IT-Enabled Revenue Cycle Transformation in

Journal of Management Information Systems
ISSN: 0742-1222 (Print) 1557-928X (Online) Journal homepage: http://www.tandfonline.com/loi/mmis20
IT-Enabled Revenue Cycle Transformation in

Resource-Constrained Hospitals: A Collaborative
Digital Options Inquiry
Rajendra Singh, Vitali Mindel & Lars Mathiassen
To cite this article: Rajendra Singh, Vitali Mindel & Lars Mathiassen (2017) IT-Enabled
Revenue Cycle Transformation in Resource-Constrained Hospitals: A Collaborative
Digital Options Inquiry, Journal of Management Information Systems, 34:3, 695-726, DOI:
10.1080/07421222.2017.1373005
To link to this article: http://dx.doi.org/10.1080/07421222.2017.1373005
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IT-Enabled Revenue Cycle Transformation
in Resource-Constrained Hospitals: A
Collaborative Digital Options Inquiry
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RAJENDRA SINGH, VITALI MINDEL, AND LARS MATHIASSEN
RAJENDRA SINGH (rajendra.singh@moore.sc.edu; corresponding author) is a clinical

associate professor in the Management Science Department at the Moore School of
Business, University of South Carolina. He received his Ph.D. in computer informa-
tion systems from Georgia State University. Before joining academia, he worked for
over 14 years as a production engineer, business process analyst, software quality
consultant, and information technology (IT) project manager in various industries.
His research interests include IT-enabled transformation of health-care delivery,
health-care operations, and business process innovation. He has published in MIS
Quarterly, Journal of the AIS, European Journal of Information Systems, and others.
VITALI MINDEL (vmindel1@gsu.edu) is a Ph.D. candidate at the Center for Process

Innovation, Robinson College of Business, Georgia State University. His research
interests center on health information technologies, with a focus on administrative
technologies and their role in revenue management in hospitals as well as on the
clinical side IT adoption. He has published in the Journal of the AIS.
LARS MATHIASSEN (lmathiassen@ceprin.org) is Georgia Research Alliance Eminent

Scholar, Professor at the Computer Information Systems Department, and cofounder
of the Center for Process Innovation at Georgia State University. His research
focuses on development of software and information services, on IT-enabled inno-
vation of business processes, and on management and facilitation of organizational
change processes. He has published extensively in major information systems and
software engineering journals and has coauthored several books. He has served as
senior editor for MIS Quarterly, and serves as senior editor for Information and
Organization and for the Journal of Information Technology.
ABSTRACT: Although hospitals increasingly consider solutions based on information

technolgy (IT) for revenue cycle management, contextual constraints and numerous
IT investment alternatives make it difficult to identify and realize appropriate solu-
tions. Thus far, however, health IT theory has been silent on how IT can support
financial and administrative purposes within hospitals, focusing instead on IT for
clinical support. Against this backdrop, we report on an action research project
involving IT-enabled revenue cycle transformation in a financially strapped rural
Color versions of one or more of the figures in the article can be found online at
www.tandfonline.com/mmis
Journal of Management Information Systems / 2017, Vol. 34, No. 3, pp. 695–726.
Copyright © Taylor & Francis Group, LLC
ISSN 0742–1222 (print) / ISSN 1557–928X (online)
DOI: https://doi.org/10.1080/07421222.2017.1373005
696 SINGH, MINDEL, AND MATHIASSEN
hospital. Our research contributes to health IT theory by expanding the discourse to

include revenue cycle transformation and by demonstrating how resource-con-
strained hospitals can improve their financial performance through selective invest-
ments in low-cost IT solutions across the revenue cycle. We also contribute to action
research methodology by generalizing our interventions to propose digital options
inquiry—a systematic approach to business process transformation that combines
digital options theory with diagnostic process mapping—to help researchers and
practitioners jointly understand and transform business processes.
KEY WORDS AND PHRASES: action research, collaborative practice research, digital
options inquiry, health care, health IT, revenue cycle management.
As is widely recognized, the U.S. health-care system is incredibly complex, waste-

ful, and underperforming [37, 93]. Inefficiencies are common; an estimated $107–
$389 billion is wasted annually, mostly in administrative health-care operations [15,
68]. Despite the fact that U.S. health-care spending is the highest in the world [35],
hospitals face significant financial challenges as costs continue to increase and
reimbursements from insurance payers continue to decline [2]. As a result, almost
a quarter of U.S. hospitals persistently operate at a loss and approximately three in
five hospitals operate barely above break-even margins [75]. Although hospitals
have little control over the socioeconomic, market, or regulatory environment in
which they operate, they can improve their financial situation by increasing the
performance of their revenue cycle [68]. The revenue cycle—a complex process that
includes all activities related to delivering health-care services to patients and getting
reimbursed for those services [14, 48, 91]—is critical to a hospital’s business
operations and must function smoothly to generate the stable cash flow needed to
maintain day-to-day operations and enable ongoing investments into service
improvements [85, 99]. Nonetheless, inefficiencies in revenue cycle management
(RCM) are widespread, often resulting in delayed and reduced reimbursements [91].
For more than two decades, business leaders and researchers have acknowledged
the need to improve IT-enabled business processes [45]. Businesses operating in
dynamic competitive environments typically rely on integrating IT into their day-to-
day operations to enhance their ability to create and capture value and to improve
competitive performance [92, 96]. As a strategic differentiator [96], many organiza-
tions invest in business process transformation (BPT) [45] to improve performance
and productivity [16, 51]. Following this trend, hospitals are increasingly using IT to
improve revenue cycle performance; anecdotal evidence suggests that IT can lead to
significant gains [24, 53]. The difficulty, however, is that for resource-constrained
hospitals—such as small community hospitals in rural areas—ongoing investments
in expensive, large-scale IT solutions such as electronic medical record systems
(EMR), computerized physician order entry systems (CPOE), and various enterprise
systems are infeasible. Further, a multitude of desirable IT options exist, thus
complicating decisions about which solutions to invest in [42], and many hospital
IT-ENABLED REVENUE CYCLE TRANSFORMATION 697
managers do not realize that options exist beyond the costly systems promoted by
health IT vendors. Despite this situation, the academic literature remains silent on IT
use for financial and administrative purposes within hospitals, focusing instead on
IT’s impact on clinical support. We thus ask the following research question: How
can a resource-constrained hospital improve its revenue cycle performance through
low-cost IT investments?
To investigate the question, we applied collaborative practice research (CPR) [76],
a form of action research, to transform the revenue cycle of a financially strapped
rural hospital (EMC, a pseudonym) in southeast Georgia. Over a two-year period,

we worked closely with key stakeholders to diagnose critical information manage-
ment problems, identify information requirements for improving revenue cycle
performance, and develop affordable, small-scale IT solutions ranging from better
use of the existing EMR system to implementation of an open source software (OSS)
solution. Our work expands health IT theory discourse by including revenue cycle
transformation—an underinvestigated area in the literature and an important concern
for hospital managers—as well as by demonstrating how resource-constrained
hospitals can improve their financial performance through selective investments in
low-cost IT solutions across the revenue cycle. Further, we contribute to action
research methodology by generalizing [67] the results of our collaboration with
EMC into digital options inquiry, an approach to BPT that combines digital options
theory [96, 97] with diagnostic process mapping [59, 66] to help researchers and
practitioners jointly transform business processes.
Hospital Revenue Cycle Management

