From falling behind to peace of mind: A healthcare system’s journey to automated reconciliation

It’s a common problem for smaller and midsized hospitals and health systems: Falling behind on reconciling cash until there’s a massive backlog that can’t be worked through with conventional processes. The result for leaders of these organizations is constant uncertainty about account balances – and concerns about how that uncertainty could lead to large, unexpected profit and loss statement adjustments down the road.

That was the challenge faced by a U.S. health system that spans several licensed hospitals, medical centers, express and urgent care facilities, and specialty clinics. After a meeting with the organization’s vice president of revenue cycle, Crowe was engaged to:

• Review the organization’s current unapplied cash reconciliation processes and balances
• Make recommendations for future-state process changes
• Implement the Crowe Automated Reconciliation for healthcare solution

A strategic, three-phase approach to automating reconciliation

Crowe applied a three-phase approach to working with this client, with weekly status meetings and identification of potential risks throughout the engagement. With decades of healthcare experience, our specialists were able to dive deep into the organization’s processes and perform an end-to-end examination to identify opportunities for improvement.

Phase 1: Investigation

First, our healthcare specialists performed an analysis of the client’s approach to reconciliation. This analysis helped to find possible process gaps and to understand how to make the Crowe Automated Reconciliation for healthcare solution work best within the client’s existing processes.

We also looked at the organization’s unapplied cash-balance data over a three-month period to determine the extent of the problem at that point in time. Specifically, the client was concerned about fluctuations in its accounts.

The biggest issue we discovered in our investigation was a communication breakdown between two of the client’s key teams: finance and revenue cycle. Specifically, a lack of understanding existed on the part of both the revenue cycle and finance teams about how each other’s activities affected the overall unapplied cash general ledger (GL) balance. These two groups weren’t meeting regularly to figure out fluctuations within the unapplied cash balance, and neither knew what information the other needed or why.

Phase 2: Implementation

In the second stage, we implemented Crowe Automated Reconciliation for healthcare, our industry-specific technology that replaces manual unapplied cash GL account reconciliation processes with an automated process. This solution automates the cash and unapplied cash reconciliation process by performing a daily, three-way match between the general ledger, patient accounting system, and the bank. That automation ultimately improves the accuracy of the balance sheet and financial disclosures.

We also encouraged the client to open up and enhance the communication between its finance and revenue cycle teams in the interest of understanding each other’s priorities and terminology. The client agreed and, all told, this implementation phase took less than three months.

Phase 3: Evaluation

Once the Crowe Automated Reconciliation for healthcare solution was implemented and process changes were formalized and put in place, we spent the next few months running parallel processes to monitor the setup and use of the tool. We ran these processes to verify that the client was getting the data it needed to stay on top of the reconciliation – and to avoid falling behind or running into unexpected fluctuations.

Getting automated reconciliation results

In less than a year, the client had created a reliable reconciliation process, caught up on the backlog, and cultivated a better working relationship between the finance and revenue cycle teams through regular meetings and improved lines of communication.

Following the implementation of the Crowe Automated Reconciliation for healthcare solution and the necessary process changes, the client realized many benefits, which included:

• The business office started monthly reconciliations within the month of implementation for the first time in several years. 
• The revenue cycle team began daily matching and reconciliation, which represented an entirely new process. During the following month’s closing process, deposits were 98% reconciled, with only 2% unmatched. 
• Efficiency from month to month improved. Prior to the engagement with Crowe, the client needed three to four months to perform a single month of reconciliations. Today, the client typically can reconcile to the general ledger shortly after financial close.

The benefits went beyond process improvements. Within the first month after the solution went live, the client had adequate time to explore and move on to other new, systemwide process improvement initiatives. 

Additionally, with accurate and current reconciliations, the client can now confidently focus on decision-making without major revenue or compliance problems popping up unexpectedly.