What Can Medical Providers Learn from the Southwest Airlines Fiasco?
January 20, 2023
Even those who were lucky enough not to be traveling over the holidays are aware of the epic fail at Southwest. While all airlines were impacted, Southwest was running at about a third of their scheduled flights even after the brunt of the bad weather had passed. The impact on travelers was so significant, and so far outside of what other airlines experienced that a government investigation was announced.
An already chaotic travel season turned into a nightmare for thousands that were affected by the cancellations. As the dust started to clear, chatter escalated about Southwest’s reportedly outdated scheduling software and how that turned a tough event into a business-defining failure. Insiders reported that issues with the outdated software had been talked about for years, but leadership had failed to bring the technology up to date. According to Michael Santoro, vice president of the Southwest Airlines Pilots Association, “Southwest has failed to invest in an updated software system used for flight routing and staffing, which is crucial to avoid continual problems.”
Southwest airlines has stated December cancellations could cost the company over $800 million. In addition, the recent crisis has multiple travelers and companies reconsidering booking a flight through the airline.
The long-term impact on Southwest’s business remains to be seen, but it is clear that this was a catastrophic event for the company. What can we in the healthcare space learn from this painful lesson?
“Southwest has failed to invest in an updated software system used for flight routing and staffing, which is crucial to avoid continual problems.”
Michael Santoro
VP, Southwest Airlines Pilots
Technology – The True Cost of Deferred Billing Improvements
In our work at XiFin we are fortunate to interact with technology users from many healthcare specialties. In our conversations about revenue cycle management, we hear frequent themes when it comes to legacy technology. Not optimizing your RCM technology leaves you vulnerable to severe business and compliance risks and prevents you from improving your operational and financial performance. In addition, providers using outdated RCM technology are costing themselves in collectable revenue and in their ability to serve their patients in multiple ways.
Without upgrading the capabilities of your revenue cycle management system, you may be sacrificing performance in key business areas:
- Security and Compliance Risk – There are several business risks associated with deferring system improvements, including security, flexibility, and even potential clinical risk to their patients. Older systems/services are simply not able to keep up with the continually expanding cyber security threats. The highly publicized Scripps security breach impacted patients’ ability to schedule services, so in addition to data concerns, Scripps has needed to address the lag in medical services for some of its patients. The class action lawsuits happening now certainly highlight the financial impact as well.
- Operational Efficiency Resources – When using outdated technology, more users are required to manage the same volume; manual workarounds need people to drive them. In this case, one of two things happens: 1) the provider must shift staffing resources and dollars to revenue cycle and away from other areas of service; or 2) collections are further impacted by not having enough people to run the manual processes needed to collect.
- Connectivity and Automation – Many healthcare technology users report the need for manual processes, or processes outside of their software because the software itself does not have the flexibility to address the emerging needs of the provider or updated needs of payors. The inability to integrate with other internal or external systems leads to the need for re-work, delays in information transfer, and an inability to keep systems synced. Lack of API capabilities goes hand in hand with this issue. Many legacy systems do not offer the ability for real-time bidirectional information sharing.
- Insufficient Patient Access Tools – Patients are seeking providers that can offer convenient and secure patient access tools to access results or billing statements and electronically manage payments or information. Without a modern technology infrastructure to support multi-directional communication and data exchange, the breadth and depth of these services are limited.
- Lost Revenue and Profit Margin – Outdated technology does not have the flexibility needed to keep up with changing payor requirements; providers using older technology will have more unpaid/underpaid claims, meaning their revenue is lower than it should be for the work they are performing.
In the aftermath of the software failure suffered by Southwest, many are seeing some familiar themes. Many companies report that they know their outdated systems are being held together by sheer will and manual workarounds. Frequently the message is that “now is not the time” to spend on updating technology. The healthcare space is notorious for being behind other industries when it comes to technology.
How Long Can You Afford to Maintain the Status Quo?
Deferring action is sometimes deliberate, but more often than not it is a default position that is the result of indecision.
While the boots-on-the-ground users are often all too familiar with the fallout with antiquated technology (need for more staff to bolster the technology with manual workarounds, decreased collections due to ineffective systems, frustrated clients/patients due to errors and erroneous bills, etc.), they frequently report that leadership does not feel there is the budget to invest in updated RCM software.
We often hear that the executive decision makers are more likely to use their technology budget on tools that impact the clinical and patient experience, and as a result delay updating their back-office technology. Examples include laboratories purchasing the sequencers and reporting software for high complexity testing and remote monitoring companies putting their focus into smaller/more comfortable/more sensitive devices. New clinical technologies on the surface may seem more likely to bring a financial return and can be seen as more directly serving the patient, however that is not the entire story.
How long will these antiqued systems last before they collapse under pressure? For Southwest it took one significant weather event to bring down its systems. In the medical world we know significant events happen frequently, from payor changes to pandemics and everything in between.
What can medical providers learn from the Southwest failure? A key takeaway is that instead of assuming that they cannot afford new technology, they should realize that they cannot afford the risk of old technology.
To learn more details about the true cost of deferring improvements and keeping the status quo:
Read the XiFin Blog, “The Cost of Preserving the Status Quo – It’s Not an All or Nothing Decision Anymore.”
Download the XiFin white paper, “A Healthcare Provider’s Guide to the True Cost of Deferred Billing Improvements.”