The hospital revenue cycle begins when a patient or physician determines the need
for a medical service; it ends when the charges associated with the service have been
resolved through insurance payments, contractual adjustments, write-offs, or patient
payments [68, 85, 98]. While the hospital staff manages and executes the revenue
cycle, the cycle itself is an intrinsic part of a larger transaction involving patients and
other payers, including Medicare, Medicaid, and commercial insurers. Figure 1
provides an overview of the hospital revenue cycle.
As Table 1 shows, the RCM staff performs many information-intensive activities.
If these activities do not occur in a timely, accurate manner, billings can be delayed,
claims rejected, and revenue lost [68, 98]. In any business, managing a stable
revenue flow is important, but nowhere is the revenue-related administrative process
more complex than in health care, where it can use up to 12 percent of patient
service revenue [18], resulting in an estimated total cost burden of $471 billion to U.
S. health delivery organizations in 2012 [56]. Many factors increase RCM complex-
ity. Internally, the process involves the coordination and exchange of complex
information between various departments—some directly associated with clinical
decision making and patient care, and others (such as registration and billing) that
support care delivery and finance. Externally, some departments interact with a
Figure 1. Hospital Revenue Cycle Management
variety of payers, clinical providers, laboratories, billing service providers, and

collection agencies. Thus, for each patient encounter, RCM not only involves
delivering clinical care, but also communicating clinical and financial information
to numerous internal and external partners. This complexity is one of the reasons
many hospitals struggle financially. Other reasons include federal and state regula-
tions, the expected social responsibility of hospitals to care for patients regardless of
their ability to pay, the high default rate on bills (estimated to be about 50 percent)
among uninsured patients, and decreasing reimbursements [2]. Moreover, reimbur-
sements can take months and may be substantially lower than the claimed charges,
straining the hospitals’ cash flow.
To improve RCM performance, hospitals deploy various IT solutions to automate
rule-based tasks (such as coding and billing) and improve coordination and informa-
tion exchange within and across organizational boundaries. These IT solutions vary
widely in their capabilities, and range from simple spreadsheets to complex, fully
integrated enterprise systems. Today, IT’s impact can be seen in all stages of RCM.
Patient scheduling systems help optimize patient flow, registration systems capture
information needed for billing, EMR and CPOE facilitate the clinical documentation
required for itemizing medical charges, and practice management systems enable
charge entry, claim submission, and account reconciliation. The practitioner litera-
ture provides anecdotal evidence on the positive impact of IT use in revenue
collection activities [24, 53]. However, the IS literature on health IT has paid little
attention to RCM [85], despite computerized billing being among the first IT
systems in hospitals [39, 69] and one of the most commonly used.
Not all hospitals benefit equally from IT investments and costly IT solutions can
have disappointing results [85]. Moreover, hospital decision makers often find it
difficult to match their diverse institutional environments [68] with appropriate IT
Table 1. Revenue Cycle Stages and Activities
# Stage Key actors Brief description of activities

1 Patient scheduling Scheduling ● Receive referral information from physician
coordinator ● Schedule patient for a procedure, test, or admission into hospital
2 Patient registration Registration staff ● Enter/update patient information in hospital’s EMR system
● Verify insurance benefits coverage
● Verify procedure preauthorization from insurance provider
● Collect copayment, after taking into account any deductibles
3 Patient encounter Physicians, nurses ● Patient’s medical examination and diagnosis
● Perform any scheduled procedure or surgical intervention
● Admit the patient for continued observation, if needed
4 Clinical documentation Physicians, nurses ● Document all examinations, all procedures performed, clinician’s time spent, medications
ordered, and equipment used
5 Medical charge coding Coding specialists ● Enter codes in the EMR for each examination, procedure, and medical service according to
appropriate diagnosis-related categories
6 Billing Billing specialists ● Generate and review claim-related information
● Submit claims to appropriate payers (or to patient, if self-paying)
● Resubmit denied claims after modifications
7 Payment posting Accounts receivable ● Receive and reconcile all payments from individual and third-party payers and post relevant
specialists information to the patient’s account
8 Revenue recovery Business office staff ● Follow up with payers for denied reimbursements
● Follow up with patients for overdue payments, and negotiate discounts to encourage prompt
payment
● Arrange for debt collection by external agencies
● Write off uncollectible balance
IT-ENABLED REVENUE CYCLE TRANSFORMATION
699
solutions. For resource-constrained hospitals, acquiring the latest technologies is

infeasible, so they often rely on legacy IT and paper-based solutions for RCM
activities. Consequently, these hospitals lose revenue because their IT solutions are
inadequate. The problem is exacerbated by the fact that many hospital managers find
it difficult to identify appropriate IT solutions from the multitude of desirable
alternatives, or may not even realize that their existing IT systems can help improve
certain processes.
Digital Options Inquiry

Considering the wide variety of software solutions available for any organizational
function, decision makers can feel overwhelmed, especially because many software
vendors typically overpromise and underdeliver [64]. Moreover, it is not only the
numerous alternatives that make identifying and implementing appropriate IT solu-
tions difficult, it is also the changing business environment [104]. New regulations,
technological advances, new competitors, and macroeconomic changes can reduce
the life cycle of existing IT, which, in turn, necessitates investment in newer IT
solutions even before businesses can earn a reasonable return on earlier investments.
Decision makers are also often tempted to adopt the latest technologies, which can
be problematic because contextual conditions vary from one organization to another
[57, 95]. Clearly, IT decisions are important; productivity and organizational perfor-
mance improve when IT is aligned with the task at hand [7, 51] and the results tend
to be better when IT investments target specific business processes [45, 88]. But
identifying appropriate IT solutions for specific business processes remains difficult
and, while choosing solutions is central to IS strategy research [11, 96, 108], there is
little consensus on how best to approach IT investment decisions [12, 41, 94],
especially in dynamic environments rife with uncertainty.
In such environments, digital options—that is, IT-enabled strategic options—can
offer organizations an incremental choice process that lets them consider IT invest-
ment alternatives in a cost-effective way [96]. With roots in the financial industry, an
option gives an organization rights to future investment in a strategically important
opportunity without obligations for full investment, at least until until a substantial
portion of the opportunity’s uncertainty has been resolved [1, 36]. Bowman and
Hurry [20] suggest three sequential stages of financial options: a shadow option (i.e.,
an investment opportunity that awaits recognition), a real option (i.e., an investment
opportunity for which preferential access to a future investment has been obtained),
and a struck option (i.e., an option that has been activated, often through a larger
investment). Similarly, in the IT domain, a digital option can exist in one of three
distinct stages: (a) the available digital option is known but awaits development; (b)
an actionable digital option is selected and examined; and (c) a realized digital
option has been acted upon [97]. Studies examining financial investments have
shown that options thinking can provide sustained performance and a competitive
advantage by helping organizations manage uncertainties associated with
investments in different assets [20]. Management literature has also considered the
identification and management of strategic managerial options an important organi-
zational capability [61, 62].
Drawing on financial options theory, Sambamurthy et al. [96] argue that digital options
can support strategic decisions about IT investments to transform business processes.
Emphasizing the role of digital options in enabling digitized work processes and knowl-
edge systems, they proposed a capability-building and entrepreneurial action framework
that can enhance organizational agility in uncertain competitive environments. Further,
they suggested that—like financial options—the value of digital options increases when
the organization holding the options is able to exploit the opportunity. Despite the value of
Sambamurthy et al.’s [96] influential work in bringing options theory into the IT discourse,
questions remained about how researchers can examine digital options in an organizational
context. To address this issue, Sandberg et al. [97] propose an iterative model for
examining digital options that includes four interdependent activities. The first activity
—context appreciation—involves understanding the organizational context and identify-
ing suitable business processes for IT investment. The second activity—process charac-
terization—involves identifying and describing key tasks and their interdependencies, the
nature of the information processing involved in each task, current IT capability, and
performance implications. In the third activity—information requirements analysis—each
task is analyzed and characterized according to its information requirements. Finally, the
digital options recognition activity involves iterating between the results from process
characterization and information requirements analysis to provide guidance on what needs
to be addressed and which digital options would be appropriate for that purpose. Although
Sandberg et al.’s [97] model helps in understanding the role of organizational context,
business process characteristics, and information requirements in determining digital
options, it does not explain how researchers and practitioners can systematically engage
in context appreciation and process characterization activities and develop the selected
digital options to realize BPT.
Hence, during our engagement at EMC, we worked closely with RCM staff to
diagnose problems in the hospital’s revenue cycle, identify related information
requirements, and develop various IT solutions in response to those requirements.
Generalizing [67] from these collaborative problem-solving experiences, we draw on
digital options theory [96, 97] to propose a model for digital options inquiry that
centers on the interplay between identifying process information requirements and
developing digital options for BPT. As shown in Figure 2, by combining digital
options theory with diagnostic process mapping [66], the model offers researchers
and practitioners a systematic approach for jointly engaging in BPT.
Diagnostic Process Mapping

