How We Align Value Between Hospitals and Physicians In Ontario For Systems Receiving Global Budget
For years, hospitals and health systems have celebrated iterations of the status quo… they do what they’ve always done, and when OHIP was set up in its current form, the idea of paying hospitals through a global budget so physicians could keep 100% of their OHIP revenue made a lot of sense - and in many ways, it still does. The process allows them to not negotiate overheads regularly, allows each to kind of support the others efforts, and ensures one can’t thrive without the other. However, the dynamics have evolved over the years and in times of cost-reduction, OHIP administration has become a cost paid for by the hospitals, but that only benefits the physician.
The challenge: claims administration is now a cost center, rather than a mission-critical revenue optimization cost of doing business. When this happens, the goal becomes the cheapest possible service. The cheaper the service, the more efficient it must be to remain profitable, which means less time spent on the details that matter. The opportunity cost to the physicians can be (in our experience) between 15% and 50% of their revenue. The physicians therefore find themselves working more and harder, charting less in the name of increased volumes and workload, with means the recovery on work reduces, workflows continue to struggle and the only group to benefit is OHIP and the Ministry of Health. Remember: OHIP is a government-owned health insurance company and their goal is to retain as much as possible.
So, the PF Manifesto for hospitals and physicians: Align your interests and find value for the hospital in properly administering the claims for physicians, and you will have doctors with reduced burnout, renewed professionalism and engagement, and another opportunity to align on the metrics that matter to the hospital. Remember: you don’t need to see more people or see people faster to improve your budget, you ultimately need to improve your teams satisfaction, charting and other clinical KPI’s, and ensure patients feel they have meaningful time and experiences… and we all know if you take care of your doctors, they will take care of your patients.
The Hidden Costs of Misaligned Revenue Management In Ontario Health Systems and Care Centres
Traditional healthcare revenue management creates unnecessary friction between hospitals and physicians. Consider these documented challenges:
Physicians lose an average of 20% - 40% of their claims revenue due to inefficient, lowest-cost billing administration
Physicians spend between 10% and 40% of their call time on administrative tasks, and with legacy processes, that time is often not put to even reasonably worthwhile use as charts and notes are messy and systems + data are not trackable
Up to 13 hours a week for 1 FTE physician may be attributed to administrative waste
Clinical documentation gaps lead to 5 - 10% of their revenue leakage
Cost-efficient error and reconciliation strategies and following up on missed revenue opportunities can cost the physicians an additional 10% to 15%
Understanding Stakeholder Needs
Hospital Administration Requirements:
Cost-effective claims processing - lower price point seems better when the hospital retains 0% of the billing revenue
Reduced administrative overhead - lower costs on administrative cost centers are generally seen as a win by leadership
Improved documentation accuracy - improved documentation, when read and understood by others in the circle of care, can improve outcomes, improve insights, and improve physician claims revenue
Enhanced regulatory compliance - an ongoing challenge is compliance with the ever-increasing burdens of regulatory control
Strategic insight into service line performance - a key part of hospital leaderships mandate is to consistently monitor, refine and coach improvements to how the hospital serves its patients
Efficient resource allocation - hospitals in Ontario Canada must consistently “do more, with less” where expenses and political interests within the ecosystems
Physician Priorities:
Maximized revenue per encounter
Reduced administrative burden or wasted time
Faster payment cycles
Clear financial reporting that is logical and coaches improved habits
Improved work-life balance, reduced burnout felt with improved sense of control and transparency on payments
Focus on patient care
The Integrated Solution: Creating Mutual Value
Our comprehensive approach addresses both hospital and physician needs through integrating services and data refinement to drive symbiotic value:
Understand costs of value-priced and aligned services, and the benefits to all stakeholders. If physicians reap 100% of the improved revenue and benefit, while the hospital pays a drastically higher cost, what is the compromise of the physicians? If there is none but instead the doctors argue that a premium service is their right or is the specific performance obligation of the hospital, the hospital may want to choose the option that gives them the best data and clinical insights to support reporting or improve their use of the global budget.
