Baby Boomers and Your Technology Strategy

“Get ready, cause here [they] come.” By now, pretty much everyone has heard the warning bells of the aging baby boomers. Baby boomers – people born between 1946 and 1964 – all 70 million of them – make up one of the largest generations in U.S. history and exert disproportionate influence on almost every segment of our culture and economics.

It’s been widely reported that the first “Boomers” will move out of the workforce starting in 2011, and begin to draw upon their retirement program benefits. The impending wave of retirees will place severe budgetary pressures on the U.S. federal government and irrevocably impact the nation’s healthcare system on a number of fronts.

The statistics behind this “demographic wave” are quoted so often to have almost become cliché. But let’s quickly review them:

• The first Boomers will turn 65 in 2011 and according to some studies*, more than 37 million of them – six out of 10 – will be managing more than one chronic condition by 2030.
• By 2020, Boomers will account for four in 10 office visits to physicians*.
• And over the next 20 years, Boomers will make up a greater proportion of hospitalizations as they live longer but with multiple complex conditions*.

Knowing the Boomer statistics is far different than understanding how to manage their impact on your business. In fact, boomer demographics are requiring companies across all industries to rethink their core business and market strategies. For example, based on Boomers’ projected longer life expectancy and shortcomings on savings, insurance companies are now selling products to protect people from living too long, not dying too young.

Multiple impacts to your revenue stream

For healthcare providers, the impact will be even more acute. At the same time we were all getting older and marching to this point in time, Medicare started slashing provider payments. Without congressional intervention, Medicare will slash physician payments about 40 percent over nine years beginning in 2008**. This can only result in greater portions of the medical bill falling to the patient and/or the secondary payer.

The aging baby boomer becoming eligible for Medicare makes it imperative for healthcare providers to reassess their technology priorities – and implement some sound business strategies to deal with them as they enter into the hospital revenue stream. Especially when you consider these statistics:

• 80% of Medicare patients have secondary insurance
• 30% of secondary claims revenue is never collected
• Medicare crossover claims require human intervention 58% of the time

Given the low dollars and high volume entailed in secondary claims, many providers historically have understaffed their organization to pursue them, and write them off as bad debt.

In fact, the average healthcare facility today has between 3,000 to 5,000 unresolved secondary claims at any given time. On average the value of each secondary claim is $208, with an average reimbursement rate of $166. With thousands of secondary claims each month, any hospital can experience between $3 and $5 million in secondary claims outstanding.

Worse yet, within the past 10 years revenue cycle solutions have receded in importance within hospital IT budgets, replaced by advanced clinical solutions to promote safer and better quality patient care. Rightly so, but the provider industry's focus on clinical systems has left it ill-equipped, understaffed and budget-strained to counter a phenomenon that can only have a significant negative impact on revenue cycle results if left unchecked.

Some practical options to prepare for “Them”

As the healthcare insurance market continues to migrate to patient dollars and the baby boomers consume Medicare, providers can no longer afford the luxury of ignoring the silent, unpaid portion of the patient bill. The aging Boomers will make hospitals and physicians more vulnerable to secondary payers' denial and underpayment strategies.

Providers will need to capture secondary payments and at the same time empower their staff to better deal with denials. Yet most hospitals do not have the staff or budget to invest in multi-million dollar new patient accounting systems to overhaul current infrastructure.

So what are some practical options requiring minimal investment to tackle this issue?

The most logical place to start is to take advantage overarching technology and service solutions that can supplement your legacy systems and staff. Providers should look at combined service/technology solutions that can support internal staff on a wide variety of administrative activities – from improving patient access to claims and denial management to billing follow up.

Hospitals also will need to find a way to consolidate their patient financial information to make it actionable – they can expect the demanding Boomers to make lots of inquiries on billing issues. Best of breed technology has created islands of information within the hospital environment. The billing department may have one system, whereas patient registration is on another. Consolidating that information to create a patient-centric view to allow staff to easily handle patient inquiries and payer denials will be critical.

CareMedic works with leading hospitals to transform billing processes and implement enabling services and technology to improve major aspects of their operations. For providers our services includes replacing labor intensive points within the revenue cycle and offering expert staff to outsource
non–core functions.

One of our more unique service offerings is designed to close the secondary claims write-off black hole. This bundled technical infrastructure and services team turnkey solution called SecondaryGold™ completely manages the entire process for customers – while eliminating their current secondary claims management overhead costs.

SecondaryGold combines CareMedic’s AccelerateAR™ MedicareRT and Claims Management solutions with follow-up services to relieve hospitals from the tedium of working secondary claims, or worse, writing them off.

We are able to collect for our hospitals up to 90 percent of secondary claims dollars. Those results can translate into real increases on the bottom line.

To compensate for the service, the hospital pays only a percentage of the secondary dollars collected by CareMedic. The solution also offers accurate reporting and monitoring features, including a performance monitoring dashboard that keeps the customer abreast of all activity.
CareMedic also offers an overarching technology called the electronic Financial Record ™ (eFR™), which stores information from disparate financial systems in a common data repository and can serve as a critical source for financial business intelligence at the patient level. The eFR creates an online, long-term record of each patient’s financial activity, storing information from both CareMedic applications and other hospital systems in a common patient folder. Once the patient folder is created, it is continuously updated as staff makes changes or additions in any of the systems that feed the eFR.
Each piece of data – insurance, eligibility, coverage information, referral information, physicians, department encounters – is associated directly to the patient account, tying “pockets” of information together. This aspect of the system becomes even more beneficial in an integrated delivery networks environment.

CareMedic’s eFR customers exceed industry best practice standards every day using the system to discover the root cause of lag times and claim errors, and to enable optimized processes to fix problems at the source. Key areas such as admissions, charge capture, coding, payment posting, denial management and insurance follow-up can benefit from the eFR’s automated workflow and information delivery.

Regardless of whether you are currently planning to invest in revenue cycle solutions, market dynamics dictate that you rethink your IT priorities. Meanwhile, baby boomers, including myself, are not getting any younger.

Sheila Schweitzer is chairperson and chief executive officer of CareMedic Systems Inc.

*AHA, First Consulting Group, May 8, 2007
** American Medical Association, May 2007