Just as physicians must diagnose a patient before considering treatment options—
including specific procedures and medications—organizations must diagnose a
business process before considering their digital options [97]. Such diagnostic
Figure 2. Digital Options Inquiry for Business Process Transformation
activity must recognize the business process context by analyzing perceived pro-
blems, their root causes, and their effects. The literature identifies different process
diagnosis techniques that vary in complexity and sophistication [59]. We adapt a
simple yet useful method of mapping business process problems [66] that can lay the
ground for context appreciation and process characterization activities [97] and for
identifying information requirements. Such an approach is especially helpful in
action research, where academic knowledge and experience merges with practi-
tioners’ domain expertise to uncover the underlying causes of problems in business
processes. Outside researchers bring a fresh perspective, which helps practitioners
illuminate the perceived process problems. At the same time, practitioners help in
understanding the specific organizational context.
Generally speaking, a map is an interpretive description of a situation that offers
insight into possible actions to take in that situation or ones like it [66]. In drawing a
map, one can select and attach meaning to some elements or events instead of others
[66]. Diagnostic maps are based on the idea that a problem situation has a cause and
effects that call for possible solutions. Accordingly, a diagnostic map of a business
process relates situations perceived as problems (including anomalies and failures) to
their root causes and to more general organizational or behavioral features [66]. Each
map locates and describes an existing problem, as well as possible responses (as
perceived by participants) following the pattern in Figure 3 [66]. This mapping
technique forces participants to systematically examine a situation as a specific
problem, viewing it as the cause or consequence of other problems within other
maps.
Information Requirements Identification

After uncovering business process problems in an organization, participants must
identify the information requirements as the basis for developing specific digital
options [27, 31, 97]. We can view an organization as a set of multiple interlocking
processes [29], and many factors can disrupt these processes. Such factors may
include lack of human capabilities [65], insufficient IS resources [92], and issues
• Participants see the situation as a specific problem and try to explain it.
Participants may iteratively reformulate the problem as they relate possible
causes, consequences, and alternatives.
• Participants formulate theories about what happened in the situation, assess
possible causes of the problem, provide evidence of causes, check for
inconsistency between different causes, and suggest alternative explanations
that may expose other maps and reveal conflicting perspectives and beliefs.
• Participants assess impacts, which may be currently observable or occur in
the future, to evaluate whether the problem is serious and who is impacted
by it. Such evaluation is valuable before undertaking any correcting action;
it can lead to dropping the chosen problem and discovering a new
interpretation of the situation.
• Participants attempt to restructure the situation by designing alternative
actions, moving from evaluating consequences of existing problems to

developing positive statements about a possible future. In doing so, they
iteratively consider conditions and possibilities within their action domain.
Figure 3. Diagnostic Process Mapping
with cross-functional coordination and integration [60, 109]. Often, however, orga-
nizations face information management problems rooted in a misalignment between
the information required and the information available [31]. For instance, an orga-
nizational unit might have diligent employees and managers, and even the resources
it needs. However, if the information it uses to support its operations is incorrect or
incomplete in key respects [31], it is likely to produce suboptimal output. Moreover,
because processes and tasks interlock in modern organizations [29, 70], suboptimal
outputs caused by information deficiencies are likely to ripple throughout the
organization, causing complications elsewhere. Researchers have identified multiple
information requirements, including equivocality, ambiguity, quality, uncertainty,
timeliness, and shared understanding [3, 13, 27, 28, 84]. Here, we focus on require-
ments as requisite conditions for effective information capture and exchange across a
business process. Researchers have considered two broad categories of such infor-
mation requirements: reach and richness [26, 38, 96].
Information reach refers to the “number of people who participate in the sharing of
information” [38, p. 23]. Sambamurthy et al. [96] define reach as the extent to which
a firm deploys common, integrated, and connected IT-enabled processes. Hence, we
find high reach in processes that “tie activity and information flows across depart-
mental units, functional units, geographical regions, and value network partners
(including suppliers, customers, and vendors)” [96, p. 247]. Generally, information
reach refers to the flow efficiency of messages between (a) tasks within a process,
(b) a task within one process and a task within another process inside the same
organization, and (c) a task within a process and a task within another process in a
different organization. Information flow problems include those related to the rate
and timeliness of message exchange among intended recipients within and across
organizational boundaries.
Information richness is also important for supporting management and organization
design [27], as it can be futile and even damaging if information is inaccurate, incompre-
hensible, confusing, or incomplete. Generally, information richness denotes the degree of
the information’s accuracy. Specifically, it refers to the quality of information from the
user’s perspective [38, p. 23]. Accordingly, users might define information richness in
terms of its bandwidth (the amount of information that can be transmitted), currency
(speed of information transmission), customization, interactivity, reliability, and security
[38, p. 25]. Sambamurthy et al. define information richness as the “quality of information
collected about transactions in the process, transparency of that information to other
processes and systems that are linked to it, and the ability to use the information to
adapt or reengineer the process” [96, p. 247].
Together, information reach and richness provide an accurate profile of a business

process. To achieve BPT, however, reach and richness must complement each other.
Any imbalance—or trade-off—between reach and richness can generate asymme-
tries that limit information exchange within and across organizational boundaries
[38, p. 28]. By allowing easy information sharing, digital networks make it possible
for people to exchange rich information, thereby bridging information asymmetry
and eliminating the reach–richness trade-off [38, 96].
Digital Options Development

Next, participants evaluate a portfolio of digital options and choose specific ones to
develop, engaging in exploration (searching for new assets and capabilities) and
exploitation (operating with and refining existing assets and capabilities) [73]. Each
organization has specific internal and external circumstances; to arrive at an appro-
priate balance between exploration and exploitation [73], participants must continu-
ously identify and develop digital options, finding alternative options for those that
are not realized.
Navigating the three stages of digital options—available, actionable, and realized [97]—
can be difficult. The process requires that participants understand multiple alternatives,
skillfully evaluate each alternative, and effectively implement the selected alternative. As
the available options increase, it may not be feasible to develop all of them. Moreover, the
consideration of available digital options must take into account the organizational context
[89], including level of competition, financial constraints, or cultural idiosyncrasies. For
example, considering a centralized IT solution holds limited value if the organization
cannot afford it or key employees are likely to resist it due to internal politics [87].
Insufficient attention to organizational context will likely result in failure to move a digital
option from actionable to realized.
Business Process Transformation

