To be successful in healthcare’s value-based payment environment, providers must understand the true costs of delivering care and how to price services.

However, without cost assessment and revenue cycle management tools enabling them to accurately capture or predict a wide range of factors influencing their clinical and operational costs, providers could be hamstrung as they transition from a fee-based to a value-based payment model.

Revamped processes, as well as automated abilities or cost accounting systems used to help determine costs, will be critical to thriving in the post-fee-for-service world, says Pamela Jodock, senior director for health business solutions at the Healthcare Information and Management Systems Society.

Traditionally, the chargemaster has been the vehicle for setting prices, but with changes in the marketplace and regulations, it is less a reflection of what it costs to deliver care and more a barometer of what commercial payers are willing to pay, Jodock contends.

“When you look at the bundled payment or pay-for-value environment, the chargemaster is not the measuring stick you want to use for establishing prices,” Jodock says. “It’s not about how much are payers willing to pay. We need to look at how much does it cost to deliver a service, what margin do we need to have in place to remain financially viable, and then what does that mean to us in terms of how we will price our services or products—and, also taking into consideration geographical market conditions and competitors in your area.”

She adds that value-based payment puts new demands on revenue cycle systems, making it all the more important for providers to truly understand what it costs to deliver care.

Based on initial results from the HIMSS Cost Accounting Survey, Jodock says some provider organizations do understand the costs involved and are able to price their services accordingly. However, she reports that the overwhelming majority of respondents so far to the survey—which is available online through December 31—are “not there” yet.

“Many of them do not have the tools and resources today to electronically identify what it costs to deliver a service,” Jodock says. “Some do it manually on a spreadsheet, and some don’t do it at all.”

Part of what HIMSS is trying to assess through the survey is whether providers utilizing electronic means are leveraging commercially available tools or more homegrown systems. “Generally, so far what we are seeing is that more sophisticated, larger organizations are able to develop their own in-house solutions to meet their needs,” Jodock reports. “For the industry to be successful, there needs to be widespread availability and adoption of those types of revenue cycle tools.”

Providers can still take the HIMSS Cost Accounting Survey here. Survey results will be released and presented at the 2016 HIMSS Conference being held Feb. 29-March 4, 2016 in Las Vegas.

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