0. What You Need to Know about the Revenue Cycle

The revenue cycle and contract integration has been a hot topic of discussion within the University Physicians Group (UPG), the School of Medicine, and the Health System. What is it, and why does it matter? Join me as I discuss everything you need to know with Dr. Mitch Rosner, Chair of the UVA Department of Medicine.  

Transcript

0. What You Need to Know about the Revenue Cycle 

Intro

[00:00:00] Taison Bell: Hopefully the next time we talk about cycles, it's the urea cycle. 

[00:00:03] Mitch Rosner: I would appreciate that...

[00:00:04] Taison Bell: Actually. I'm just kidding. I don't want to talk about the urea cycle. 

[00:00:07] Mitch Rosner: Ah, come on, Taison. 

[00:00:08] Taison Bell: Hello, everyone! You are listening to This Medicine Life. I'm your host Taison Bell, a Critical Care and Infectious Disease physician at the University of Virginia. And, if you're like me, you may love being an academic medicine, but it's hard, y'all! The goal of this show is to make that just a little easier through the power of connection. We're interviewing medicine faculty, both inside and outside of UVA. Our goal is to connect with each other, to share our stories, our tips for success, and - together - become the best versions of ourselves in life and career.

[00:00:46] Pre-Guest Segment

[00:00:46] Taison Bell: If you've been attending some of these School of Medicine, faculty meetings, or UVA Health town halls, you may know that the revenue cycle has been a hot topic around [00:01:00] here lately. Now, this has emerged during the ongoing integration process with three hospitals, Culpeper, Prince William, and Haymarket. 

[00:01:08] Now to remind you, these are the hospitals that were formally a Novant/UVA Health joint operation, but are now wholly owned by our system. Now the revenue functions are still being performed by Novant, but that's going to end in the fall, and from that point, they'll be fully integrated with UVA. The proposal up for discussion is whether or not to integrate UPG's revenue and contracting functions as well. 

[00:01:29] And this is a big deal because it's very consequential. We are talking about integrating a key function of UPG with the Health System. Now opinions on this break down into three basic camps. The first one, this is great for everyone. It'll save money, increase operational efficiency, et cetera, et cetera, business-speak, business-speak, et cetera, et cetera. 

[00:01:51] The second camp takes the opposite approach. This will be terrible. UPG could lose its autonomy, et cetera, et cetera, fatalist speak, fatalist speak, et cetera, et cetera. [00:02:00] And then the third camp - which I belong to - really breaks down to: what is the revenue cycle? What are we talking about? And why does everyone have such a strong opinion? 

[00:02:11] Now to answer these questions, I turned turned to Mitch Rosner. He's the Henry Mulholland Professor of Medicine and Chair at the University of Virginia Department of Medicine. And he's also been a part of many past discussions regarding the relationship between UPG, the School of Medicine, and the Health System. And I couldn't think of a better person to help put all this into perspective. So with that, let's get to Mitch.

Mitch/Taison Conversation

[00:02:33] Taison Bell: Good morning, Mitch. How are you doing today? 

[00:02:39] Mitch Rosner: Hey, Taison, thanks for having me. 

[00:02:40] Taison Bell: So let's go ahead and jump right in. The one question I hear all the time is, what exactly is the revenue cycle and why is this important for us? 

[00:02:48] Mitch Rosner: Yeah. So revenue cycle broadly just refers to all of the business functions that allow us to capture revenue for the Department of Medicine. So the way to think about [00:03:00] it is, from start to finish when the patient schedules to when they complete their visit there are lots of tasks that occur there that allow us to develop a bill charge, a patient charge and insurance company, and ultimately capture that revenue from an insurance company. So that process start to finish when we basically see a patient and then get the revenue for that visit is called the revenue cycle. 

[00:03:23] Taison Bell: I see, and there's a separate one for the physicians and for the hospital.

[00:03:28] Mitch Rosner: Correct. In the current state, the medical center is responsible for the revenue cycle around the technical, the hospital stays, and on our side, on the professional fee UPG, our physicians practice plan, really covers that revenue cycle function for the professional fees. 

[00:03:46] Taison Bell: I see. So this might be why some people get two bills. 

[00:03:50] Mitch Rosner: Exactly. Patients in the current setting will get a bill from UPG for the professional fees and also one from the medical center for the other fees. 

[00:03:57] Taison Bell: I see. So, we're talking about [00:04:00] integrating the UPG revenue cycle and the contracting into UVA Health, but how this is done at other academic medical centers? 

[00:04:06] Mitch Rosner: Yeah, I'd say the old saying is obviously if you've seen one medical center and one health system, you've seen one health system. But in most health systems, those are integrated functions. And the reason why they're integrated is several fold. One to make the patient experience better, a single bill, a single point of contact for disputes, or trying to understand what's on that bill. And the second part is to really avoid redundancies in terms of functions.

[00:04:32] Taison Bell: Seems like there's an obvious benefit to patients in getting simplified billing from the Health System. One bill for one service. Now on the physician side the other conversation that we've had a lot is around fair and equitable compensation, and we do have some issues related to competitive pay here in the department. So are these two topics related or are they completely separate? 

[00:04:53] Mitch Rosner: I think in many ways they are related, and let me give you my personal perspective on this and let me start talking about [00:05:00] compensation first. So I think, as you mentioned, we do have an issue with the fact that we don't have a unified compensation plan here at UVA. So there are differences between departments. I'd say that there are departments that are able to pay better compensation than others based upon whether they can generate more revenue from things like procedures or technical fees. The issue for us is that when we look at funding such a compensation plan, it's going to require a significant infusion of money into the departments in order to do that. Back in 2019, we tried to model what a compensation plan would look like. And what we found was that there was a delta of a need to fund that compensation plan of about $15 million. Now that was back in 2019. That number may have changed, but the point remains that, if we want a equitable competitive compensation plan, we're going to need an infusion of dollars over to the practice plan and the departments to help support physician compensation. Now, moving to the revenue cycle [00:06:00] issue. What we know in the current state is by having two separate revenue cycles, we have a lot of duplicative services and that comes at a cost. 