BPT—variously referred to as business process reengineering [29, 46], business process
management [58], collaborative business engineering [34], and process innovation [47]—
is an organization-wide approach that “requires redesigns in which IT, business processes,
and other organizational elements are aligned and jointly optimized” [45, p. 8]. Compared
to other management approaches, BPT focuses on intra- and interorganizational business
processes and requires a complex alignment of processes, information, and systems as

work practices change to accommodate emerging information needs during IT adoption
and implementation [87]. While prior research [97] has suggested a useful processual
approach to recognizing an organization’s digital options, our digital options inquiry
model includes explicit consideration of a digital option’s impact on BPT. Thus, diagnostic
mapping, analyzing information requirements, and developing select digital options can
lead to the realization of digital options that successfully transform the target business
process.
Research Design
Collaborative Practice Research
Because the driver of this research was to improve RCM performance enabled by IT
in a hospital context, we selected action research [9, 33, 90, 103] as our research
method. Many studies have successfully adopted and applied action research to
implement IT-enabled organizational change and studied the outcomes of such
change [8, 50, 55, 74]. Action research has also proved useful in investigating
complex issues related to health care, and specifically in studying the consequences
of IT implementations [21, 22, 30, 63].
Combining theory generation with researcher intervention to solve immediate
organizational problems [10], action research seeks to “contribute both to the
practical concerns of people in an immediate problematic situation and to the
goals of social science by joint collaboration within a mutually acceptable ethical
framework” [90, p. 499]. Susman and Evered [103] have suggested several char-
acteristics that make action research a desirable method in a study such as ours. Most
important, action research let us participate in both the research and problem-solving
aspects of EMC’s situation in a way that links theory with practice and thinking with
doing [102]. Further, as a particular form of engaged scholarship [106], action
research helped us understand the different perspectives of key EMC stakeholders
and thereby to study complex problems related to RCM transformation.
Despite its utility, action research presents specific challenges, including the need
for researchers to have an in-depth understanding of the local context and to adapt
the research design and specific interventions to accommodate changes in that
context [25, p. 153]. To address these challenges, we adopted a particular type of
action research—collaborative practice research [76]—in which researchers work
closely with key stakeholders involved in a specific business practice to gain
sufficient understanding of the local context and to participate actively in the
problem-solving process. Hence, choosing CPR helped us reduce the substantial
RCM knowledge gap that existed at the start of our engagement.
CPR strikes a useful balance between rigor and relevance and has been success-
fully applied in other information systems (IS) studies [19, 40, 54, 55]. Iversen et al.
[55] suggest several characteristics that distinguish CPR from other action research
approaches. For this study, our CPR has focused on understanding, developing
support for, and improving specific professional practice, and has supported close
collaboration between researchers and practitioners to develop and implement the
agreed-upon interventions. With this focus on interventions into a specific business
practice, CPR affords unique opportunities to develop action research methodology
dedicated to that practice. Hence, similar to the way that CPR was applied to
reflective systems development [77, 78, 79] and contributed to action research into
IS development, this study has applied CPR to develop digital options inquiry as a
contribution to action research into BPT.
Data Collection and Analysis

The first and third authors were involved throughout the collaboration with EMC;
the second author joined later with an interest in RCM and in adding independent
analytical capability to the research team. Data collection started in March 2008,
when we held an initial workshop with EMC’s revenue cycle stakeholders. As a
workshop follow-up, EMC’s chief financial officer (CFO) invited us to visit the
hospital in April 2008. During that visit, we interviewed the CFO, the business
office director, the director of coding and documentation, the billing supervisor, a
nurse manager, and the IT manager. These early interactions resulted in a two-year
collaboration with EMC. Our goal was to identify and develop affordable, small-
scale IT solutions that would improve EMC’s revenue cycle performance. We visited
EMC once each month for a full-day session in which we reviewed the progress of
various interventions with the steering committee (the CFO, the business office
director, the director of coding and documentation, and the two researchers), inter-
viewed RCM staff, and planned for subsequent interventions. In addition, the first
author visited EMC every other week to collect data, facilitate and manage inter-
ventions, provide training to revenue cycle staff, and coordinate technical issues with
EMC’s IT team. We made a final follow-up visit in June 2011.
We collected evidence from multiple primary and secondary sources (see Table 2). In all,
we conducted more than 125 semistructured in-person interviews at EMC, covering more
than 40 employees across key managerial functions and different RCM stages. We
prepared a protocol to structure the interviews and to collect appropriate information,
and tailored it for specific interviewees. For example, the protocol for the IT specialist
included information about EMC’s IT infrastructure, an overview of IT solutions support-
ing RCM, current and planned projects, security risks, and other technical challenges.
Interviews typically lasted 30 to 120 minutes, with the two researchers taking separate
notes. We recorded all interviews, except those that discussed specific patient cases or
when an interviewee requested that the interview not be recorded. We transcribed all the
interviews and workshops relevant for diagnostic mapping, requirements identification,
and analysis of possible solutions to various RCM problems. We conducted direct
observations of how different RCM staff members conducted their day-to-day work,
which technologies they used and how they used them, what problems they faced, and
Table 2. Primary and Secondary Data Sources at EMC
Primary data sources Secondary data sources

● Workshops (6) ● Internal documents (150), including
● Steering committee meetings (20) ● EMR system reports
● Clinical and nonclinical staff ● Presentations
meetings (8) ● Meeting notes
● Semistructured interviews (125) ● E-mails
with EMC’s
● Clinical documentation
● Chief financial officer

● Consultant’s audit reports
● Business office manager and
● Personal communications
staff
● IT resources questionnaire
● Billing supervisor and staff
● External documents (5)
● Quality manager
● Public data (www.cms.gov; www.jointcom
● Utilization review manager
mission.org)
● Documentation and coding
manager
● IT manager and staff
● Nursing managers
● Registration supervisor and staff
● EMR system consultant
● Field observations (50), including
● Patient registration
● Clinical documentation
● Coding and billing
● Follow-up on delinquent
accounts
● Interaction with insurance
payers
which opportunities for improvement they saw. Apart from face-to-face interviews and
direct observations, we also interacted through e-mail and phone to clarify issues and
collect additional information. In particular, we requested and received weekly data
updates for key interventions. We also reviewed secondary data sources, including
technical specifications of the EMR system, internal presentations, minutes of monthly
staff meetings, and e-mails.
We generalized [67] the digital options inquiry model (Figure 2) based on our experi-
ences at EMC and used it to organize and analyze the rich data, as well as to present a
comprehensive account of how we collaborated with EMC stakeholders to explore and
exploit digital options to address the hospital’s identified RCM information requirements.
In doing so, we followed Miles and Huberman’s [83] data analysis strategy by iterating
between data reduction, data display, and conclusion drawing. Data reduction helped us
select, simplify, focus, and abstract the rich data into a comprehensive account [83, p. 10]
of how we collaborated with EMC stakeholders during diagnostic process mapping,
information requirements identification, digital options development, and BPT
(Figure 2). The diagnostic maps (see the Online Appendix) proved very helpful in this
process by letting us zoom in on specific problems in each RCM stage and identify related
information requirements and digital options for detailed analysis. For data display, we
developed a comprehensive table that summarizes key data in the different RMC stages
and the different activities involved in digital options inquiry (Table 3, in the next section).
This compressed assembly of information served as a repository for our data reduction
efforts and helped us draw conclusions [83] about problem solving at EMC, how the
interventions were identified and organized, and how each intervention impacted revenue
cycle performance.
Analyses and Results

