Harnessing best practices for successfully winding down legacy A/R accounts means coming up with an intentional plan to get ahead of a conversion.
Legacy A/R is usually the largest current asset on an organization’s balance sheet, but hospitals and health systems don’t always properly prioritize it when facing a conversion. Successful system conversions require appropriate upfront planning to manage that valuable asset, which can run into tens of millions or hundreds of millions of dollars.
Experienced revenue cycle professionals who have navigated conversions safely and successfully do four things right—and well in advance of a go-live:
1. Develop a Comprehensive Strategy
A 2018 Deloitte report notes that developing a comprehensive strategy is “critical to managing a patient accounting transition.” The advantages, in particular, of a comprehensive strategy are the ability to create a governance structure to manage the wind-down and a longer term data management solution for legacy A/R accounts.
Starting the planning process 12 months to 18 months in advance of go-live is recommended.
Leadership buy-in is also important; this means that everyone should be on the same page about specific goals and expected outcomes, resources to be allocated to the effort, and various timelines.
2. Line Up the Right Vendor as a Partner
While some hospitals and health systems go it alone when it comes to legacy A/R accounts, it’s a decision that can be fraught with risk. As such, experts recommend an outsourcing strategy to place aging accounts with revenue cycle vendors. This will not only help organizations focus on easily collectible accounts, but also (and perhaps most important) enable staff to focus on training and essential go-live preparation.
But working with the right vendor is critical. Organizations should choose a partner that has the experience—and the scale—to handle their conversions and one that possesses familiarity with myriad revenue cycle platforms. The right partner will enable the organization to focus attention on the new platform and handle legacy A/R, assuring the least amount of revenue leakage.
Here are four key questions to ask when scouting potential partners:
3. Allow Adequate Time for Vendor to Work Placed Accounts
Plan on issuing a request for proposal (RFP) at least 10 months in advance of go-live to identify a partner who will handle your legacy A/R accounts. Identifying the winning vendor approximately eight months in advance of go-live allows enough time to finalize agreements and start the preliminary test work for the engagement, including the establishment of agreed-upon KPIs.
Having the vendor work accounts no later than six months in advance of go-live is a best practice to ensure that accounts are resolved and to ensure cash flow deceleration doesn’t trigger serious financial problems for your organization, including the need to tap into cash reserves.
4. Monitor Agreed-Upon Financial KPIs
Handing legacy A/R accounts over to an outside vendor allows you to focus on training for a new system and prepping for the go-live. To work with your outsource partner successfully, you will want them to collect and report on KPIs customized for your hospital or health system.
The most common KPIs tracked by organizations include:
The best partners will work with you to identify the best KPIs for your organization, collect and report them, and help you to fine-tune your systems, processes and workflows to produce better financial results.
Organizations that acknowledge the experience of revenue cycle experts should adopt these four principles. Doing so will ensure your organization is ready to forge a safe, successful path to a new patient accounting system.
Contact Parallon to learn more about our legacy A/R services.