Hospitals are leveraging AI to improve revenue cycle

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Hospitals and health systems are increasingly turning to AI to enhance their revenue cycle management (RCM) processes as healthcare execs shift their perspective on the role of the technology.

A survey of 101 healthcare leaders conducted by Sage Growth Partners on behalf of healthcare software developer Ingenious Med, found that more health systems, hospitals, and physician groups plan to invest in AI for RCM in the next one to three years in the expectation that AI will be widespread in revenue cycles within five years.

A third of those surveyed were CFOs and another 17% were vice president or director of Revenue Cycle. Forty-three percent were with health systems and integrated delivery networks and 25% were with physician groups. Thirteen percent were with an independent acute care hospital.

WHY THIS MATTERS

The survey highlighted AI's potential to address key RCM challenges, such as patient payment estimations, coding, charge capture, cash flow and payer payments and denials management.

Among the findings, 82% of respondents believe AI will positively impact RCM, 67% plan to use AI for denials prevention and 65% for coding, with 51% focusing on charge capture.

Dan D'Orazio, CEO of Sage explained the RCM process is filled with high-volume, repetitive tasks, such as eligibility checks, on the front end, claim status checks, in the middle of the cycle, and payment posting on the back end.

"This is the first place we are seeing organizations invest in AI, to automate those tasks and activities allowing RCM teams to invest their time into higher order tasks and activities," he said.

He added there is also traction in coding – not just in automating the claims-editing process to ensure accurate coding, but in the form of autonomous coding, which streamlines that effort significantly.

D'Orazio said the third area seeing traction is predictive analytics for both prior authorization and denials management – offering organizations the ability to prevent denials rather than work them after the fact.

He recommended organizations recognize AI is a tool, not a complete strategy, one which must be integrated as part of the broader system, rather than seen as the solution itself.

"AI is often misunderstood as a cure-all, but it's just one piece of the puzzle," D'Orazio said.

When implementing AI solutions, organizations need to focus on key considerations, prioritizing return on investment by asking vendors to provide proof points in their solutions.

This includes determining how AI can replace or augment existing staff, speed up processes like payment collection and reduce errors and rework.

"Many vendors market AI indiscriminately, and much of what they label as AI falls short," D'Orazio said. "It's essential to ensure that AI addresses specific problems rather than being adopted just for the sake of using it."

He added organizations should avoid getting distracted by shiny new technologies: New solutions should not dictate implementation priorities.
Instead, organizations must focus on improving operations with technology that aligns with their goals.

Because RCM is core to hospital, health system and practice operations, the focus should be on streamlining essential workflows.

"Identify your challenges first, and then find the right technology to solve them," D'Orazio said.

THE LARGER TREND

Three-quarters of U.S. healthcare providers and payers increased their IT spending this past year, with artificial intelligence, cybersecurity and IT infrastructure among the chief areas of investment, according to a study by Bain & Company and KLAS Research.

Adoption of AI is gaining traction, with 15% of providers and 25% of payers reporting an established AI strategy in 2024, the report said.