[00:06:09] Taison Bell: How much money are we talking about here? How much could we potentially save by integrating our revenue and contracting and making that a little more efficient? 

[00:06:16] Mitch Rosner: The estimates that we've heard from Health System leaders have been on a low from around 20 million to high as 50 million. And I think there's a lot of uncertainty around that. A lot of due diligence needs to be done to really determine that number, but there is going to be a significant infusion of money from the revenue cycle integration that would allow us to do things like fund a more competitive comp plan. So in that way, they're related. In some ways they're completely separate. Revenue cycle is very different than compensation. I view it as revenue cycle integration gives us the resources to move forward with some of the things that we need to do as an institution to remain competitive. 

[00:06:54] Taison Bell: So they are separate issues, but they're related in a sense that in order to have a way to [00:07:00] increase compensation the revenue cycle is a way to achieve that. 

[00:07:03] Mitch Rosner: Right, and I think what every academic health system around the country is struggling with right now is when there're constraints on the revenue generation side, you really have to work on the expense side. And this is an obvious way that we can generate a sustainable increase in funds that goes to departments that would be able to then fund the things that we want. 

[00:07:24] Taison Bell: I see, so benefit to patients. Financial benefit that we could put towards competitive pay. But what do you say to the people who have concerns around the potential loss of autonomy that could come from having UPG integrate the revenue cycle and contracting? Because UPG is a standalone organization that's focused on physicians and quality improvement. But how does that potentially change with this integration? 

[00:07:47] Mitch Rosner: I think it's a great question. And one that concerns all of us. One is that the devil is always in the details. So we have to develop a memorandum of understanding. Essentially, a contract between the departments, UPG, [00:08:00] and the medical center that really outlines the details of what revenue cycle integration looks like. Where are the points of autonomy? Where are the points that we're together? And when there's conflict, how is that adjudicated? One way that that's often done is by having an oversight board that would include physician representation at a fairly strong level, so that if there were concerns about the physician voice, there'd be a veto power. That's one way to do it. The other ways are really things that I think we really have to discuss as we move forward that would allow us to maintain some oversight over the process but also recognize the benefits from coming together as one Health System. It's a complex issue, but I think it's at the heart. And I think the other thing that we've all heard and I think we've all felt is that over the decades that many of us have been here there's been issues with trust at the Health System level. And I think building that trust through transparency, through having oversight boards is going to be [00:09:00] really important. And I think it rests on the senior leadership continually communicating with us about what's the intent, what are the details, and how is everybody's interest protected here?

[00:09:10] Taison Bell: I think that's probably something we can all agree with. Well thank you for coming on and answering our questions. This was a very informative conversation. And hopefully the next time we talk about cycles, it's the urea cycle. 

[00:09:23] Mitch Rosner: I would appreciate that...

[00:09:23] Taison Bell: Actually. I'm just kidding. I don't want to talk about the urea cycle. 

[00:09:26] Mitch Rosner: Ah, come on, Taison. 

[00:09:28] Taison Bell: All right. Thank you. 

[00:09:29] Mitch Rosner: Alright, thank you.

Post-Guest Segment 

[00:09:30] Taison Bell: I'm really grateful that Mitch came on to discuss this topic because it's obviously a very complex issue and it affects the relationship between UPG and the health system going forward. Now there's two issues I want to put on a table. The first let's talk about revenue cycle integration and contracting. I think on balance, this is a good idea for a few reasons. The first [00:10:00] is that this puts us in line with how several other institutions have performed these functions and it makes sense to try to integrate into the full UVA Health for that reason. The second is that there's a tangible financial benefit that we can use towards many different things that fulfill our mission. The compensation plan that we need to get into more competitive range, and then to grow our clinical, research, and educational missions. Having dollars free to do that is overall very good. And then third, and probably the most important, is this is good for our patients. One thing that you hear a lot is that there's a need to simplify the billing process. It's a big complaint from our patients. And it will help them navigate the healthcare system easier. Now I remember when I had my first elbow surgery last year, I received the bill and it was a hit, but I was expecting it. But then two weeks later I received another bill for the professional fees. 

[00:10:52] And if you've received care here at UVA, you probably experienced this too. And so this is a positive step for our patients and something that we [00:11:00] should seriously consider. 

[00:11:01] The other issue that I want to get at, and what I think it's a larger issue, is trust. There's been an erosion of trust over the years for many different reasons that we don't have to get into. 

[00:11:13] But there is an erosion of the relationship between UPG and the health system. And I will put it on both leaders at the Health System and UPG to work towards fixing it. And, as I see it, there are two main issues. One is transparency, and the second is the need to have an open dialogue. And my sincere hope is that this conversation around revenue cycle integration and contracting could be the first steps towards repairing that relationship. But it will take a commitment to each other and to our patients going forward. 

Outro

[00:11:47] Taison Bell: And that's our show! Thank you for listening to This Medicine Life. If you enjoyed the show, please subscribe, write a review, and tell a friend. We are available wherever you get your podcasts. This show was created, recorded, and [00:12:00] edited by - me. Music is by Dr. Malcolm Lex. 

[00:12:04] Views and opinions expressed to not necessarily reflect the view of the University of Virginia or any other entity. Please send me your ideas for topics you want to hear about or guests you want to have on the show. My Twitter handle is my first and last name, Taison Bell. Please stay tuned for the next episode. Until then, I'll see you around.