Finance
e-Newsletter
Intelligence Unit Special Reports Special Events Subscribe Sponsored Departments Follow Us

Twitter Facebook LinkedIn RSS

What's Hiding in Your Vendor Inventories?

Steven Levin, for HealthLeaders Media, June 1, 2010

What Can a Provider Do to Address Inventory Reconciliation Issues?
Many hospital business offices only perform spot checks or "rough reconciliations" due to the volume of activity, inaccessible account data and limitations with patient accounting system. Many hospitals also use time consuming, manually intensive account matching, thinking they can solve their reconciliation problems with human intervention. While better than doing nothing, they are insufficient.

The scale and scope of the previously mentioned research plus the trend to use more outsourcers in business office processes suggest providers and their vendors need to enhance key routines:

  1. Check placement files for misplaced accounts and identify root causes of problems. Despite their best efforts, hospitals do occasionally send a handful of accounts to a vendor that either should not have been sent to a vendor or were already sent to a vendor. When this happens, it is critical that the accounts are identified, inventory records are corrected, and the underlying reasons for the account being incorrectly placed are identified and corrected.
  2. Reconcile balances for all accounts in placement and recall files. It is not sufficient to simply confirm receipt of the placement file and total number of accounts. Individual account balances need to be verified as well, preferably by cross checking account-level financial transactions.
  3. Reconcile full inventory at each vendor, at least monthly. Given the compounding effect of problems over time, full reconciliation at least monthly is necessary. In many situations, weekly reconciliation of the entire inventory may be appropriate.
  4. Update policies and procedures and monitor adherence. A number of inventory issues are created as a result of inadvertent customer service activity, such as incorrectly moving or closing an account or applying an incorrect transaction code. A good practice is to review policies and procedures at least once per year to check that they are up to date, cover all reasonable situations and are understood by employees in the business office and at vendors. The provider also needs to monitor adherence to these policies and procedures.
  5. Ensure comprehensive and common reporting. Numerous hospitals unknowingly rely on incomplete information or reports generated using different variable definitions. Having accurate reports that are common across vendors to track inventory reconciliation is central to having clean, accurate account inventories.

Long term, cost effective approaches generally are technology enabled, automating the exception identification process.

Ultimately, whenever a provider corrects existing inventory reconciliation issues and prevents new ones from occurring, they are improving the patient experience, reducing operating costs and compliance risks, and enabling their vendors to be more effective. It is a true win-win-win experience.


Steven Levin is CEO and co-founder of Connance, a leading provider of back-office, self-pay collection and scoring solutions. Contact him at slevin@connance.com or visit www.connance.com.
For information on how you can contribute to HealthLeaders Media online, please read our Editorial Guidelines.

Comments are moderated. Please be patient.