Hugh Chatham Health reduces revenue cycle costs by 27%

Challenge

Hugh Chatham Health has deep history in North Carolina, with a longstanding reputation for high-quality care for patients across the Yadkin Valley region. But financial pressures stemming from the COVID-19 pandemic tested its legacy as a lifeline to the communities it serves.   

The nonprofit health system had consistent performance prior to COVID-19 and leaders maintained a favorable operating margin and significant cash reserves. However, the emergence of the pandemic, with elevated staffing costs, declining patient volumes, rising operating expenses, and difficult economic conditions, presented risks to the organization’s financial sustainability.  

Hugh Chatham’s legacy revenue cycle systems challenged the health system’s ability to maximize cash collection. Coding delays and documentation bottlenecks contributed to accounts receivable (A/R) that aged significantly past industry best practices for both physician and hospital services. 

Hugh Chatham’s management knew that investing in a long-term revenue cycle process improvement solution was a key lever to stabilize financial performance. Leaders sought a comprehensive partner with a strategy that would provide immediate relief while supporting long-term stability. 

 

Approach

Hugh Chatham engaged Guidehouse to fully manage revenue cycle operations for its hospital and physician group services, with responsibility for central business offices, coding, and customer service and self-pay collection. Managed services leaders also assumed oversight for healthcare information management (HIM) and patient access for hospital services. Guidehouse took accountability for each point in the revenue cycle. 

Guidehouse rebadged Hugh Chatham’s revenue cycle team, working hand-in-hand with the health system’s HR department to align team members’ benefits, tenure, and compensation with—if not exceeding—what they previously received. Guidehouse leveraged its rapidly scalable, domestic and global workforce to add much-needed capacity—up to 42% more—while still delivering on a commitment to decrease costs and improve performance.   

A redesign of the health system’s middle revenue cycle system was launched to improve efficiency across the enterprise:  

• Leaders from both organizations worked together to completely redesign coding and medical records processes based on Guidehouse’s Best in KLAS® model, increasing the speed of a previously inefficient process that decreased charge lag from 30+ days to less than 2 days. HIM holds and discharged not finally coded (DNFC) decreased from over 2 weeks to less than 3 days baselined within 6 months. 
• A six-month intensive training and quality assurance (QA) initiative improved performance among rehired coding and HIM team members, raising monthly QA scores from approximately 80% to a consistent 95%. 
• Added capacity helped the health system address backlogs created by initial denials and coding corrections, with total A/R aged > 90 Days decreased to historic system lows for both hospital (-11%) and physician services (-46%) 
• Guidehouse and Hugh Chatham worked together to resolve longstanding inefficiencies with provider credentialing that had been leading to costly denials and delayed time-to-cash.    

 

Impact

Hugh Chatham benefited from immediate improvements to its revenue cycle operations, which led to measurable financial gains over time. These benefits have continued to grow as part of an ongoing strategic agreement, reinforcing the long-term value of the partnership. Nearly all rebadged staff members remained with Guidehouse a year-and-a-half post-go-live, with a few retiring during that time. 

Within just six months, cash year-over-year outpaced prior performance. Over the course of the first year of the engagement, net yield increased by 4.3%.

In addition to improving cash flow, the health system was able to decrease revenue cycle costs by 27%, from nearly $6.9 million in annual costs to $4.9 million. This brought the health system’s cost to collect from a monthly high of 7.75% to a monthly average of 4.6%.