Preserve Financial Performance During Enterprise Software Conversion

3 Critical Steps in Preparing for Work-down of Legacy AR

As if the transition in EMR technology wasn’t difficult enough for hospital revenue cycle teams, working down legacy AR is also a critical priority within that work.

Let’s first set a bit of context with respect to the problem.

A healthcare system wisely invests in a new, all-encompassing EMR technology. It’s the right investment for a variety of reasons. Yet with every wise investment comes change. And with change comes problems.

The conversion of software and workflow is a monster project adding extreme time demands absorbed by the Rev Cycle team. And this team already had full time jobs before the conversion. Now more of their time and energy must be dedicated to working the new AR and addressing new workflow challenges, adjusting processes to ensure timely payment and simply, reestablishing workforce profiency levels. .  As for the demand to work aging AR down to completion? It’s still there. And because legacy data cannot be easily ported into the new software, hospitals are forced to maintain two systems until all the legacy AR is worked out .

This perilous path threatens the financial viability of the hospital (see figure 1) in multiple ways:

  1. Maintenance costs are high for legacy systems. Because of risks associated with vendor sunsetting, operating maintenance and stability, and a dwindling pool of qualified support resources, hospitals often incur high and unpredictable maintenance expenses.
  2. Productivity cost takes a toll as well because team members are stuck working in less efficient workflows forced by the old technology. Without proper resource planning, the added demand to the team will absolutely drive Days in AR up while draining cash reserves
  3. Even when financial leaders plan properly, part of that plan brings with it an added cost: the cost of enlisting third party help. 
Figure 1

Figure 1

For many unfortunate healthcare systems, EMR conversions have already proven to be the perfect storm for accelerating the depletion of cash, even bringing a few to the verge of serious financial hardship.

So what’s the answer? Prepare for success.

There are three parts to this preparation: Assess, partner, and war-game.

1. Assess

It’s pretty clear investing time in understanding where you are is critical to creating a path for where you are going. When preparing for this magnitude of change, it’s critical to gather stakeholders across multiple business and clinical disciplines to collaboratively assess what you know and what you don’t know about your organization relative to your desired outcomes. While the organization may be doing this at an enterprise level for the entire technology conversion project, don’t underestimate the value of an equally diligent assessment process specifically for the finance component. Additionally, ensure a meeting cadence and stakeholder representation outside the finance team to create the most value in the results of your assessment. Lastly, consider taking a SWOT approach in performing your assessment. It remains one of the most effective approaches to collaboratively understanding your organizational footprint relative to your desired outcomes and the gaps between them.

2. Partner

With enterprise technology conversions, the reality is that your organization, and most notably your finance team, will have increased work demands that exceed your current resource capacity...just to preserve current financial performance in key metrics such as Days AR, cash-on-hand, and managing denials and underpayments . A technology conversion is a bit like trying to service a vehicle while driving it. You can’t stop driving, but the tires still need to be changed. It’s particularly relevant if there is an expectation to accelerate the work-down of legacy AR during and after technology conversion.

With this considerable increase in work demand, it’s critical to consider qualified partners to help, particularly in the work-down of legacy AR. Qualified partners are those with real stories that produced positive results using a systematic approach. Qualified partners, when vetted, successfully demonstrate a vision and a path that inspires confidence for your finance team to preserve financial performance and focus on managing the day-to-day business without the added burden of a Legacy AR work-down.

3. War-game

Yes, war-game. War-gaming is more than piloting or testing your plan. It’s a form of advanced piloting that considers not only a real-life sampling of plan execution, but also includes simulation of the worst-case scenario(s). It can be used for both the technology conversion work and/or the work-down of Legacy AR. Why war-game? Because revealing negative milestones and the resulting consequences is the most valuable method for testing the effectiveness of the plan and properly preparing to troubleshoot when things don’t go according to the plan. While this may seem like a unique, maybe even unusual step in preparation, it will serve your organization well in achieving the best results for your conversion and the work-down of your legacy AR.

How does war-gaming work? Whether creating your own methodology or leveraging that of a third party, it’s important to analyze each critical milestone of the plan and the pathway between them for points of vulnerability (places where there is considerable risk of negatively impacting financial performance). After identification, simulate what could go wrong and the consequences. From there, modify the plan with appropriate prevention measures. Additionally, war-game collaboratively with deliberate communication across key stakeholders. While a small team can own the heavy lifting, it’s important that the results of the exercise not be achieved in a vacuum.

In conclusion, enterprise software conversions create work demands for finance teams that extend beyond resource bandwidth. In effort to preserve financial performance, assess, partner, and war-game all the work, especially the work-down of legacy AR. 

Questions and comments welcome! Also, please share this post with your colleagues. 

Noel Felipe

About the Author:

Noel Felipe is Division President for MedAssist and a 30 year veteran in the Revenue Cycle Management space.

Connect with Felipe on LinkedIn

About MedAssist

Hospital leaders choose MedAssist to simplify the financial experience for both patients and the people of their organization. Hospitals achieve a stronger financial foundation, while patients experience clarity and a path to peace of mind about how to pay for their care. Happy patients are loyal customers. And loyal customers tell their friends and family about their good experiences. That leads to new market share for the hospital… the kind of market share no financial software can create nor any marketing budget can buy.