Underpaid Care, Overdue Revenue

We talk with Accuity's CFO about underpayment, rising AI-driven denials, and how to trace the cash from clinical care to collected dollars. The strategy blends technology with physician review to lower final denials to around one percent and deliver material, auditable ROI for hospitals of any size.

• financial pressure on hospitals and underpayment
• AI-based denials and due process concerns
• pairing technology with physician-led clinical validation
• focusing on complex cases, CMI, and surgical mix
• material impact at single-site and academic centers
• traceable ROI with 98–99% expected collections
• aligning DNFB speed with net cash outcomes
• breaking silos with shared scorecards and goals

At Accuity, we're transforming healthcare reimbursement with a provider-driven, innovative approach. We share valuable clinical coding insights and current best practices to improve financial outcomes across health systems. If you have any questions or would like to offer a topic to discuss, please email info@accuityhealthcare.com.

Chapters

• 0:00 Setting The Stage
• 0:53 Financial Pressure On Hospitals
• 2:11 Rise Of AI-Based Denials
• 3:32 Tech Plus Clinicians, Not Either-Or
• 5:25 Short-Term CFO Realities
• 5:45 Where Analytics Find Missed Revenue
• 8:05 Material Impact For Any Size Hospital
• 10:35 Amplified Tech And ROI Proof
• 12:23 Denials Down To One Percent
• 14:46 Follow The Money, Validate Payment
• 16:31 Breaking Departmental Silos
• 20:32 Team Scorecards And Shared Goals
• 21:15 Closing And Listener Information

Transcript

SPEAKER_01: 0:01

Welcome to Chart Checkup, Clinical Perspectives for the Middle Revenue Cycle. This podcast delivers insights that drive impact in healthcare information management. Stay current on clinical knowledge, coding updates, and industry trends through expert interviews and conversations with Acuity's own physician, CDI, and coding leaders. Good afternoon. I'm welcoming to the podcast Robert Jones, CFO from Acuity. He has an extensive background in both the healthcare service industries, patient education, pharmaceuticals, even as far afield as American Express. Robert Jones has had some incredible experiences that will hopefully touch on some of the expertise he's derived from that. And we will uh launch into a discussion from his perspective as CFO of Acuity Healthcare. Welcome to the show, Robert. We appreciate you joining us. Thank you. To just launch into sort of a general landscape picture, how do you see the current state of the mid-revenue cycle industry and how we're we're fitting in right now?

SPEAKER_00: 1:04

So I think the typical thing we hear from hospital CFOs and heads of revenue cycle is uh very much being under extreme financial pressure, major concern about how the legislation is going to impact the the already uh difficult financial situation. And I'd say a general case where many of the CFOs feel that one way or another they're getting underpaid for the work they're actually doing, whether that's through the true clinical picture isn't being captured or through payers um denying more than they more than is appropriate. I think there's a feeling that there's revenue that the hospital really uh deserves and is treated patients for, but is is not capturing.

SPEAKER_01: 1:50

Absolutely. I have had uh an episode where we we talked a little bit about denials and had an expert uh from acuity on covering that. Do you have uh any insight into sort of the the new wave of AI-based denials and sort of the the coming battle that is that's going to exist in that space from already a bleak outlook to possibly a uh well, I don't know. Do you think it's uh bleak outlook to worse outlook or or how do you feel about that?

SPEAKER_00: 2:16

So what we hear from clients is they believe the denial rates are very high and higher than are are warranted. You know, some of that varies by state, obviously varies by payer, but we hear a consistent theme where they feel like the denials are happening um almost out of hand without kind of due due process. We've had a couple of clients that have raised very serious concerns about, hey, are things just being denied? And so whether that that concern increases, I think there's an expectation that will increase over time. And so for it goes back to the point about the clients we deal with feeling like, hey, are they really being fairly paid for the patient care they're providing? And that's very much why they're working with acuity. But I think there's there is uh concern about just having the data. Why is the case denied? Obviously, can we help? Uh is it denied to be, is there a DRG assignment-related denial to begin with when they're working with Acuity? And then, you know, if if in fact there is, can we help overturn that denial?

SPEAKER_01: 3:14

It's uh such an interesting uh space and and and time to be in it. Do you have any outlook on the role of technology, though, playing a role? Either automation, AI, machine learning, uh, any of these uh technologies either getting in the mix to help or to further hinder?

