Convergence of People, Business and Things
As discussed in a previous post, physicians, hospitals and other health service providers spent $138 billion just in 2012 on billing and insurance-related (BIR) administrative costs. With the most complete data available on physician practices – annual BIR costs were estimated “at $82,975 per physician in the U.S.” for 2012. How can healthcare providers leverage a digital enterprise (business) to dramatically reduce both BIR and non-BIR administrative costs.
In order to leverage digital technology to deal with administrative costs, it seems reasonable to define “digital enterprise”. Based on research conducted at McKinsey, Paul Willmott a director at its London offices states, “It’s safe to assume virtually all companies use digital technology in some form or another. Yet getting beyond obvious and small applications of technology to drive the creation of truly “digital enterprises” is vital—and presents a challenge for executives.” In this case, McKinsey is defining digital enterprise as vital and is making it clear that simply having implemented digital technology doesn’t establish an enterprise (healthcare provider organization) as a digital one.
Gartner goes further – “The promise of digital business is to usher in an unprecedented convergence of people, business and things to blur the boundaries between the digital world and the physical world, creating new revenue opportunities in its wake”. What isn’t said but understood in Gartner’s definition is that the convergence of people, business and things takes place leveraging information technology. IT systems operate utilizing binary code, meaning 0’s and 1’s and thus to leverage IT and “go digital” requires abstraction of people, business and things be defined in the universal language of IT systems which is a series of on and offs.
In putting it all together to have a definition, a digital enterprise is one which has developed the ability to get things done only through use of binary code. Thus, no enterprise will ever be fully digital, just as no one is perfect – however some will be closer than others.
Paul Willmott of McKinsey describes “the full value of digital to the enterprise” is “reduced costs by replacing labor-intensive activity with software-supported activity either through full automation or through improving the productivity of individual workers in their jobs”. It is well established that BIR activities are labor-intensive and thus ideal for digitization, which in turn allows for full automation or improved productivity.
“But increasingly, we’re seeing that the firms that are really making a difference are doing so because the chief executive is getting personally involved.” – Paul Willmott
Although one logically would list Revenue Operations under Finance, the practical reality is that Revenue Operations is a single group of operations within the larger enterprise. A digital Revenue Operations can only be as effective as its weakest integration point with the rest of the enterprise and outside the enterprise – that requires CEO leadership.
It has been our experience at CHC that well managed Revenue Operations plan, organize and execute their BIR activities with the recognition that revenue cycle management is one continuous unit of work with patient care in its center. As such it makes perfect sense that one of McKinsey’s research findings regarding how to transition to a digital enterprise is – “they need to take an end-to-end view, ensuring that customers receive a joined-up experience from end to end and that all functions are working together”
As with most efforts, transforming an enterprise to a digital one requires prioritization of efforts. Even with limiting the scope of “going digital” to Revenue Operations, prioritization is required. As a CFO friend once remarked, “using food, water and oxygen as analogy, cash flow is like oxygen – you feel the pain very quickly when it’s not there”. With Revenue Operations being responsible for collecting on services rendered, compartimization and prioritization is critical.
A very significant issue to consider and plan for is “how to build digital skills across the enterprise.” – Paul Willmott. Or to quote Thomas Jefferson, “a well-informed electorate is a prerequisite to democracy”.