Diagnostic Process Mapping
Following the diagnostic mapping technique and based on both discussions with
RCM staff and field observations during the initial EMC visits, we created a map for
each revenue cycle stage. These maps (summarized in the Online Appendix) identify
relevant internal and external conditions that led to problems in the hospital’s RCM,
reveal the immediate impact of those problems, and point to possible interventions to
address them. We improved the maps’ validity through discussions with key stake-
holders, which helped us establish both shared awareness of RCM problems and a
joint commitment to action. Overall, the maps illustrated the need to address several
information reach and richness requirements to improve EMC’s RCM performance,
as summarized in Table 3 and detailed in the following.
Information Requirements Identification

Most problems reported during EMC’s billing and revenue recovery stages were
rooted in information reach and richness deficiencies in the scheduling and registra-
tion stages. We found that the registration stage related deficiencies in information
richness were often a result of inadequate training, time pressures, and unavailable or
outdated insurance information (Table 3, row A). For a medical claim to be accepted
and successfully processed by a third-party payer, it must be complete and accurate,
containing all details of patient demographics and the subscriber’s insurance cover-
age. Missing information caused delays in claim submission; if claims were delayed
more than 60 days after a patient visit, some payers refused reimbursement. We
observed that the hospital submitted 60–70 claims every month with missing or
inaccurate information, which led to processing slowdowns and subsequent denials.
In addition, deficiencies in information richness during scheduling and registration
often caused inefficiencies in later RCM stages, requiring billing specialists to spend
considerable time tracking down information they should have already received
(Table 3, row B).
Table 3. Summary of Digital Options Inquiry
RCM stage Information requirements identification Digital options development Business process transformation
(A) Registration Richness: Exploitation: ● Registration-related problems reduced
● Inadequate or inaccurate information on 1. Identified previously unused registra- from an average of nearly 70 per
patient demographics and insurance cover- tion quality report in the EMR system month in November 2008 to less than
age leads to claim denials that lets staff review and address 10 per month after July 2009
registration-related problems— (Figure 4)
November 2008 (digital option
realized)
2. Added pop-up message feature in the
EMR to alert staff when they leave
key information fields blank during
registration—August 2009 (digital
option realized)
(B) Registration Richness: Exploration: ● RCM problems addressed via pro-
and billing ● Incomplete or inaccurate information cap- 3. Configured an OSS application for blem-tracking system increased from
tured during registration reduces billing staff use as problem-tracking system to 20 in March 2009 to 80 in December
productivity track errors identified across RCM 2009 (Figure 6)
Reach: stages—March 2009 (digital option ● Problems reported during billing stage
● Ineffective information flow across RCM realized) (by claims processing system and
stages causes breakdowns in communica- Exploitation: billing staff) dropped from 1,326 in
tion and lack of coordination 4. Used the problem-tracking system to May 2009 to 328 in March 2010
create a process of assigning appro (Figure 7)
priate responsibility for fixing RCM- ● About 80% of claims submitted in
related errors—April 2009 (digital 2011 had no problems, compared to
option realized) 50–60% of claims in 2008
(C) Registration Richness: Exploration: ● Co-pay collection (during registration)
and revenue ● Missing information on the creditworthiness 5. Acquired credit-checking software to increased from approximately $3,000/
recovery of self-paying patients increases defaults on use during registration and during month in 2008 to an average of more
bills negotiations over delinquent patient than $9,000/month in 2011

accounts—May 2009 (digital option
709
realized)
(continues)
710
Table 3. Continued
RCM stage Information requirements identification Digital options development Business process transformation
(D) Clinical Richness: Exploitation: ● After initial resistance, more than 80%
documentation ● Incomplete information captured in paper- 6. Used CPOE for clinical documentation of nurses were using CPOE by June
and medical based charts by clinical staff during clinical —September 2010 (digital option 2011
charge coding encounters reduces charge coding and staff available and actionable, but not ● Continued errors in clinical orders as
productivity, and contributes to missed fully realized) some physicians ignored auditor’s
charges Exploration: reports and resisted using CPOE (only
7. Proposed external audit of clinical 27% of physician orders used CPOE
documentation—April 2009 in summer 2011)
SINGH, MINDEL, AND MATHIASSEN
(digital option available and action

able, but not fully realized)
8. Created paper checklists to assist in
documentation (as an interim solution
to using CPOE)—October 2010
(digital option realized)
(E) Billing and Richness: Exploration: ● Cases of discrepancies (between
payment ● Missing information on whether reimburse- 9. Created an Excel-based application to reimbursed and contractual amount)
posting ment amounts align with contractual agree- verify each payment against the con- reduced from 2–3 patient accounts
ments with payers tractual amount—October 2009 (digi- each month in 2008 to approximately
tal option realized) 1 patient account every other month in
2011
(F) Revenue Reach: Exploitation: ● Accounts receivable days gradually
recovery ● Slow follow-up by revenue recovery depart- 10. Used EMR-generated custom reports decreased from 61.6 days in
ment on patients with overdue bills to identify delinquent accounts and September 2008 to 54.6 days in May
initiate quicker follow-ups—November 2011
2009 (digital option realized)
(G) Scheduling Reach: Exploitation: ● Cases of payer delays or denial of

● Ineffective information flow between sche- 11. Assigned all preauthorization claims due to missing preauthorization
duling and third-party payers for determining requests to a dedicated person reduced from 5–6 claims each month
preauthorization of care and insurance (patient access coordinator)—April in 2008 to only 2 claims during the
eligibility 2010 (digital option realized) entire year in 2010
12. Extended the existing laboratory
services scheduling system to all
admissions and related insurance
eligibility verifications—March 2011
Exploration:
13. Used payers’ web-based portals for
preauthorization requests—April 2010
711
Another information richness requirement related to patient creditworthiness

(Table 3, row C). Approximately one in six patients were self-pay patients—that
is, they were uninsured and thus responsible for paying the bills out of pocket.
Further, among the insured, a large proportion did not meet their insurance
deductibles and were responsible for paying a share of the medical bill.
Without knowing a patient’s financial situation, EMC registration staff members
could not know which patients they should ask to pay upfront (for nonemergency
care) and could not estimate the likelihood of getting paid back. Not knowing the
creditworthiness of patients also hurt the revenue recovery stage as the business
office staff did not possess all the relevant information needed to negotiate
payments on delinquent accounts. We also detected information richness defi-
ciencies during the clinical encounter stage that impacted the documentation,
coding, and billing stages. In many cases, nurses and physicians neglected to
document some procedures, medical equipment, lab tests, or medications pro-
vided to patients (Table 3, row D). As a result, the claims submitted to third-
party payers and patients did not include all charges. This would lead to the
hospital providing care without getting reimbursed for it. We uncovered further
deficiency in information richness in the billing and payment posting stages
(Table 3, row E). After receiving reimbursements from third-party payers, the
billing and payment posting departments did not have the information on whether
the payments received were in accordance with the contractual agreement. As is
typical in the health-care industry, EMC had negotiated rates for reimbursements
for different codes with each insurance company, and the payment posting
department was not certain whether it received correct payments.
The diagnostic mapping also helped uncover information reach issues within
RCM-related departments and other hospital functional units (such as finance)
and externally with third-party payers. Within RCM, we observed deficiencies in
information flows between the registration and the billing departments. Often,
information that was supposed to be sent by registration staff to the billing
department was delayed—and in some cases, not sent at all—causing break-
downs in coordination (Table 3, row B). In addition, we found information reach
deficiencies in the revenue recovery stage, when the business office staff
attempted to reclaim overdue payments from patients (Table 3, row F). The
staff often failed to initiate timely follow-ups with self-pay patients. As a result,
unpaid balances were often sent to collection agencies or had to be written off.
We also found deficiency in information reach between the hospital and third-
party payers (Table 3, row G). To authorize nonemergency care, the scheduling
staff had to send the information it obtained from patients and their physicians to
insurance companies to get preauthorization. Without that preauthorization, the
hospital could provide care, but would not get reimbursed. In many cases, the
information transfer from the scheduling staff to the payers took too long; in
other cases it did not happen at all. Both scenarios led to lost revenue.
Digital Options Development

