As population health management becomes the norm and new reimbursement models take hold and threaten to erode revenue, the CFO of a large Pennsylvania teaching hospital unveils his plan to improve collections.
Like many healthcare leaders I have spoken with recently, Michael O'Connor, senior vice president and chief financial officer at WellSpan Health, a 572-bed community teaching hospital in York, PA, sees shifting reimbursement models as a major threat to this organization.
"I think the biggest challenge that we face is actually going to take many years to resolve, which is navigating the change from fee-for-service to being paid to care for populations," he says. "We are trying to make sure we make changes in our delivery system and delivery model both from the clinical and patient services perspective and make sure we are synchronizing that with payment models with commercial payers."
Keeping pace with new value-based payment structures designed around population health management requires a comprehensive approach to clinical care with a particular focus on primary care, O'Connor says.
"We have an integrated delivery model, so we have professional services, ambulatory services, and institutional services. Where it starts is on the professional side, specifically with regard to primary care," he says. "We are very far along with developing patient centered medical home capabilities. All of our primary care practices are patient centered medical homes, and most are quite advanced."
A Community of Care
WellSpan is also moving its clinical model beyond the PCMH model, O'Connor says.
"We are expanding that concept from the patient-centered medical home to the patient-centered medical neighborhood," he says. "We are coordinating the activities of not only the primary care physicians [but others on the care team] by linking with specialists and other support services. It's taking it to another level."
"On the physician side of our organization, we are really trying to act in a much more coordinated fashion, but it's not just physicians, it's others, too, including the health coaches and social workers that provide support," he adds.
As population management becomes the norm and new reimbursement models take hold in larger numbers, O'Connor believes revenues will decline as a result.
Improving Collections, Identifying Denials
"We expect that revenue will continue to tighten over time because we don't believe society can afford the current healthcare system. As we transition to more fixed payment arrangements, it is going to drive down costs, but it will also drive down revenue," he says.
To protect its bottom line, WellSpan is focused on its revenue cycle to improve collections and zero in on the cause of denials.
"We have a revenue cycle management department. They are responsible for monitoring the quality of our billing and collection process, primarily billing, which involves making sure the chargemaster is properly maintained and that the codes associated with services we are providing are proper. It's really quite a big job," O'Connor says.
Through the use of an automated process designed to target revenue cycle trouble spots, WellSpan has improved its ability to manage patient accounts. The health system initially purchased the software from an outside vendor, then brought the function in-house a few years ago by replicating the tool.
"Every night we download every patient account activity, all bills and all payments, and we use this analytic tool to make sure we are being paid properly by the various payers," O'Connor says. "We are able to basically monitor the revenue cycle on a real-time basis."
Because the revenue cycle is becoming more complicated, having the technology necessary to analyze accounts on a granular level is key to protecting cash flow, O'Connor says.
'Solid ROI'
"It is much more sophisticated than it was several years ago. Contracts are more complex, and having the ability to drill down to each individual account to find out why it wasn't paid correctly is important," he says. "We are identifying why a payer isn't paying, and there could be a good reason. It may be that it wasn't coded properly or they may have added edits to their system… It's kind of a moving target."
Although O'Connor declines to say how much WellSpan invested in this revenue cycle tool, he says the ROI has been solid. "We have recovered multiples of what we've spent in terms of improved payment levels."
Moreover, WellSpans's leadership team sees the tool as a way of improving its relationship with patients.
"The other thing is it is better service to the patient," O'Connor says. "It makes the process much better if we can communicate more effectively with payers and identify problems and get them resolved. It's better for patients if we can find a quicker resolution for any disputed amounts so that they don't get caught in the middle."