Once costs and benefit are aligned, the hospital must understand where else it can leverage the data or ancillary benefits to its benefit. For hospitals leasing clinical space to specialists or specialty clinics, for example, the benefits of dashboard and tracking services like our Clarity Dashboard is that it can help track and prompt patient encounters toward the specialists that should see the patients, so the hospital may be able to benefit from the investment by (for example) enhancing higher-revenue patient tracking and referrals into clinical services that lease space from the hospital.
As implementation starts and as the benefits become clear to the physicians, tracking and coaching toward aligned goals is key. Physician engagement goes up when their effort is reduced and they see improved revenues, so leveraging this to improve other outcomes is a critical opportunity. For example, encouraging hospital physicians to attending coaching sessions and seminars on billing and using their systems, and using that time to enhance case-conferences or other matters of collective importance and benefit will help them with a both a direct and a symbiotic incentive. When hospital finance departments or physician associations work with us, we include coaching resources and mentorship resources for billing, charting best practice and can weave in messages or tie together our work with the agreed KPI’s of the health system. The result for the health system is improved adoption of new systems, improve investment by the physicians into the systems and changes, improved chart hygiene and engagement, and reduced reports of burnout.
Case Studies
Ottawa-based Hospital ward (AFP Model)
66% adoption of new system by legacy physicians and 100% adoption of new physicians to the AFP
~$2M additional revenue captured in first 12 months
95% physician satisfaction score (*Based on asking the physicians directly if they are satisfied with the service and results)
78% reduction in billing queries to Claims Concierge in first 6 months
4-month ROI achievement for initial cost investment
Ancillary benefit to AFP model physicians who started with Claims Concierge billing optimization is their baseline income was 35% higher than legacy colleagues, which means their AFP revenue share will be that much higher through their tenure with the group, further incentive to remain active in the AFP for the long term
Community Hospital Network (Walk-In and ER Departments)
Their original system has us invited to share a workload for a group that was charging $1 for every claim submitted, and so there focus was the volumes of claims processed, not their approval rating to payment rates. Before us, the payment rates were low, the cards being used for charging were submitted monthly, physician satisfaction and culture was poor and the ancillary challenges ranged from their denying care to US patients to pressuring the administrative teams to not accept credit cards when OHIP wasn’t accepted. The knowledge gap and payment rates were both focused on the cheapest costs - not the best value.
28% improvement in claims accuracy within 3 cycles
Physician satisfaction and engagement grew in 1 cycle
Renewed interest in accepting credit cards for available revenue, and renewed interest in international patients (as the doctors know now the revenue is tracked clearly by a 3rd party
Improved and clearer revenue cycle and shorter payment times through improve claims and error reduction
Common Questions About Healthcare Revenue Management
Q: How does aligned billing and hospital revenue management benefit both Ontario hospitals and OHIP billing physicians?
A: The approach shifts the perspective of claims administration being just a cost center to being a revenue and culture enhancing opportunity. It creates mutual value by improving revenue capture and documentation quality for physicians, giving the hospital KPI’s they can report to improved quality and outcomes, and giving the hospital leverage to further initiatives outside of OHIP billing (WSIB contracts, international patients, etc.). Ultimately, the new alignment leads to measurable improvements in efficiency, satisfaction, and financial performance for all stakeholders.
Q: What ROI can hospitals expect from implementing aligned revenue management?
A: Hospitals should ideally achieve ROI within 6-8 months through the process, improved revenue capture (15-20% increase for the physicians should be within 2-4 months), and faster accounts receivable cycles (45% improvement) will further improve their satisfaction. Additional value comes from improved physician satisfaction, their incentive to chart and spend the right amount of time with the patient, and reduced administrative friction.
Q: How does the approach improve physician satisfaction and retention?
A: Physicians save an average of 4.2 hours weekly on documentation, experience fewer administrative tasks, and see both improved transparency and improved revenue capture. This leads to better work-life balance, more time for patient care, and clearer financial reporting.
Q: What makes this solution different from traditional Ontario hospital revenue management systems?
A: Our approach uniquely aligns hospital and physician interests through more than a cost / benefit of improved OHIP revenue. The wholistic approach considers the opportunities through new ways of working, integrated workflows, enhanced engagement, and strategic insights helping inform more strategic decisions in the mutual interests of the hospital and the physician. This creates measurable value for both groups while improving overall system efficiency and effectiveness.