Based on the information requirements derived from the diagnostic maps, we
worked with EMC stakeholders to identify and develop digital options to improve
RCM performance. Some of these options were based on exploration efforts (i.e.,
they were new assets or capabilities that EMC acquired), while others were based on
exploitation efforts (i.e., they built on EMC’s existing assets and capabilities).
To address the information richness deficiencies during registration, we exploited a
feature in the hospital’s EMR system (Table 3, row A). We discovered that the EMR
contained an unused registration quality report that could help registration staff
review and address missing and inaccurate information by identifying errors based
on nine preconfigured parameters (including patient address, demographic informa-
tion, and subscriber insurance information). After securing staff commitment and
ongoing training, we made the option actionable in a pilot run and subsequently
realized it as an integral part of the registration stage. The hospital later comple-
mented this initiative by having the EMR vendor configure pop-up messages for all
common registration errors to remind registration staff to correct any missing or
incomplete patient information during registration (Table 3, row A). To address
information richness requirements related to patient creditworthiness, we explored
available IT solutions on the market (Table 3, row C). EMC made this option
actionable by acquiring an online credit-checking software, then quickly realized
the option by integrating the software into the registration and revenue recovery
stages.
We also addressed information richness deficiencies in the clinical-encounter stage
by exploiting an existing unused CPOE module in the hospital’s EMR to capture
patient encounter-related information (Table 3, row D). Although the option was
readily available and actionable, it was not easily realized due to resistance from the
clinical staff. The physicians and nurses expressed concerns that using the CPOE
might increase their workload and disrupt their routine. Therefore, the option was
put on hold. Instead, we worked with the director of coding and documentation to
design paper-based charge checklists that the nurses agreed to use. Over time, as the
nurses got used to documenting charge-related information based on checklists, their
resistance to CPOE subsided; by June 2011 (nearly two years after initial imple-
mentation), 80 percent of nurses used CPOE. In contrast, the physicians refused to
use the paper-based checklists, and by summer 2011, the physicians used CPOE for
only 27 percent of orders. Thus, the CPOE exploitation took much longer than
anticipated, and the option was realized only partially by the clinical staff. Finally,
we addressed information richness deficiencies in the billing stage by exploring new
digital options (Table 3, row E). We created an Excel-based system that compared
received payments for charges with contractually agreed-upon rates for each diag-
nosis code for each payer. To make it actionable, we tested the option in a pilot
study, where it proved sufficient. It was subsequently realized as an integral part of
the billing stage.
To address information reach problems resulting from ineffective information flow

across RCM stages, as well as information richness problems due to incomplete or
inaccurate information in various RCM activities, we explored software solutions
that could help to effectively report and manage the problems. We considered several
alternatives on the market, but eventually decided to go with an option that had
proved useful in another EMC process: an open-source issue-tracking system that
the IT department used to manage its work orders. This option was readily available
to help address information reach and richness problems, but we had to reconfigure
the system substantially to make it actionable as a tool for coordinating work across
the RCM stages (Table 3, row B). The problem-tracking system let billing staff track
problems originating in the registration stage and share timely information about
correcting them (see the screenshot of the system interface in Figure 4). Once the
system was realized, it played a vital role in coordinating work and effectively
addressing problems in various RCM stages.
To address the information reach deficiencies in revenue recovery, we exploited an
underutilized capability in the hospital EMR system (Table 3, row F). We identified
a custom report that listed accounts that were more than 90 days overdue and
brought those accounts to billing personnel’s attention before the default deadline
(typically 120 days after the date of service). Using this new report, the billing
department was able to contact patients sooner about outstanding payments. Again,
to make it actionable, we tested the option in a pilot run and subsequently realized it
as an integral part of the revenue recovery stage. We also addressed the information
reach deficiencies related to missing preauthorization of care from third-party payers
and insurance eligibility by developing a digital option that combined exploitation
and exploration of IT and organizational capabilities (Table 3, row G). We exploited
existing capabilities by creating a new patient access coordinator position to manage
all preauthorization requests. Then, as we explored available IT solutions to comple-
ment the new position, we worked with the registration supervisor to identify payers’
web-based portals for submitting preauthorization requests and tested it to determine
Figure 4. Problem-Tracking System

its potential as an actionable digital option. In addition, we worked with the CFO
and the business office director to extend the existing laboratory services scheduling
system to all patients, thereby centralizing admissions and insurance verifications.
Thus, we realized a combination of existing capabilities (the new patient access
coordinator position and the scheduling system) and new IT capabilities (portals) as
a comprehensive digital option that improved performance during the scheduling
and registration stages.
Business Process Transformation

Developing this portfolio of digital options helped improve EMC’s RCM perfor-
mance. Based on the registration quality report, the registration staff could easily
identify and correct missing or incomplete patient information daily (Table 3, row
A). As Figure 5 shows, the number of unresolved problems at the end of each month
dropped significantly after this option was realized in November 2008 (from an
average of nearly 70 per month to less than 10 per month). The minor upward blip in
May 2009 resulted from a training issue: some new staff members had joined the
team, but once they became familiar with the registration process and started using
the registration quality report, the number of problems subsided again.
Using the problem-tracking system improved the flow and accuracy of information
exchange across the revenue cycle (Table 3, row B). As a result, more RCM-related
problems were identified—and resolved effectively—by the RCM staff before they
could lead to delays or claim denials. When the problem-tracking system was first
implemented, only 20 or so problems were initially identified, but the number of
identified problems increased significantly as more RCM staff recognized its value
and began using the system (see Figure 6).
The turnaround time for identifying and fixing a problem is now less than a day;
previously, it may have taken several days and multiple communications among the
involved parties using various approaches—in-person visits, e-mail, hand-delivered
Figure 5. Problems in Registration Quality Report