SPEAKER_00: 3:31

So I I think as we've seen here, there is technology in the system. There'll continue to be technology in the system, and presumably that technology improves over time. And that's what we've seen with our technology and our ability to help clients with our technology. So I think that's absolutely going to be the case. But I also think it's the case that the physicians aren't going away, and the complexity of the care isn't going away, and the complexity of understanding everything isn't going away. So I think it's both a function of years, expertise, that there is, you know, billions of dollars that can be potentially missed. So, yes, in theory, if there were technology and it would capture everything perfectly, and there'd be a complete translation of what the doctor did into the proper coding to make sure the hospital was fully and fairly paid and the claim wasn't denied, and that could be done cheaper than you know, with no human intervention. Yes, I think everyone would want that. But it in the getting there and in the in the time frame where that's actually possible, if that is possible, that there's I think billions that could be lost. So I think the reality is going to be there, I mean, in continued use of technology, enhanced reliance on technology coupled with uh humans. And we had one client uh recently say, hey, I'm concerned, you know, looked at the AI solutions, you know, as a standalone solution. And we're concerned that either there's going to be uh too much too many cases upcoded, or conversely, uh clinical complexity is gonna get missed. And and their belief at this client was we need the technology and we need we need the physician review as well, which is which is what you know acuity does. So I I think the answer is going to be a combination of the technology and the physicians paired with the coders, all of that will get to the optimal answer for the hospitals in in a reasonable time. But the other piece, you know, yes, maybe if you went out 10 years from now, it's a different story. Where things sit now, most CFOs are not thinking 10 years from now. They're thinking, hey, how do I get through this year? And then how do I get through maybe the next year or two? But the time horizon where all of that, you know, may those great things may happen, that that's just not the reality. Most CFOs are working in day-to-day.

SPEAKER_01: 5:45

That's a great point in perspective that it's um a time of rapid change, but it's a day-to-day survival that we're sort of more zeroed in on occasionally. And in an attempt to uh capture where a health system might be in that sort of fight, are there some key analytics or or um targets that you look for? Is there a measure that we could explore to look at accuracy or efficiency or uh use uh crunching some numbers as acuity uh education analyst? I I always like to get some uh some numbers in the mix.

SPEAKER_00: 6:23

So I'd say the the the general case is the more complexity, the more uh complexity of the case is the more opportunity there is for our technology and our physicians and our coders to find things that may have been missed, where the the hospital may have been providing more care than is necessary and expending more resources than was necessarily captured by the hospital with their own team with technology. So typically um, you know, academic medical centers, for example, will have higher potential for us because they're dealing with more complex cases than what a small rural hospital might do. Now we can help them too, uh, but it's just a matter of of the amount of dollars that can be that can be found. So within that, generally, if where there's high CMI, that's an indicator, high surgical mix. Obviously, these things all kind of correlate together. High surgical mix is an indicator, generally, you know, better for us than not, or where there might be opportunity missed. And then the geographies can also play a part. So certain states have higher Medicaid reimbursements than others, and the commercial payers are different by state. So, you know, the same case, same uh clinical situation may get paid at a different rate in a different location. And so that potentially finding what wasn't otherwise found can have just more upside. So, with all that, I think what we see is there's definitely a common theme across clients. So we're dealing with 62 clients. There are absolutely common themes from the smallest client to the largest, where we can find help help them across whether they're small or large. But some of the indicators that are the variables that I talked about generally drive a higher level of performance uh because of that. But there's still help to be found. So it's a matter of degrees. And I think what's also important when we look at this to bear in mind is we had recently a single-site hospital uh that didn't have all the dynamics we're talking about, where we were able to make a major difference for them in a very short amount of time, in two months. We were generating millions of dollars for them, which for them mattered. It was very material to the CFO there. And you might say a larger, you know, top five L system, okay, the you know, the couple million dollars wouldn't be that important to them, but for it's all you know, relative. And for uh this institution, it absolutely did matter. And I think that's an that's another you know thing to really bear in mind that we don't necessarily have to compare the scale of one client to the other. It's are we finding, are we giving them a material financial benefit that changes their financial profile? And I and I'd say kind of to your question about kind of the variables, the common denominator is with with really you know a handful of exceptions, almost every hospital is under extreme financial pressure. Large, small, academic medical center, not pick your state, it's almost all of them. And we do have a couple where they're very profitable and don't have that, but for the most part, they're all in that situation. So given that, I think the key thing we're bringing to bear is the ability to make a material impact in their financial profile. So not if you step back, not just you know, in a single case, we had to find, we found something, and you know, there's a coding change. In in if you just kind of step back in a way, we have a we have with clients where we have represented up to 50% of their profit for the year. We've had with clients where we've increased their profit margins by 30% for the year. And there are very few things that hospital CFO can do that generate that level of return. And so really what we're saying is yes, we're in mid-revenue cycle, we're reviewing cases, we're doing very specific tasks. But if you step back, the real output really what they care about is hey, by changing their financial profile, we can we can help them with uh we can help in a much, much bigger way than might you know meet the eye at first blush.

