The CFO of a medical center in Idaho shares three strategies he has implemented to reduce the cost of delivering care and to maximize his organization's resources.
Treading water can save your life.Treading water too fast is unsustainable. Eventually it will kill you.
As Eastern Idaho Regional Medical Center deals with changing reimbursement models and an increasingly difficult payer environment, it is having to expend more resources than ever just to maintain its revenue—something Jeff Baiocco, CFO at the 330-bed institution in Idaho Falls, sees as a major challenge for the organization.
"We are putting a lot more time, energy, and effort into getting paid what we have historically been paid," Baiocco says. "Our challenge as we continue to adapt our cost structure to meet reimbursement pressures—whether they be sequestration reductions, reductions on readmissions, or increased denials from insurers—is that we are putting more money into just maintaining payment levels."
1. Creating More Capacity with Technology
In order to overcome this challenge, EIRMC has implemented several strategies to reduce the cost of delivering care and to maximize its resources.
"One of the things we are trying to do is leverage technology as best we can," Baiocco explains, citing newly installed printers in the emergency department as one example.
"We used to have a few wireless printers in the ER for lab draws. Now, instead, we have them in every room. When quantifying the savings, it is not necessarily direct savings, but it is reducing staff time because we don't have someone spending 10 minutes every time to find lab results. It allows us to grow capacity in our ER without adding staff," he says.
Having more automated processes is also important to growing capacity, Baiocco says. EIRMC is currently considering implementing new ventilators along with a software program that will allow for automated instead of manual patient monitoring.
"This will allow for a lot of automated processing for what right now is manual processing. It will also allow us to intervene more quickly without having to manually monitor as closely. We are making that investment up front and, ideally, down the line there will be a greater return when it allows us to free up some human resources," Baiocco says.
2. Focusing on Wellness to Prevent Readmissions
To prevent readmissions and the payment penalties that result, EIRMC has recently opened a wellness clinic to stay more connected with patients after discharge.
"We've been doing well with the clinic around readmissions," Baiocco says, adding that EIRMC's hospitalists are routing patients with a high risk of readmission there for additional outpatient care. "The hospitalist is seeing that patients get the necessary follow-up care and are making sure a nurse practitioner is connecting with that patient."
Annual operating expenses for the clinic are approximately $400,000, Baiocco reports. "I like to highlight the clinic because I think it is a specific example of us doing more to get paid the same. By avoiding a readmissions we are avoiding a penalty."
As reimbursements become further tied to outcomes, it will be even more important for provider organizations to focus on patient wellness in the future, Baiocco believes.
"We are dipping our toe in this arena because the future will be all about outcomes," he says. "It's a balancing act where we are not all the way in, but we are certainly preparing for a future where we need to balance the financial side with clinical outcomes."
3. Tightening Up the Revenue Cycle
As high-deductible health plans create new collection challenges for providers, EIRMC will have to focus more on collecting payments before services are rendered, Baiocco says.
"With the way insurance plans are migrating to high deductibles and high co-pays, it has had an impact on our revenue cycle. We've always been focused on upfront collections, but that is going to become very much a part of our everyday existence," he says. "We've really worked on our scripts and how we approach this to balance the dignity of the patient and respect for patient care with the business side of the equation."
EIRMC is also directing its attention to increasing preauthorizations, especially for surgical procedures.
"In late 2013, we assigned a dedicated case manager to work with the OR to assist in getting preauthorizations," Baiocco says. "We're doing that ahead of time so as not to disrupt the patient case… we don't want to delay a case unnecessarily."
Although the case manager has only been working with the OR for a few months, EIRMC is already reaping the benefits.
"There are some times, for example, when a case has a very expensive supply attached to it, and that wasn't part of the preauthorization. We are tightening up the process for those kinds of instances, and we are already seeing dividends," Baiocco says.
Paying this level of attention to preauthorizations is also good for patients, he notes, even if a procedure has to be postponed for a short time.
"An elective case may be delayed by two days until we have everything worked out, but that benefits the patient, too," Baiocco says. "The patient doesn't want to be in a position where there is a denial on their coverage and now not only do they have a healthcare problem, but they also have a financial problem."