Figure 6. Problems Identified in Problem-Tracking System
Post-it notes, and telephone calls. Overall, the use of the problem-tracking system
improved the quality of information exchange, as seen in the significant reduction in
problems identified during the billing stage, from 1,326 in May 2009 to 328 in
March 2010 (Figure 7). These numbers include both automated billing edits gener-
ated by EMC’s claims processing system and edits entered manually by billing staff.
The increase in identified problems in July 2009 occurred as the billing staff began
to pay closer attention to identifying problems after an initial period of familiarizing
themselves with the problem-tracking system. In June 2011, the business office
director noted that the billing staff processed about 1,800 claims per month and,
of these, more than 80 percent were now clean (i.e., without any problems). This
was a marked improvement over his estimate of 50–60 percent clean claims in 2008
—suggesting the considerable beneficial impact of the problem-tracking system.
Similarly, other realized digital options led to improvement in revenue collection at
the registration desk (Table 3, row C), reduced discrepancies between contractual
rates and actual reimbursements (Table 3, row E), reduced accounts receivable days
(Table 3, row F), and fewer cases of claim denials due to missing preauthorizations
(Table 3, row G). All these efforts helped to improve EMC’s RCM: in June 2011, it
Figure 7. Problems Captured during Billing Review

was in much better shape than in the financially precarious situation in 2007–8,
when the accounts receivable days totaled more than 88.0 and many medical
services faced closure due to lack of sustaining cash flow. These improvements in
RCM performance were particularly remarkable because, during that period, the
hospital’s external economic environment (and that of the U.S. economy as a whole)
was very challenging. The economic indicators in the county had worsened: for
example, April 2011’s 12 percent unemployment rate was almost double that of
April 2008. Further, although EMC’s gross revenue fell by 18 percent (from $62.07
million to $50.78 million) between 2008 and 2010—understandably because of the

worsening local economy due to the U.S. recession—its total profit margin increased
from –3.76 percent to +3.91 percent and its cash flow margin increased from 3.73
percent to 12.74 percent, suggesting that the BPT efforts helped improve the
hospital’s financial situation. Based on our discussions with the CFO, we sensed a
greater commitment to EMC’s financial future among RCM staff and an increased
level of confidence among the administrative leaders in their ability to steer the
hospital through a particularly difficult time by developing various digital options.
These were perhaps the most encouraging outcomes of our CPR efforts.
Discussion
This study reports on an action research engagement with EMC, a rural hospital that
was struggling financially. Over a two-year period, we worked closely with EMC
stakeholders to diagnose and address various RCM-related problems. We identified
important information requirements related to the revenue cycle and developed
various digital options [96, 97], many of which were successfully realized. We
have documented in detail how developing this portfolio of digital options signifi-
cantly contributed to improving EMC’s RCM performance. Based on our experi-
ences with BPT at EMC, we offer two contributions to knowledge. First, we expand
the health IT discourse to include revenue cycle transformation and document how
resource-constrained hospitals can improve their financial performance by identify-
ing and realizing a portfolio of heterogeneous, low-cost digital options across their
revenue cycle. Second, as a contribution to action research methodology, we gen-
eralize our interventions at EMC to propose digital options inquiry as a systematic
approach to BPT based on collaboration between researchers and practitioners. We
now discuss these contributions in detail.
IT-Enabled RCM Transformation in Hospitals

In recent years, almost all hospitals have invested in various IT solutions—such as
EMR, CPOE, laboratory and pharmacy automation, patient portals, and medical
imaging—to improve the effectiveness and efficiency of health-care delivery [4, 5,
6, 82]. These solutions have led to improved management of patient care and clinical
outcomes [17, 80]. Improving patient outcomes is no doubt important, but it is also
necessary to focus on the financial health of hospitals as it directly impacts their

ability to provide quality health care [99]. Given that many hospitals struggle to
maintain stable cash flow, it is important to understand how IT can be leveraged to
improve not only their clinical operations but also their administrative activities [82].
While the health IT literature has paid considerable attention to clinical support, few
studies have examined how hospitals can use IT to improve their business opera-
tions. Some researchers have, however, recognized the need for empirical research
that examines IT’s role in improving business performance in health care; they have
also considered how clinical and administrative IT differ in their application, adop-
tion, and return-on-investment (ROI) schedule and how they might complement
each other to deliver better and more affordable patient services [82, 85, 98]. In this
study, we examined various RCM functions at EMC and experienced firsthand how
complex information was exchanged within the hospital and with its payers. We
developed various digital options that could improve EMC’s financial performance
by supporting these information exchanges. Based on this experience, we contribute
new insights that are relevant to both health IT researchers and practitioners.
First, creative use of existing platforms and low-cost, simple software solutions
(and even open-source software, or OSS) can be valid alternatives—at least in the
short term—to complex enterprise systems. Often, hospital executives are tempted to
follow industry trends and acquire costly RCM systems [42, 53]. While such
acquisitions may be a reasonable strategic move for large, financially robust hospi-
tals, it is not likely to be the case for resource-constrained hospitals. As past research
on the financial impact of enterprise systems shows, it can take several years before
ROI is fully achieved and contextual factors can interfere with IT adoption and
implementation [52, 100]. Regardless of the long-term value proposition of enter-
prise systems, the reality is that resource-constrained hospitals—which typically
struggle to maintain a stable cash flow—can rarely afford them and thus must find
other ways to leverage IT. Our study illustrates that exploiting existing IT systems
(such as EMR and CPOE) and acquiring low-cost software solutions can yield
significant benefits. In fact, the most effective digital option realized in our study
was a simple OSS solution (the problem-tracking system). Studies have shown that
OSS can have a positive impact on organizational performance [49], but they also
show that managers tend to be wary of OSS and often reject it [44]. Our study
demonstrates how an appropriately selected and configured OSS can be a viable
solution to improve RCM performance.
Second, before considering appropriate digital options, researchers and practi-
tioners seeking to improve hospital RCM need to determine information require-
ments in various RCM stages in terms of information quality (richness) and flow
(reach). Our experiences show that targeting information reach and richness require-
ments in individual RCM stages had a positive impact on related RCM processes
and overall RCM performance. RCM practitioners have recognized that transforma-
tion of front-end processes (such as registration) can significantly improve RCM
performance [32]. While it is not feasible to control the dynamic external environ-
ment under which RCM operates (significant reimbursement-related policy changes
would be needed to accomplish that), smart use of IT can help RCM staff quickly
identify and correct problems during patient–hospital interactions. The key is to
capture the problems caused by deficiencies in information reach and richness as
early in the revenue cycle as possible—such as during registration and scheduling—
before the problems become difficult to detect and costly to correct. Understandably,
not all information deficiencies can be detected early on; some will inevitably be
identified during later revenue cycle stages. However, as we demonstrated, a port-
folio of heterogeneous and affordable IT solutions can help RCM staff prevent many
front-end problems and detect other problems so they can be tracked and addressed
before they adversely affect overall RCM performance.
Third, health-care practitioners sometimes perceive IT as a panacea for organiza-
tional problems [86]. However, in many cases, IT is most effective when it targets
specific processes [45, 88]. Practitioners may discuss the need for radical RCM
transformation, but starting from a clean slate may be unrealistic and is likely
counterproductive, as it might destroy valuable existing know-how and even trigger
resistance from staff. The debate on the trade-off between incremental and radical
BPT is well covered in literature [58, 101, 105] and is also relevant to RCM
transformation. A radical approach (such as implementing a new practice manage-
ment system) might be tempting given a software vendor’s promise of speedy
implementation. However, it can also be risky and lead to severe disruptions in
day-to-day operations. In line with existing recommendations regarding EMR imple-
mentation in both practitioner journals [81] and IS literature [105], an incremental
approach that targets information requirements in specific processes can be effective
and yield quick results at a lower risk.
Fourth, our study reinforces the impact of organizational context on RCM trans-
formation. While we were successful in realizing digital options aimed at improving
administrative processes, we were less successful with digital options seeking to
improve the important interactions related to clinical encounters with patients
(Table 2, row D). Getting physicians to collaborate with management is a key factor
impacting hospitals’ financial performance [43]. Previous research also finds that
physicians and nurses often resist new IT [110]. Indeed, our attempt to get the
clinical staff to use CPOE to provide timely information about the patient encounter
met with resistance. Several factors may explain the clinical staff’s resistance to
CPOE. Generally, clinicians are focused on patient care and pay less attention to the
business side of operations [71]. Further, overburdened by the demands of patient
care, physicians and nurses are often reluctant to use any new IT that may affect
their routine or productivity.
Digital Options Inquiry into Business Process Transformation

