Unraveling the Business of Healthcare

When entering the world of healthcare many people are intimidated by the jargon which overlays the business component of the system.  The business side of healthcare is also obscured by the clinical aspects of the operation.  In the clinical setting providers work with patients, emergencies are treated, lives saved.  For most outsiders, the clinical side of healthcare is what they are familiar with other than perhaps, the bill.  And the bill itself can be as opaque as the clinical procedures to the uninitiated.  Healthcare and complexity seem to go together and keep outsiders away.  Going through the doors of the business office another side of healthcare is revealed.  The fundamentals of running and managing a business remain the same once they are abstracted away from the jargon and the setting. 

In distilling healthcare business processes there are some simple rules to follow that help to get to the essence of the system.

1. Focus on the Fundamentals

Every business whether it’s a profit, non-profit, heavy industry or healthcare needs to have revenue to support the services it provides.  That means that supplies need to be purchased, contracts signed, invoices for services issued and tracked, revenues collected and posted.  It also means that expenses likewise need to be managed and costs accounted for.  Looking at healthcare it’s easy to get distracted by the medical profession, the knowledge of those in the field and the criticality of the services being provided.  If you can’t shoot, dribble and pass the ball you can’t win.  Stick to the fundamentals.

2. Follow the Money

The lifeblood of healthcare like any other business is revenue.  Once the fundamental business elements of the operation are identified, follow the money.  Where does it come from, how is it tracked, what audits are in place, are there separation of duties, how are the handoff’s through the money chain optimized?  Find the revenue streams even though it can be difficult because there is a combination of private and public payments.  Discover how cash, credit cards and checks flow in and are processed.  Each organization is unique at this level.  Track charges and how they are consolidated, transmitted, vetted and paid by insurance companies and the government.  Each produces a different set of support workflows.  Identify and map them from front to back to understand where minor changes can deliver huge rewards.

3. Regulations, Regulators and Laws Oh My

Healthcare is a heavily regulated industry and most are happy that it is.  To the public, clinical regulations what they see and often the business side to regulations is ignored.  Many healthcare processes are incentivized by the government and the insurance companies.  Following certain protocols, reaching specific objectives or thresholds or implementing operational structures being with them additional revenue streams.  Looking beyond the traditional revenue sources provides other avenues to optimize income while achieving new levels of operational excellence.

4. Tune the Business Every Day

The clinical side of healthcare is conservative by its very nature and very self-critical.  Daily safety huddles, evaluation of adverse outcomes, tracking outcome performance and rewarding positive behavior are all part of the clinical side of healthcare.  Each day clinical delivery systems are questioned, evaluated and improved.  The same philosophy applies to the business side.  Many healthcare organizations are federations of many smaller practices.  Acquisitions are made, staffs rolled up, modifications incorporated implemented for higher volumes.  This mandates that the business side constantly look at how their systems can be improved instead of simply making a small system larger.

5. Know Your Limitations

Healthcare systems such as pricing is complex and difficult to rationalize.  Layer in the various insurance carriers, state and federal agencies and understanding it requires years to master the subtleties of payer contracts, governmental regulations and the underlying elements of Work Relative Value Units (WRVUs).  Grasping the fundamentals of healthcare business means there must be an appreciation for these areas but knowing when to partner with an expert is the key.

Feel free to contact us with any questions you have about turning your healthcare business strategy into a tactical operational plan.  Download our eBook "10 Days to ERP Success" for additional perspectives and contact Tribridge to learn more about how a strategic approach can lead to a successful business transformation.

Next Post