as more organizations underwent mergers and acquisitions. Newly formed parent systems began to build Central Billing Offices to bring revenue cycle tasks back in house and to streamline their vendor relations.

However, the new reality is a need to balance the overwhelming need to keep up with a rapidly changing industry with growing patient expectations. Growing challenges, restrictions and mandates across the healthcare landscape are driving more and more systems to consider healthcare revenue cycle business process outsourcing services.

What Changed?

The implementation of the Affordable Care Act created an influx of new patients with insurance coverage and increased the size of aging populations, and as a result medical office staff and payers alike struggled to keep up with the boost in complex claims. The implementation of ICD-10 placed even more strain on already understaffed reimbursement departments, and the shift toward value-based healthcare left hospital staffs working harder than ever to comply with conflicting mandates for improved quality and reduced costs. These challenges were amplified by outdated systems that were unable to meet the expectations of an internet-driven world. Now the new administration has different ideas of how healthcare (and reimbursement) should be delivered, and these already limited resources will be stretched even further.

As a result, the revenue cycle management outsourcing market is projected to reached nearly $277 billion by 2021, up from $170 billion in just five years from 2016. Still, the decision to outsource revenue cycle tasks can be a difficult one.

Review these five common industry trends that are putting pressure on hospitals and medical practices. If any of these are creating issues within your organization, it may be time to consider seeking outside assistance:

Reimbursement Delays

With new value-based payment models emerging almost annually, and new codes and procedures for requesting reimbursement from payers, it takes longer than ever to receive payment for services rendered. Coupled with the increased number of claims submitted since the implementation of the Affordable Care Act and payers beginning to withdraw from the marketplace, medical offices consistently receive inadequate reimbursements.

Your current in-office staff may not have the experience, or the time, to keep up with that growing pile of claims. Instead of your medical office staff taking time away from patients daily to process endless reimbursement paperwork, consider outsourcing the task. Your payments will grow and your staff will get time back to focus on what really matters – providing quality patient care.

Download the Revving Up Reimbursements eBook Here! | A Meduit Innovation Lab eBook | Legacy AR Work Downs Supplement

Regulation Changes

It is no secret that keeping up with regulation changes is a full-time job. Not only must you keep up with healthcare-specific regulations surrounding the security of patient information, maintenance of tax-exempt status and the delivery of care, there are also updates that span multiple industries, such as the Telephone Consumer Protection Act and the National Consumer Assistance Plan, that may affect business processes (and ultimately revenue) as well. Understanding the ever-changing landscape and implementing protocols in a timely manner requires specialists that can dedicate the time to ensuring your compliance.

Staffing Shortages

Hospitals across the country are experiencing staffing shortages on every level. Understaffing can drive up costs and negatively affect the health and happiness of existing team members. More significantly, it can threaten patient satisfaction and safety. Make the best use of your medical staff and leave time-consuming back-office tasks to a team of professionals better equipped to handle them.

Technical Innovations

Technology changes almost as quickly as compliance requirements do. BPO providers can offer newer technology to assist in optimizing your revenue cycle that may be too costly or time consuming to implement on your own. Keeping up with the latest innovations can improve data security, customer service, and receivables.

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Changing Patient Expectations

Patients are more informed about their health, and the cost to maintain it, than ever before. With the rise in patient responsibility on marketplace and high deductible health plans, patients are taking care into their own hands and shopping for the best experience for their dollar. Access to providers is essential to patient satisfaction, but that access suffers when providers are losing time with their patients to attend to endless stacks of paperwork and tasking.

Download the Creating Connections eBook Here! | A Meduit Innovation Lab eBook | Legacy AR Work Downs Supplement

Ready to get started?

Does your facility have plans to make a system change in the next 12 months? Contact us today to learn more about our Legacy A/R Work Down program and don't let your receivables take a step back as you try to move forward. 

Submit the form to apply for a free consultation with our work down experts. We look forward to hearing from you!