SPEAKER_01: 10:13

That's an amazing point uh and perspective, but particularly about the single-site hospital, and that having that large of an impact can even be then sort of life or death for the institution there. And that's certainly a large impact for uh the residents and constituents that that use that type of hospital or that single-site hospital. And so that's uh an interesting point of uh the expanded impact, as you said, uh the a sort of a broader look, a broader scope on it. That's very interesting. I appreciate it. Robert, we've talked a little bit about technology and some of the uh approaches that acuity can use. Do you have any thoughts on our new amplified technology?

SPEAKER_00: 10:52

Yeah, so we've heard from about 20 CFOs that were working with our technology now. Is how does the technology allow us to give them a bigger financial benefit? So I think the concept of what they're really looking for is what maximizes their cash flow, what maximizes their ROI dollars? And where the technology helps us is in two ways. We can find more and we can do it more efficiently. So for the hospital, they're getting more incremental revenue at a lower cost. So the net of that is obviously a higher net, you know, net profit or net ROI dollars. So um, similar to what we the the what we were speaking about, the bigger picture, I think, is hey, they're looking to maximize their net dollars. So the typical CFO isn't necessarily analyzing everything about our technology. They'll have their, you know, the CTO go go take a review. Um but what they're looking for is hey, is this going to deliver? And I'll give you an example of this. We have a large academic medical center and the CFO said specifically we chose acuity because we checked the references. And what we were told is you A will generate the most dollars for us in a compliant fashion than anyone else. And B, you have the best technology that allows you to do it. That's what they said. Well, and so far, we are that's exactly what we're doing. We're delivering results for them, incremental cash that is exactly in line with what we projected for them. And the way we work, it's completely auditable, traceable. Because we're the last step in the workflow, the client can tell, okay, is are these dollars real? Are they billing out at a higher level? And in fact, are the payers paying? And when we run payment validations, we're seeing it on very large clients 98-99% of the expected uh collections are actually the impursements that the client is getting. Wow. Which means the denial rates are very low, running less than 1% final denial rate. And all this comes back to the combination of the technology, the clinical expertise, the physicians paired recoders, augmented by the technology. So, to your question from the CFO's perspective, they're looking at hey, is your technology going to deliver the biggest net result for you know for the client?

SPEAKER_01: 13:19

Have the rubber meet the road there. I like that. It's very interesting, though. The 1% final denial rate is pretty amazing, especially with the rise in AI-based denials and then just the sort of deny first and ask questions later, uh, sort of attitude that's arisen.

SPEAKER_00: 13:35

Yeah. So so the context of that is what we're we we know, the typical range we hear is that we're talking about DRG assignment-related denials. Typical hospital is running about six to ten percent of their uh cases being denied or their dollars being denied. And ours runs at one percent. So you're talking about you know, one tenth to one-sixth uh low, you know, uh, uh, uh, uh denials, that's very material. And you're talking, you know, millions, those differentials are millions of dollars. Um, the other piece of that is when we're reviewing the cases, we're we're we're also supporting denials on cases we reviewed where we didn't make a change to the DRG assignment. So if we see the case, we say, hey, we agree with the DRG as the hospital had it, and then it's all we support that also, and that that's very important in the equation, too. So that even where we're not changing the DRG, we're standing behind, hey, we reviewed it, we agree with it, so we're gonna uh support it. And and that's in that is also in in uh you know captured in in the numbers. So where all that goes back to is can can what the hospital needs to know is they're ultimately going to get the cash. So if you follow the chain here, it's they're paying their staff to treat the patients, they're working with their staff to make sure everything is accurately coded to ensure compliance. And then they want to make sure the payer ultimately pays at the expected level. And we come into the picture, we try to help at every stage of that. Obviously, we're not providing the patient care, but we're providing our view of what is the right DRG assignment. We're then providing our view of, okay, now you should bill out a higher level than you would have under the prior DRG assignment. And then we're tracing to make sure, okay, you in fact actually got paid. And so from a CFO's perspective, the the ability to trace all that or what of that really does matter because for for many, many other things that the hospital will invest in. To your example on technology, you can't necessarily trace the result. If you're in marketing, you can't really trace, okay, did this ad actually generate new patients? Did this promotion generate, you know, new business? It's very hard to trail. Even if you say I added more staff, did it what's the what's the pre and post? And we get asked that all the time. And it's very difficult uh to actually measure because there's so many factors that go in the that get in the middle of that, that it's hard to know was this investment action, was this decision, did it actually drive the result with us? It's very measurable because we're the last step in the workflow. Hospital knows exactly what they at least we're going to bill out at pre-R review. They know what it is post-R review, and then they know, you know, three to six months downstream, did they actually collect the cash in full? And so that um that confidence level that I can trace the cash is very important to a CFO.

