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RCM Center of Excellence - Sarah Hirsch
Within the Shore Resource Team is a specialized group called the Centers of Excellence (COE). COEs came from operating careers to provide subject matter expertise and support to portfolio companies. COEs directly support companies on projects, share best practices between companies, and promote connectivity between companies so that 40+ companies create a competitive advantage through collaboration.
In this episode, we discuss Shore’s COE focused on Revenue Cycle Management (RCM). Sarah Hirsch, Chief Revenue Officer for Shore, talks about the strategies she employs to help multi-site healthcare portfolio companies navigate the complex world of RCM. Sarah also discusses the RCM infrastructure that Shore offers to enable these companies to thrive and scale.
Transcript
Introduction
Anderson Williams: Welcome to Bigger. Stronger. Faster., the podcast exploring how Shore Capital Partners brings billion dollar resources to the microcap space. Centers of Excellence at Shore Capital are subject matter experts who provide their functional expertise to support our portfolio companies. COEs, as they're known, share best practices and engage with our portfolio companies to address real business challenges and to create opportunities far beyond what a traditional microcap company would be able to do on its own.
In this episode, we highlight Shore Capital's Center Of Excellence focused on Revenue Cycle Management.
Sarah Hirsch: Sarah Hirsch, I'm the Chief Revenue Cycle officer here at Shore Capital Partners. I've been here since 2016 and was a founding member of the Shore Resource Team. Started my career working with the Shore Resource Team, doing portfolio company onboarding, which we referred to as the a hundred day plan, and then moved into our Centers of Excellence to focus exclusively on revenue cycle.
Anderson Williams: And give me a little bit of a description of what revenue cycle is and what you do in that space.
Sarah Hirsch: Yeah, so I work exclusively with our multi-site healthcare portfolio companies that accept third party reimbursement. So, reimbursement from an insurance company like Blue Cross Blue Shield, Aetna, etc. So, I make sure that we actually get paid for the services that we provide in our multi-site healthcare clinics.
So, oftentimes if you've been to a doctor, you know that a portion of that visit you pay for. Whether it's your co pay, your deductible, coinsurance. The other portion of that visit is paid by your insurance, and oftentimes your insurance will deny the claim or ask for additional information, et cetera.
So I just make sure that we're maximizing those collections from both parties, whether it's an insurance company or a patient.
Anderson Williams: And can you just give a little bit of context to the challenge that a multi-site healthcare company has when it comes to revenue cycle? Just for someone who's not familiar with that space, what are the challenges that require the investment of someone like you to really come in with your expertise and time to support our portfolio companies?
Sarah Hirsch: There are a couple of challenges I would say for our newer investments, smaller portfolio companies. It's just building that infrastructure to be ready to scale. Insurance companies can be rather difficult and you may have experienced that as a patient, but they'll do everything that they can not to pay a claim.
So there is a lot of follow up. The revenue cycle starts in the clinic, so it's also working with our operational teams and making sure that they're gathering the right information in order to get a claim paid. So if we didn't take the right imaging or we didn't do the right preoperative things, then we're not going to get paid for that claim.
There's something I can do in the back end and that's just revenue that we're no longer collecting. Likewise, from the patient, I think historically, you would go to the doctor, you might pay or co pay, you'd walk out the door. It's really hard to collect from a patient after they've left.
They've gotten their service. It was great. So we are moving those collections forward. We're doing credit card on file just like you would with any other kind of vendor that you would work with, whether it's your phone bill or your cable bill, whoever putting that credit card on file, doing the same thing as we think about healthcare.
And I think the most challenging thing is actually with scale. So if you're an acquisition based kind of growth model for your portfolio company, you're going to be acquiring new practices that are on different systems that have different technology. It's really hard to scale a revenue cycle team when they have to learn how to navigate multiple systems.
That's hard for anyone. It's really hard for the level of employee that does a lot of the blocking and tackling in this area. So we typically try to consolidate to one EMR or one kind of billing system in order to kind of get some economies of scale and streamline.
