EHR Conversions Can Make a Devastating Impact By John Freeman, AVP of Finance at HealthTechS3

Hospital Information Systems (HIS) and Electronic Health Record (EHR) conversions and updates usually have significant impact on the financial well-being of an organization. The cost of acquiring a new system often exceeds several years of a hospital’s annual net operating income. The costs of setting up and training for a new system is also significant. Rarely is there an actual positive return on investment for a system conversion. Reasons for most system conversions include:

  • Attempting to stay current with the industry
  • Satisfy medical staff requests
  • Meet regulatory requirements

“Careful planning for revenue cycle systems and processes is essential to assure a successful conversion.”

Revenue cycle operations bill and collect for most hospital services. Building master files, establishing work flow plans, training staff, and testing and reviewing charges and bills before go live are of major importance to success. The expenses for staff time, and in many cases, the use of contract services committed to these jobs is staggering in total. But failure to properly follow these steps can be devastating. GAFFEY Healthcare provides AR Follow Up Services for organizations across the healthcare sector

It is not uncommon for small rural hospitals to partner with larger regional health systems for access to HIS and EHR. This alliance can save the smaller hospital significant funds compared to updating the current systems or acquiring new systems on their own. However, being tied to a larger system often poses challenges for smaller hospitals while converting financial operations. A decision to partner with a larger system should be considered carefully. Issues have been noted in revenue cycle functions, including patient registration, insurance plan set ups and selection, charge description master accuracy , charge capture, billing edits, electronic billing and other key areas within the revenue cycle when dissimilar hospitals share systems. For example, Medicare critical access hospitals (CAHs)have different billing rules in some cases compared to larger Medicare prospective payment hospitals. When setting up master files and work plans the teams need to be aware of differences and make accommodations to avoid significant rework and delay in bill payment.  

“Emphasis must be placed on careful planning, training and testing new systems prior to go live”

Solid revenue cycle processes are essential to bill and collect for patient encounters. Revenue cycle processes can quickly be upended during a system conversion. If the front end information is not completed promptly and accurately the odds of getting a bill paid timely and per contract rates and terms drop significantly. Correctly gathering and entering important patient information into the new system is critical. Correct data including patient demographics, primary and secondary insurance plans, employer name and mailing address, admitting physician, admitting diagnosis, selection of the correct payor and insurance plan and more are essential to getting a bill paid correctly and on time. Insurance verification and verifying Medical Necessity for the admission continue to be fundamental. These processes may have been working very well prior to the conversion but can fall by the wayside during a system conversion. Staff accustomed to using the old system can become very inefficient during the de-bugging and re-learning necessary after a system change.

During conversions hospital managers must dedicate additional time and attention to the charging process.

  • It is essential that all staff involved in the charge capture process are properly re-trained.

  • Each should be able to identify the correct charge in the new chargemaster.

  • The hospital should assure it has a current, complete, and correct chargemaster prior to the conversion.

  • When a new chargemaster is built, items descriptions should be clear and recognizable.

  • The new chargemaster should be reviewed carefully by the manager and staff of revenue producing departments.

  • A cross walk should be completed between the new and old chargemaster to assure all chargeable items are included and each field is completed correctly. 

  • If a small hospital has partnered with a larger health system, extra attention should be given to assure the chargemaster works well for both.

It is very important to watch for unexpected increases or decreases in department revenue the first few months after the conversion. Total revenue by department, revenue by physician, by diagnosis or type of visit should be compared for care provided under the old and new Chargemaster for a reasonable time period.  Material variances in total charges should be investigated and if price are inconsistent the issue should be should be corrected promptly. Charging unit of measure must be consistent. A treatment or supply item should be charged per the each or the day or the hour same as before if possible.

Most hospitals revenue cycle departments cannot operate at normal levels of performance through the conversion period. When a hospital converts or updates information systems many opportunities occur for creating process disruption effecting almost every aspect of financial operations. For example, payments on patient accounts usually need posting into both the old accounts receivable system and the new system for a period of time until the old accounts receivable balances are paid in full, moved to the new system or outsourced to a vendor. Cash posting often reverts to a manual process for the transition period. Daily balancing of cash and accounts receivable postings becomes very time consuming during conversions. System set up and training are major factors in a successful conversion. It is common for additional staff time to be needed including use of overtime pay during the conversion and for a period of time following.  

“Hospitals should put major emphasis on accumulating cash prior to the conversion as well as holding on to cash during the conversion process.”

Disruption to financial processes will drain cash from the system at an alarming rate. Emphasis must be placed on careful planning, training and testing new systems prior to go live in order to minimize delays in billing and collecting for patient care. Hospitals have reported decreases in days Cash On Hand from 60-90 days prior to the conversion to less than 10 days cash on hand immediately after. Most hospitals pay employees on a weekly or bi-weekly basis and major vendors weekly, biweekly or monthly. Medical staff directorships, purchased services, insurance, utilities, taxes and other expenses must be paid timely to avoid interruption of services. It is difficult to conduct business as usual during periods of severe cash drain. Hospitals should put major emphasis on accumulating cash prior to the conversion as well as holding on to cash during the conversion process.   

When planning an EHR system conversion hospitals should develop plans to build cash reserves. Increasing cash can be done by placing extra emphasis on collecting account receivable more quickly and by eliminating non-essential expenditures (including capital purchases). Capital purchases can often be postponed, especially for non-revenue producing assets. This delay may create short term disaffection with medical staff, employees and others; but holding on to $25,000 – $50,000 or more by postponing a purchase can help grow cash balances needed to meet payroll or essential expenditures when cash flow is disrupted by conversion activities. Paying employees, suppliers and others correctly and on time is essential to maintain operations and sustain organizational goodwill in the community.

Conversions of HIS and EHR are disruptive under the best of circumstances. Key to making a conversion work as smoothly as possible are careful preparation, planning, training and testing prior to go live. It is important to clean up existing accounts receivable prior to the conversion and to build cash reserves.  Healthdata Data Archiver has identified six health data migration considerations when replacing one EHR with another:

“Key to making a conversion work as smoothly as possible are careful preparation, planning, training and testing prior to go live.”