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Save Millions By Paying Attention to Process

 |  By kminich-pourshadi@healthleadersmedia.com  
   February 20, 2012

Samaritan Health Services, a nonprofit network of hospitals, physician clinics, and health services located on the central Oregon coast, is a young organization. Launched in 1997, SHS has grown from one to five hospitals and 85 clinics, caring for over 290,000 patients and offering four insurance plans to over 28,000 members. While the exuberance of youth sparked a great deal of expansion, it also brought forth millions in revenue cycle losses due to poor processes.

Early on, SHS had the foresight to create a central business office to help coordinate its facilities. Nonetheless, some revenue cycle basics got overlooked—namely workflow. Poor processes caused A/R to balloon to 58 days, and unposted cash to hover at $25 million. Dawnell Buell, SHS vice president of revenue cycle, recounts that six years ago, when she moved to SHS from the more tech-savvy Providence Health Services in Renton, WA, she quickly realized that the CBO was hamstrung by manual procedures, paper documentation, limited storage, and two disparate patient accounting systems.

In fact, nearly 85% of the payers that worked with SHS (including the organization's own plan) were sending information by paper, forcing manual entry and posting.

"Here we are an integrated health system and we're getting a manual remittance from our own payer. We were getting 600-800 pages of remittance a week, and it was taking multiple staff to administer our own health plan and manually post payments," she says. "Our processors have to reconcile the funds before deposit, so our cash posting process was just painful. We were using a lot of paper processes and we were in dire need of change."

(Before I continue with SHS' story, I'd like ask financial leaders to pause and do a mental assessment of your billing offices workflow. Do you notice people milling about photocopying and faxing? In the age of Internet technology, the one supply you should see on decline is paper. If not, you may have a process problem. Now back to SHS.)

"We started to look at all the technology that could help us and I thought, 'Do I want an imaging solution?' I have no patience, so I wanted a short set-up time," says Buell. After several months of comparing technologies, SHS selected a payment management and imaging system from OptumInsight. Buell used operational funds to purchase the technology, bypassing the capital expense budget and the need for board approval, which expedited the overall process. In less than 30 days, the program went live at the SHS CBO.

"When folks approach this [type of project] they see huge dollars, and so did I. [We] worked through this and looked at the potential return on investment—we modeled it. What we found was we'd have ROI within one year—and the system did pay for itself in that time. Operationally we saw the benefit within 60 days," says Buell.

The elimination of so much manual work, and so much paper, had a positive effect on morale and the bottom line, she says. The staff quickly latched on to the system and payments were posted swiftly; now unposted cash averages one A/R day, or just $4 million. Plus, within a year the SHS CBO was able to reduce the number of staff overtime hours, reallocate seven FTEs, and save $224,000 in temporary agency fees.

RAC audits prevented paper costs from declining, but even that was a win, Buell says. "We were able to keep our paper costs steady, though we reduced enough paper in billing to bring in another team member to help with audit management," she says. "Audits are very paper-driven; if we hadn't added this technology, then my paper expenses would've increased by 25%."

The remittance and payment processes for third-party payers is already complex, and doing it manually is painstaking. When the ICD-10 transition is rescheduled, the accompanying onslaught of codes will become nearly impossible to deal with manually.

"We're all pulled in so many directions and we're all trying to prioritize projects. Those that have the [revenue cycle] technology see the value, but there are no government penalties for not getting it as there are with EHRs," Buell says. "So it's only natural that we focus on the places where we get penalized. But we have to pay attention to the money that's coming in the door now. If you can get that money posted quicker, then you can use it to your benefit for projects like an EHR."

As financial leaders, you've read countless articles about revenue cycle and how to plug leaks. Sometimes it's easy to get caught up in daily work and become blinded by the familiar. SHS's story is a good reminder: always pay close attention to work process and flow.

Karen Minich-Pourshadi is a Senior Editor with HealthLeaders Media.
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