Start the Engagement
Anderson Williams: And what does it look like for you just from a practical standpoint?
How does a company come to you for help or how do you go to a company? How do you get an engagement started with you?
Sarah Hirsch: So it varies. Sometimes a portfolio company will reach out to me with a specific issue. So I've worked with multiple companies on, hey, we historically use this outsource vendor for our revenue cycle services.
We want to bring that back in house. Can you help us think about how we should do that and make sure that it goes smoothly? Cause any time these things don't go smoothly, we don't get paid for the services, and then we don't actually have cash in the bank to pay our employees, to grow, et cetera. So it is more in that we do maintain a steady cash flow while doing any of these transitions. So sometimes a partner on the deal will ask me to get involved if I don't collect monthly metrics from our portfolio companies on revenue cycle.
If I see metrics that are trending in a bad direction or, you know, a concerning direction, I do highlight that to the partner as well as CEO. And so I might step in at that point to kind of help diagnose maybe what's going on and what the path forward should be. I've also helped when we do consolidate to one EMR, one practice management system, I do kind of help the portfolio company think about that.
Both from a setup standpoint, as well as just again, trying to maximize and keep maintain cash flows as they kind of go through that transition because it is highly disruptive.
Anderson Williams: So stepping back out a little bit, how do you define the idea from a Shore perspective of what a Center of Excellence is?
Sarah Hirsch: I think it's an expert in a particular area. That's focused on making sure that our portfolio companies are operating at a very high level in that area, but also at a reasonable cost.
So I mean, I often have portfolio companies that perform really well, but their cost to collect is too high and then that's not a win for me. But I take personal ownership. If there's a revenue cycle issue at one of our portfolio companies, whether I'm currently involved or not, that's my problem and it's my job here at Shore to make sure that all of our companies perform in that area and that all of our companies are ready to exit.
And then no circumstances of revenue cycle can hold up and exit or make us not meet our financial requirements.
Complex Processes
Anderson Williams: It seems from the outside like a really complex set of issues and processes and so forth and something that an early stage at a rapidly growing, rapidly acquiring company could rarely have actual in house resources for. Is that accurate?
Where does this fit in in that idea of you're supporting as a Center of Excellence versus maybe when somebody brings that, hires for that in their growth trajectory, hire somebody for RCM. How does that work?
Sarah Hirsch: Yeah, we've been pushing portfolio companies to hire like a Director of VP level of revenue cycle kind of within the first six months of the investment.
Just because we do feel like it's really important to set that foundation to get it ready to scale. Oftentimes we scale and then we look back and things are not where they should be. It's a lot harder to kind of turn the bus around at that point. So we are trying to encourage portfolio companies to hire that earlier.
I would say with our last monthly site investment, they did hire that person within the first six months. And I think that's been really impactful.
Anderson Williams: And do you support that person directly if they don't have any of that sort of experience or historical knowledge in house, or how does that work if they do have somebody versus you being sort of the one person show supporting? Do you train? Do you, what other kinds of things do you do to support those people?
Sarah Hirsch: So in the scenario where they didn't hire someone in revenue cycle, I wouldn't step in full time, but I would step in on a partial or interim basis to help make sure that nothing kind of fell off the tracks. I have taken interim management roles at certain portfolio companies when there's a gap in revenue cycle leadership.
I feel that that's important and it's a critical time for the company, but most of the people we hire are experienced, but I think a core component of my role is the people that we hire are not always going to be as experienced as someone in a Center of Excellences.
And so, it is part of my role to train them and give them the tools, the templates, in order to maximize their success and also grow in their own careers. So, that's definitely part of my role.
Real World Scenario
Anderson Williams: And can you give, without naming a company name or anything, but an example of, for lack of a better way of putting this, the kind of financial impact, the operational impact of getting your house in order as it relates to revenue cycle management is? Just sort of real world before, after kind of story.
