The first piece of advice a dietician offers a weight-loss patient is to make small changes, and then to build on these until a full-scale, permanent life change is achieved. The same is true for hospitals and health systems considering a Lean and Six Sigma approach. These process improvement plans offer healthcare leaders a sound path to meet the goal of improved quality of care delivered at the lowest possible cost.
For most hospitals or health systems, process improvement generally starts out as targeted strikes and eventually rolls into a whole new way of operating. In my next two columns I take a look at how four different providers approached process improvement, and how the changes they made—small and large—paid off.
Stage One: Small Changes Yield Encouraging Results
Every big change begins with a small step, and at North Ottawa Community Hospital, an 81-bed acute care facility located in Grand Haven, MI, the hospital was looking at a variety of inpatient, outpatient and support services to find ways to bolster margins while reducing cost and improving patients’ access to care. To that end, it affiliated with several organizations to help bolster its services and transform from a standalone hospital into a healthcare delivery system.
However, while the affiliations meant better patient care, NOCH’s billing and collections department had some process inefficiencies that had the potential to offset the progress. Moreover, some of the hospital's processes would soon be in conflict with new laws regulating how payment information is kept.
“My staff was writing payment information down and keeping it at their desks—that isn’t allowed with the new laws. Also, sometimes that information would get misplaced and the payment wouldn’t get run. So, this was also a security effort; we knew we had to tighten things up,” said Mary Oomen, patient financial service manager at NOCH.
The main problem was that NOCH was still using dial-up credit card terminals in multiple locations and manually depositing checks at the bank. Its system lacked the ability to collect payments at any web-based computer in the hospital or at the new affiliate locations. In fact, one billing employee was still logging checks manually in an Excel spreadsheet, and another employee had to audit that log and physically bring the checks to the bank.
The collection process wasn’t any less manual either. Collection calls were made and payment information was taken over the phone. Then, the collections employee brought the information to the cash office, and it would be entered into a credit card terminal. If the card was rejected, the file would go back in to collections. If the card was accepted staff had to mail the patient a receipt for the transaction.
Kim Denhof, business manager for NOCH’s extended care services, says “just going to the bank, from start to finish, was 45 minutes every day and two people had to be involved in the process.”
Moreover NOCH lacked the ability for patients to pay online, via debit card, or to set up recurring automated payments. In short, posting, reporting, and reconciliation processes were rife with inefficiency.
As with our diet scenario, NOCH recognized that this was an easy area to take a first step at improving process. The hospital added a patient payment and remote deposit software program from InstaMed, and saw a 44% boost in collections. Plus it saved 20 hours of staff time each week.
“The individual who was responsible for making the deposit before now does it remotely, and it’s freed them up to work in our accounts receivable and outstanding accounts issues,” said Denhof.
Additionally, Oomen says patients who pay over the phone now receive a receipt via email instantaneously and they can complete the transaction while the patient is on the phone. They also can set up recurring payments with a debit card.
“[Automating] helped make our work more standardized throughout because we could offer this at the hospital and to our affiliates. It also helped eliminate a security risk for us, and the patients like it,” said Oomen.
Stage 2: Bigger Size + Bigger Efficiencies = Bigger Bucks
Four years ago, leaders at Phoebe Putney Memorial Hospital, a 443-bed facility in Albany, GA, took a look at their revenue management process. The hospital was processing 215,000-225,000 claims per year, yet it had only four auditors, two for inpatient and two for outpatient.
“We were able to audit about 10% of the claims annually. There just wasn’t enough time or personnel to even review the charts for charge accuracy,” explained Wendy Allen, director of revenue management for the hospital. “We would audit a chart if a payer needed something or if a patient requested it, but we didn’t have a formal process in place.”
In this instance, the solution was actually only the beginning for multiple process improvements. Like its counterparts at NOCH, Phoebe Putney added technology from MedAssets-- new charge capture software which improved claims processes. Since adding the program, Phoebe Putney has been able to realize $12 million in net corrections by producing cleaner claims and processing each charge correctly on the first take.
Improving the charge capture process yielded some other important findings pointing to other hospital inefficiencies. The system was able to identify a situation where employees were stealing narcotics.
The staff would dispense medication from the system and charge it to a patient, but they weren’t providing the supporting documentation for the administration of the drugs. Without the software the limited number of auditors wouldn’t have been able to track the number of instances this activity took place and then work with their pharmacy to verify patient orders.
“This program helped us fix that and our processes,” explains Allen. “It also helped us look at and correct some compliance issues,” she says.
Phoebe Putney has been able to identify consistent coding mistakes and work with and train coders to avoid these errors. Moreover, the system also revealed that the labor and delivery department was processing patients incorrectly.
“If a patient delivered at night or on the weekend they were likely not going to pay for it because the staff wasn’t charging for it. We had a breakdown in communication between staff members. So, we implemented a new process to correct that, and then our charge capture software helped us determine if the new process was being followed,” Allen explains.
Though the intent was to use charge capture software to improve the department’s own inefficiency and increase the bottom line, what the hospital found was that one process improvement leads to another.
NOCH and Phoebe Putney offer glimpses of how early-stage process improvements can yield results on a small scale. What happens when healthcare leaders embrace process improvement as an organizational philosophy and encourage Six Sigma or Lean to influence every aspect from billing to care delivery? Next week we’ll look at two large providers who have done just that—which made them financially stronger and improved the quality of their care.
Karen Minich-Pourshadi is a Senior Editor with HealthLeaders Media.
