Legacy AR Wind-Down Support: Don’t Get Caught with Your Revenue Down



There are numerous issues that can precipitate the need to transition to a new patient accounting or revenue cycle management (RCM) system: mergers, security breaches, natural disasters — or simply the recognition that your existing system is insufficient to achieve your revenue expectations and operational goals.

Whether you know you need a new system or you are beginning to wonder whether your current one is serving your needs as well as it should, expert help is available. But when is outside assistance most warranted — and when can it be extraneous?

To best answer that question, let’s examine the four phases involved in transitioning to a new RCM system:

Phase One: Planning

Obviously, planning is key to any successful change effort. It can be challenging to orchestrate such significant changes without negatively affecting your staff, productivity and revenues. So, to minimize risk and position the project for success, you will need to clearly define goals, actions, priorities, responsibilities, resources, expenses, schedules and metrics for success.

If you are a highly experienced CFO, then you and your team should be able to examine these elements on your own to develop a plan. But, as they say, “the devil is in the details.” And those details matter because every element of the process is interconnected. If there are gaps in the plan (e.g., if resources are insufficiently allocated, if the schedule is overly ambitious or if critical tasks are overlooked) the entire process can tumble like a giant set of dominoes.

That’s why it can be highly advantageous to bring in an expert to help you during your planning process. When Change Healthcare works with hospitals and practices planning a system conversion, we bring years of best practices and encounters of all situations to the table. We have been called on to help create plans, review existing plans and supplement plans with elements to help determine:

  • What must be replaced and what can be leveraged within the legacy system
  • The collectability and value of liquidating old account receivables (AR)
  • The cost of properly collecting all old AR
  • Timelines for making the transition
  • An affordable and realistic budget for making the transition
  • How to best leverage both in-house staff members and outside talent to achieve the most rapid, productive and cost-effective transition
  • Archival and storage options of legacy AR data and records
  • Criteria for measuring the success of the transition
  • Contingency planning and coverage for any ‘drift’ or delay in a scheduled transition

Phase Two: Adjustment

As you prepare to transition to a new RCM system, it is essential to reconcile payments as thoroughly as possible. You must determine what should post to the legacy system and what should go into the new system. A strong internal business team with clearly organized, well-managed accounts should be able to pursue this process independently.

If your timeline is aggressive, you may get better results if this task is either handled completely or managed by an outside expert. Outside resources have experience in managing payment posting and reconciliation across both systems. With proper process and guidance, internal and external staffs can complement each other to record all payments and adjustments rapidly and accurately in both systems.

The “Adjustment” phase may also offer excellent opportunities to make other improvements in your processes. Research indicates that when an organization is already in the process of making changes, personnel are more receptive to other simultaneous changes.1

For this reason, transitioning from a legacy system to newer technology often offers an excellent opportunity to examine your processes for insights into where they have become unproductive — and to identify changes that will create the most significant improvements.

You have probably already noticed procedural areas that could be more productive — think self-pay collection, insurance payer interaction and processing, and payment posting/reconciliation. At the same time, when you live and breathe your own processes every day, it can be difficult to examine them objectively enough to make truly productive changes.

Phase Three: Cleanup

In order to make the transition to your new system as crisp as possible, it is essential to clean up old patient accounts in all financial classes and actively address legacy AR for collections and adjustments. You should determine which accounts are worth pursuing and which should be written-off. Driving this legacy AR to a “clean” state, prior to transition, will save both money and time.

Throughout your transition process, but especially as you close out old AR accounts, documentation of large-scale cleanup transactions are critical for several reasons. Obviously, you want a paper trail in the event that any account needs to be re-examined, and you will want the detail associated with any and all write-off projects.

A key cleanup area of the transition is research and resolution of aged, outstanding credit balances that may be outside of regulatory timeframes for resolution. Processing credits is arduous and will not yield income, but it may avert penalties for non-resolution.

Depending on the size and complexity of your AR portfolio, an outside perspective and support can make this step significantly more efficient and productive. It is important to seek flexible services from experts that can provide whatever personnel are necessary to reduce part or all of your AR portfolio – and that will commit to specific account resolution goals – while managing their own team or working in concert with yours.

Phase Four: Switchover

The most stressful part of the transition is often the actual switchover, because, until you disable the old system and start running a new system, you cannot be certain if everything will work exactly as planned. If you are exceedingly well-prepared and experienced enough in this process to know that everything will go as planned, this phase of the process can turn leaders into heroes. But if anything goes wrong, the implications for the financial health of the hospital can be severe.

Even if you have not worked with an expert in the Planning, Adjustment and Cleanup phases of the transition, expert support for the switchover itself can identify last-minute issues before they become problems. Additional support can also help your own staff to stay focused on their day-to-day responsibilities, making the final transition as transparent, secure, efficient and productive as possible.

Choose Wisely

Taken together, the Planning, Cleanup, Adjustment and Switchover phases of an RCM system transition form a highly intensive, in-depth, complex process, which can benefit from outside perspective and support. Don’t let concerns that the presence of a consultant will suggest that the in-house team is not capable of leading the transitions. Instead, bring in outside expertise to help accurately identify and address issues — before they become problems. In those cases, the transition to the new RCM system is as smooth and seamless as possible — as well as an example of the business and finance leadership’s foresight and initiative.

One note of caution: Be wary of any consultant who tells you that they can make the transition process “automatic” or “easy.” In an organization as multi-faceted and complex as a hospital, transitioning to a new RCM system is a process that requires:

  • In-depth knowledge of the process
  • Intelligence into how specific elements of the hospital’s structure, culture and leadership could affect the transition
  • The ability to direct significant resources – yours or theirs – to the many intensely manual elements of the process
  • Sophisticated analytics to enhance both the planning and measurement aspects of your effort

Additionally, regardless of whether you manage the process yourself or bring in outside support, you should insist on performance-based criteria for success. Clearly, there is nothing “easy” or “automatic” about winding down an old RCM system and getting up to speed on a new one. But with the right expertise, you can make it as efficient and productive as possible.

Change Healthcare provides healthcare organizations and their employed physicians as much – or as little – help as they need to optimize all areas of the revenue cycle, including patient access, coding, charge capture, compliance, medical billing and accounts receivable management.

Learn more about our revenue cycle management services and how we can help you grow revenue and maintain positive cash flow.

1. Aarts, H., Dijksterhuis, A. & Dik, G. (2007). “Goal contagion: Inferring goals from others’ actions – and what it leads to.” In J.Y. Shah & W.L. Gardner (Eds), Handbook of Motivation Science (pp. 265 – 281), New York: Guilford Press