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The Path to Unification

Philip Betbeze, for HealthLeaders Magazine, January 13, 2009
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Trinity Health's gradual transition into unified revenue cycle functions means improved efficiency—and new responsibilities for the system's CFOs.

Until recently, supervising the financial operations at Trinity Health's 44 hospitals has been an exercise in ruling a lot of very different local fiefdoms. Each local chief financial officer had his or her own way of doing things—the central office didn't meddle much. And it worked pretty well. Trinity, based in Novi, MI, is a $6.37 billion, AA-rated system with financial metrics in the top decile among hospitals nationwide. But Edward Chadwick, the system's senior vice president and CFO, knew that operating a hospital system in this manner didn't take full advantage of the economies of scale a big system can put into play.

Developing a new model for the system's revenue function has long been in the plans, he says, but Trinity had been preoccupied with other integrative initiatives in the supply chain, treasury, investments, and IT infrastructure.

"A number of organizations have been down this path to varying degrees of success, but we spent the last year doing a detailed business case and design and have moved toward implementation," Chadwick says. "If you ask me a year from now, I'll be able to use past tense instead of future tense to describe what we're doing."

What they're doing is ambitious. The unified revenue organization (Chadwick's term for the initiative) is really a systemwide revenue initiative that will cover all end-to-end revenue operations, including pricing, managed care contracting, registration, billing and collections, clinical coding and documentation, and net revenue reporting. The initiative has several metric-based goals (see "URO Goals," next page), but the strategic goal was to free local hospital CFOs from the daily operational side of the revenue function so that they could focus more on supporting the organization strategically, Chadwick says.

Little steps
Trinity's trip down the path of a unified revenue organization started small. It began a few years ago with three modest-sized hospitals, Chadwick says. "We raised the bar by pulling those hospitals together in billing and collections and general accounting." After that test proved successful, Trinity's leadership, including Chadwick, some CFOs, senior vice presidents and chief revenue officer Paul Sahney, visited with their counterparts at other large health systems that had been down the unified revenue road.

"Tenet, Banner, HCA, and Allina are four systems that I would like to emulate in pieces of this," Chadwick says. "It's a pretty robust construct."

When the program is fully integrated in three years, Chadwick says, "We'll have a couple thousand internal revenue consultants working in this new entity."

Some will be new hires, but many will be transferred to one of three bases of operation within Trinity. Registration staff, of course, will be in the local hospitals. Six or seven regional centers (Trinity operates in seven states) will handle billing and collections, and contracting with managed care and Medicare billing will be handled in the central office.

"This is a very ambitious change effort," says Sahney, who has been with Trinity 10 years and has served as associated controller at Henry Ford Health System and CFO at Lakewood (OH) Hospital within the Cleveland Clinic Health System before coming to Trinity. "This change initiative will touch about 2,500 to 3,000 associates throughout. "

Technology's role
The idea of revenue unification is not new, but it can be difficult to execute, says Chadwick. "Some people have gone down in flames trying to create a unified revenue operation, and many of the challenges emanated from technology."

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