Sarah Hirsch: Sure, so we had one portfolio company. It took them on average 65 plus days to collect on patient visit, which is pretty high. And you can sense that that would have cash flow implications. It resulted in us writing off a decent amount of revenue because a lot of that revenue is way over 65 days. And then we were able to turn that around and get it down to 32 days.
So that improved when you've got way more cash and quicker when that days to collect is lower.
Anderson Williams: And was that negotiating with insurers or what did you do to bring that down?
Sarah Hirsch: For that particular business, I would say about 45 percent of the revenue actually comes from patients. And so it was really focusing on time of service collections.
Cause again, that was most of our accounts receivables was with patients. They just didn't want to pay their bills. After they had gotten the service in one of our clinics, so it was bringing that forward. But our denial rate at the time, we didn't have any metrics or transparency into what that was.
When I asked the team, they said they thought it was around 5%. When we actually got data on that, it turns out it was 30%. So we think about that for 30% of all the claims that we submit, we don't get paid on, they get denied, they go into a pile. Someone then has to manually go in and touch them, fix them, and resubmit them.
And that's a very expensive and from a labor standpoint, but also extremely time consuming because it takes someone probably five to 10 minutes to work a claim depending on how complex it is.
The RCM Cohort
Anderson Williams: And you also run a cohort with RCM leaders across the Shore portfolio. Can you just describe what that is?
Sarah Hirsch: Yes. So it's the highest level revenue cycle person at each portfolio company. So the role varies in titles across each portfolio company. We get together as a group quarterly. So that's three times via Zoom, one time in person. I also make them report monthly metrics to me. When they report those monthly metrics, they have to say what the three highs of the month was or what their three lows of the month was.
If there's trends across portfolio companies in that area, so if a bunch of people are centralizing revenue cycle management or a bunch of people are doing tax ID consolidations or a bunch of people are having issues with denials, then I will get that smaller group of individuals together to talk about it and I might bring in somebody else who's maybe not currently having that issue but maybe had it in the past.
So I do try to create more focus calls. Our most recent one was we have four companies on the same EMR and we were having issues with that particular vendor. So we got them all on a call together to kind of discuss what the key pain points were as well as gather some data to show that vendor that they were performing where they needed to perform.
Anderson Williams: So in that sense, both finding opportunities to bring outside knowledge, but also to facilitate some of the network knowledge across portfolio companies.
Sarah Hirsch: Yeah, I think it's hard if you've got a call with like 20 people on it, it's a zoom call. I only really hear from like five people versus if it's a smaller cohort of people where the topic is really relevant to them.
I think people are more engaged. It's hard to find a topic on a quarterly basis that's actually relevant to everyone at that time. I think it's a bonus for all the portfolio companies. They have an expert that they can reach out if they have a really specific question or if they feel like the individual that they have in the seat is just spread too thinly.
So I guess my advice is that having a Center of Excellence work on your portfolio company does not always mean you're underperforming. I work with a lot of companies that are extremely high growth and it's just really hard to scale at that speed. So sometimes it's actually a positive, like you are doing so well that we're going to give you some extra resources to make sure that you continue to do well.
So I wouldn't view it as a negative, but we're here to support you and partner with you in any way that we can. So that's, that's kind of how I look at it. And I think we're pretty flexible on what we're willing to do. So if someone asked me to do something that's really just not enjoyable, I will do it if that's what needs to be done for the company.
Anderson Williams: No, I appreciate that distinction that this is not an intervention necessarily. It could be a good problem to have when Sarah shows up. It's not an, oh, it's a, we're doing so well.
Sarah Hirsch: Hopefully people like it when I come.
Anderson Williams: That's right.
This podcast was produced by Shore Capital Partners, with story and narration by Anderson Williams. Recording and editing by Andrew Malone. Editing by Reel Audiobooks. Sound design, mixing and mastering by Mark Galup of Reel Audiobooks.
Special thanks to Sarah Hirsch.
This podcast is the property of Shore Capital Partners, LLC. None of the content herein is investment advice, an offer of investment advisory services, nor a recommendation or offer relating to any security. See the Terms of Use page on the Shore Capital website for other important information.