SPEAKER_01: 16:24

I really like that exact phrasing, trace the cash. That's a great perspective to have on real effect or no effect. Uh, Robert, uh, how do you think that uh different departments can collaborate to to optimize the mid-revenue cycle, bringing in uh our clinical team in addition to our technical experts, as well as our then uh as we talked about some technology elements that are flowing together, is there a magic to that mix?

SPEAKER_00: 16:53

So I think one piece uh from you know the financial view of that is that the hospital thinks as the as a full enterprise for the collective good. I think what we see a lot is individual departments and areas are measured on their specific uh you know metrics. So for example, it may be that the cost, whether it's you whether you're using technology, whether using us, is in one budget and the revenue is in a different budget. And the people responsible may be different. And I think one of the endemic things that we see is that many, many hospitals have the almost the PL responsibility split into different areas. And until you get to the CFO level, it's hard to see the full picture. And so the the the way almost to think about it is you know, you're you're on a team, you're playing a game, and you're you're thinking about your piece, but ultimately it's all for the greater good. And and I think we see all the time people in different areas are are whether you're CDI, HM, they're all working for the greater good possible. That's why they're there, that's their job. But the metrics that are in place don't necessarily support looking at the greater good. So as an example, as an example, we had a client say many, many client, many clients are concerned about the speed of you know the cash flow process. They want to make sure the bills go out the door, they want to make sure our views are done timely, that we're keeping their DNFB low. And many clients say, hey, you know, we you know, we're we're measured on that. And we've had some possible CFOs say, you know what? Obviously, we need to try to turn around quickly, but if it took another half day and we were gonna get you know ten million dollars more, I would make that trade all the time. And then we say, okay, but is that message clear to the your staff? And sometimes it is and sometimes it isn't. And and and so that that's I think what we what I see from a financial perspective, that the specific quantifiable metrics that each area is held to, sometimes I I I think it would be better for um if those were all really linked. So that, hey, if I'm working in one area, I care about all of this. So as the CFO is I'm responsible for the DNFP, CFO is responsible for the denial, CFO's responsible for ultimately the uh revenue, the cash collection. And I think because sometimes the departments have different goals, it can get um, you know, people are trying to do the right thing in the hospital, but the goals, the the met what they're measuring doesn't necessarily flow with that. And we do talk about that with many clients. Some do do it, and I think that's very important thing about how the groups work together because ultimately the team result is hospital from a finance perspective, is the hospital is fully and fairly paid for their work in a compliant fashion. But the measurement of that, if you know, if I'm only focused on the expense, I'm only focused on the NIRA, I'm only focused on the DNFB, or or conversely, I'm only focused on the revenue, you might be missing the full picture. And I think, you know, having a scorecard that looks across the full picture. So did the team get the best results? Not necessarily did any one group or one area have the best, but did the team get the best results? I think for that to happen, uh the each team needs to have the kind of the group measure in place. And we see oftentimes that it that that is not there.

SPEAKER_01: 20:21

I believe that that's a just a perfect resolution to the podcast there, is that it's all about the team putting the team together and then the result being across the whole. A great way to end it there. I really appreciate it. Robert, thank you so much for joining us on Chart Checkup. We appreciate your expertise and your time and look forward to hopefully getting to talk to you again. Thank you. Thank you for having me. At Acuity, we're transforming healthcare reimbursement with a provider-driven, innovative approach. We share valuable clinical encoding insights and current best practices to improve financial outcomes across health systems. If you have any questions or would like to offer a topic to discuss, please email info at acuityhealthcare.com. Opinions expressed in this production are those of the host or guest and do not represent official stances of acuity. The suggestions, advice, and guidance provided by the individuals featured in this podcast are not intended to replace any medical advice, consultation, or treatment you may receive from your healthcare provider.