An organization's ability to create value and achieve targeted revenue growth depends on the reliability of and ability to consistently predict and validate revenue while avoiding unforeseen material adjustments. FTI Consulting's team of tenured senior finance operators has created a standardized revenue recognition methodology and tool that can be customized to your business.
FTI Consulting's tool will help you accurately forecast future revenue while ensuring a sound revenue recognition policy that will stand up to independent audits and external diligence. Once the model is operational, FTI Consulting's team transfers knowledge and ownership of the tool to the client through training and practical user manuals. FTI Consulting's clients are then prepared to independently administer and carry the process forward.
Healthcare organizations turn to FTI Consulting's professionals to evaluate, build, implement and improve processes and tools to power critical revenue recognition practices. FTI Consulting's team helps clients avoid forecasting surprises and enables them to make quick decisions using accurate and transparent information.
Sophisticated Analytics
Our approach harnesses clients' data to provide the visibility
needed to measure performance at levels optimized for their
business.
Customization
Our models are highly adaptable to reporting at consolidated levels
or detailed levels broken down by regions, business lines, payors
and more.
Defined Processes
No analytics tool is enough on its own. We transfer user knowledge
and help create the processes and structures for leveraging the
tool and acting on its results.
Defensible Output
Working closely with Big Four audit firms to validate our
methodology has helped ensure successful compliance audits for our
clients.
Efficient Improvements
Our tools are 80% pre-built, allowing us to focus our time on
quickly tailoring models to clients' specific data inputs and
analytical needs.
Access to Experts
Clients have access to a "one-stop shop" of industry
experts and past operators to support operational implementation,
clinical documentation and coding compliance, and when necessary
interim and bridge management. Because of the depth and breadth of
FTI Consulting's experience, our experts are able to assist
with virtually any challenge faced by a Healthcare CFO and their
Finance and Accounting team.
About the Model
Modeling the Income Statement
Our tools measure gross and net revenue against actual and expected cash collections over time.
- Driven by detailed cash collection "waterfall" analyses conveying timing trends in collections performance
- Subsequent cash receipts estimates based on historical performance
- Intuitive insight into contractual allowances, and bad debt expense provisions booked against revenue
- Captured at customizable levels of detail and on consolidated basis
- Tracks net effect of payments, refunds, credits, and other adjustments
- Uses analysis that covers, as available, monthly, quarterly, and multiyear periods
Modeling the Balance Sheet
Our tools assess the accounts receivable (A/R) reserve based on collections history.
- Measures collections against historical A/R balances on a regular periodic basis to inform potential changes in the valuation of balance sheet A/R
- Leverages collections waterfalls to estimate A/R reserve percentages using payer, age, service line, or other groupings that contain similar reimbursement and collectability characteristics
- Validates the overall health and collectability of A/R under various dimensions and scenarios
Key Features of Model
- Based on industry standard methodologies, views revenue recognition performance through both the lens of the income statement and balance sheet
- Aligns cash collections analyses by the healthcare industry
best practice of payer classification, bringing the model
in line with ASC 606 requirements and generating
insights of payer dynamics and performance
ASC 606 is the new revenue recognition standard that affects all businesses that enter into contracts with customers to transfer goods or services – public, private and non-profit entities. Both public and privately held companies should be ASC 606 compliant now based on the 2017 and 2018 deadlines. - Accompanied by detailed process and functionality documentation outlining the key personnel and steps involved in generating and interpreting insights
- Systematic, replicable, and scalable, with minimal input touchpoints
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.