The increasing pressure to improve organizational performance provides opportu-
nities for researchers to engage in BPT through action research. However, such
engagements can create challenges for researchers, who must acquire in-depth
understanding of business processes and adapt their research design and interven-
tions to accommodate specific organizational contexts [25]. In our study, we had to
make sense of information exchanges and technology usage related to the extremely
complex RCM process in a hospital. Often, the first and third researchers—lacking
any prior knowledge of RCM—felt like explorers who had arrived on an island
inhabited by natives without a common language in which to properly communicate.
Using CPR methodology [76] was therefore particularly helpful as it let us work
closely with stakeholders in a specific business practice (RCM) at EMC and to
participate directly in the problem-solving process. Drawing on Pettigrew’s contex-

tualist inquiry [89], CPR provided the opportunity to become immersed into RCM’s
content and context as a prerequisite for our engagement at the hospital.
CPR methodology has previously been used to advance reflective systems development
as a basis for action research into IS development [77, 78, 79]. In this study, we applied
CPR to the practice of IT-enabled BPT [45] and drew on our problem-solving experiences
at EMC to develop a model for digital options inquiry (Figure 2). As business processes
have become more information-intensive and require advanced use of IT to support
coordination and management, IS researchers have paid increasing attention to BPT [23,
59, 72, 107]. Such efforts require matching technological solutions with problems caused
by breakages in information transfer and processing. As we have illustrated here, digital
options inquiry makes these efforts readily available for action research engagements by IS
researchers.
The digital options inquiry model uses diagnostic mapping [66] as a first step to diagnose
a problem situation; it thus extends Sandberg et al.’s [97] model by providing a structured
approach to context appreciation and process characterization activities. Building on
Sambamurthy et al. [96] and Sandberg et al. [97], the digital options inquiry model
identifies specific information requirements related to both quality (richness) and flow
(reach). The participating researchers and practitioners then work together to identify
available digital options that may either be readily present (and thus can be exploited) or
made available (and thus require exploration). An available digital option may become
actionable through further development and collaborative weighing of its merits in relation
to its risks, and it may eventually be realized when it is implemented as an integral part of
the business process. By emphasizing the actual development of select digital options to
realize BPT, the proposed model further extends Sandberg et al.’s [97] model, which ends
with digital options recognition.
As such, the digital options inquiry model (Figure 2) offers a practical, theoretically
informed tool that researchers and practitioners can use to identify, select, and implement
appropriate IT investments for BPT. As a reflection of an incremental approach to strategic
decision making [20], options thinking lets researchers and practitioners consider multiple
technological alternatives without having to first commit to and invest in them. Hence,
with its focus on revealing information requirements [96, 97] and both exploring new
investments and exploiting existing ones [73], the proposed model invites researchers and
practitioners to engage in strategic thinking about IT usage—even in the face of resource
constraints that leave little room for managerial maneuvering.
Conclusion
As with any research, it is important to emphasize limitations in how we approached the
action research project at EMC. First, our interventions evolved over a two-year period and
used a specific set of IT interventions. EMC also had important path dependencies in play,
including the availability of the OSS for implementing the problem-tracking system and
the preconceived notions about EMR usage among physicians and, to a lesser extent,
nurses. In addition, our findings rely on the development of specific IT interventions in a
small, resource-constrained rural hospital. As such, further studies could focus on other
aspects of RCM and develop other digital options; find ways to more effectively transcend
the boundaries between the administrative and clinical sides of health-care delivery; and
engage in IT-enabled RCM transformation in less resource-constrained hospital settings.
Despite these limitations, our research documented how realizing a portfolio of digital
options helped transform EMC’s revenue cycle and significantly improve the hospital’s
financial performance. Although the practitioner literature offers anecdotal evidence of the
benefits of investing in various IT solutions for RCM, to the best of our knowledge, no
other empirical research has, in similar detail, examined how IT can improve the financial
and administrative side of health-care delivery. In addition to our practical contribution to
EMC’s RCM transformation and performance, our research makes two important con-
tributions to knowledge. First, our empirical investigation of RCM—a critical but under-
investigated area in the health IT literature and an important concern for hospital managers
—expands the agenda for health IT research. By providing a detailed account of how a
hospital was able to explore and exploit digital options to improve its RCM, we provide
important insights that can inform further research into IT-enabled RCM and can help
hospital managers struggling with similar challenges. Second, we contribute to action
research methodology by offering digital options inquiry as a practical model for colla-
boration between IS researchers and practitioners. Although our digital options inquiry
model was developed within a rural hospital, we suggest it is generalizable to non-health-
care contexts. We hope our study will inspire IS researchers and practitioners to further
advance BPT theory through action research.
Supplemental File
Supplemental data for this article can be accessed on the publisher’s website at
10.1080/07421222.2017.1373005
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IT-Enabled Revenue Cycle Transformation in

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RAJENDRA SINGH, VITALI MINDEL, AND LARS MATHIASSEN

RAJENDRA SINGH (rajendra.singh@moore.sc.edu; corresponding author) is a clinical

VITALI MINDEL (vmindel1@gsu.edu) is a Ph.D. candidate at the Center for Process

LARS MATHIASSEN (lmathiassen@ceprin.org) is Georgia Research Alliance Eminent

ABSTRACT: Although hospitals increasingly consider solutions based on information

hospital. Our research contributes to health IT theory by expanding the discourse to

As is widely recognized, the U.S. health-care system is incredibly complex, waste-

rural hospital (EMC, a pseudonym) in southeast Georgia. Over a two-year period,

Hospital Revenue Cycle Management

Figure 1. Hospital Revenue Cycle Management

variety of payers, clinical providers, laboratories, billing service providers, and

Table 1. Revenue Cycle Stages and Activities

# Stage Key actors Brief description of activities

solutions. For resource-constrained hospitals, acquiring the latest technologies is

Digital Options Inquiry

Diagnostic Process Mapping

Figure 2. Digital Options Inquiry for Business Process Transformation

Information Requirements Identification

actions, moving from evaluating consequences of existing problems to

Figure 3. Diagnostic Process Mapping

Together, information reach and richness provide an accurate profile of a business

Digital Options Development

Business Process Transformation

processes and requires a complex alignment of processes, information, and systems as

contribution to action research into BPT.

Data Collection and Analysis

Table 2. Primary and Secondary Data Sources at EMC

Primary data sources Secondary data sources

● Chief financial officer

Analyses and Results

Information Requirements Identification

Table 3. Summary of Digital Options Inquiry

bills negotiations over delinquent patient than $9,000/month in 2011

(digital option available and action

(G) Scheduling Reach: Exploitation: ● Cases of payer delays or denial of

Another information richness requirement related to patient creditworthiness

Digital Options Development

To address information reach problems resulting from ineffective information flow

Figure 4. Problem-Tracking System

Business Process Transformation

Figure 5. Problems in Registration Quality Report

Figure 6. Problems Identified in Problem-Tracking System

Figure 7. Problems Captured during Billing Review

million to $50.78 million) between 2008 and 2010—understandably because of the

IT-Enabled RCM Transformation in Hospitals

necessary to focus on the financial health of hospitals as it directly impacts their

Digital Options Inquiry into Business Process Transformation