Healthcare staffing and reimbursement challenges: Automation and AI are here to help

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Ambulatory surgery centers (ASCs), which proliferated post-pandemic, are a booming business. With the increasing trend towards ASC-based treatments, forecasts predict a 22% rise in ASCs and an 18% increase in outpatient surgical and cardiovascular procedures over the next decade.

The increasing population of individuals aged 65 and older is creating a higher demand for ASC and general healthcare services. Currently, this age group accounts for 34% of the demand for physicians, a figure expected to rise to 42% within the next decade. The implications of America’s aging population on healthcare spending are significant. In 2022, healthcare spending was estimated at $4.5 trillion , but it is projected to soar to nearly $7 trillion by 2030.

Growing demand for ASCs presents both opportunities and challenges, especially in terms of revenue cycle management (RCM) and workforce.

Given these challenges, the questions arise: How can RCM departments cope? How can ASCs and other healthcare providers alleviate their reimbursement and staffing pressures, lower operational expenses, boost efficiency, and support future growth to increase profitability?

The solution lies in addressing staffing and reimbursement issues through automation and AI.

Complexity and claims denials pose a significant challenge

Before exploring why automation and AI are the future, let’s size up the challenges.

Healthcare administration is becoming increasingly inefficient. About $60 billion was spent on healthcare administration in 2023 – $18 billion more than in 2021. The cost of claim submissions also rose by 83%. This isn't the fault of healthcare providers; it's due to the increasing complexity of systems.

Reimbursement has been a persistent issue for RCM departments since the inception of the provider payer system, and it continues to be a growing problem. Claims denial rates are rising by 10% annually. If your denial rate is 10% or higher, you are in the danger zone.

The added work and write-offs associated with denials significantly impact your margins and can hinder your ability to manage claim and patient appointment volumes. Each denied claim adds $118 to your overhead – that’s $8.6 billion a year for the healthcare system at large.

This is in addition to the costs of servicing and processing your existing claims!

Staffing shortages continue to add cost and introduce errors

Healthcare organizations are facing a workforce gap, which is growing exponentially.

Employee turnover in RCM is as high as 40%, significantly greater than the overall employee turnover rate of around 3.8%. Frequent departures from RCM roles mean that existing employees have to take on more work, or healthcare providers must consistently invest resources to recruit, hire, and train new staff.

The constant cycle of recruitment, staffing, and training incurs significant costs. Replacing an employee can cost up to twice their annual salary. New and overloaded employees are more likely to make errors. Furthermore, 80% of healthcare professionals believe that labor shortages can negatively impact patient experience.

The double blow of staffing and reimbursement challenges is hitting healthcare providers hard

Healthcare providers often attempt to tackle either reimbursement difficulties or staff shortages separately. However, these two challenges are closely interconnected.

An increased RCM backlog results in an overwhelming workload for your team. This puts pressure on your staff, leading to decreased job satisfaction and increased turnover.

Insufficient staffing exacerbates reimbursement challenges. Overworked staff members are more likely to make errors and struggle to keep up with the volume of work.

Increased reimbursement difficulties, such as a rise in denied claims due to more errors, require even more staff.

Historically, the solution was to hire more people to handle the increased workload. However, given the current labor shortage, this is no longer a viable solution. It only perpetuates a downward spiral.

Automation and AI are the solution

Automation and AI offer speed, infinite scalability, and efficiency, which can enhance both customer and employee experiences, making your business more efficient and profitable.

Our experiences with customers have shown that AI and automation can perform the same tasks while reducing operating overhead by 80-95%. They can make each employee ten times more effective, retain top talent, enhance patient experiences and outcomes, and eliminate the need for hiring for administrative jobs.

From a reimbursement standpoint, AI can improve Days Sales Outstanding (DSO) and cash cycles by over 50%, reduce claim denials by up to 75%, and provide unlimited transparency and reporting (as AI can self-report). This can further improve providers' RCM processes.

Path to scalability, profitability, and better outcomes

To determine if your organization is a good candidate for automation, evaluate your employee headcount and business revenue. If you have at least 20 people working on RCM, automation could yield significant return on investment. If your business generates $100 million in net patient services, this also suggests that automation could be highly beneficial.

Begin by identifying tasks that could be easily automated. Eligibility verification is often a prime candidate for improvement due to the substantial amount of human labor it requires. Automation can also significantly enhance claims processing efficiency.

Find a partner with the resources to continually invest in research and development. This will allow you to collaboratively improve and grow. Opt for a provider that offers end-to-end automation, uses predictive models to provide insights, gives you an edge in running your revenue cycle more effectively, and is committed to customization and adaptation.

Adopt a comprehensive approach to automation to tackle both staffing and reimbursement challenges. This will enable your organization to leverage automation and artificial intelligence to address staffing issues and resolve reimbursement problems once and for all.

Dan Parsons, as the co-founder and chief product officer at Thoughtful, stands at the forefront of AI innovations in healthcare. His leadership has positioned Thoughtful as a pioneer in healthcare automation, revolutionizing revenue cycle management (RCM) and forging transformative partnerships with leading healthcare organizations.