A CFO's Worst Nightmare? Seeing Red.
To further compound the situation, Vail Valley Medical Center didn't have the systems in place to accurately estimate a patient's self-pay portion for a procedure. That meant that nearly 50% of the estimates it did provide were off by thousands of dollars.
That might not have been such a problem, but the Medical Center did have a policy to write off the difference between what a patient had been quoted and what the procedure actually cost. Moreover, it had no online bill pay component to enable international patients to easily settle bills once they left the country. Translation: Happy customers, but more lost money.
"We had five different pieces of software that we were using to do bills, contracts, and invoices—and we had to maintain support and pay for all of them," says Wilson. "We couldn't get the estimate right—plus when our international patients would go home, they had to figure out a way to pay their bills—and it's easier to pay online than to correspond by fax, but we didn't offer that option."
How Vail Valley fixed its woes
In addition to leadership implementing standardized processes and policies for claims processing, including discounting services and claims denials, the Medical Center realized they needed more technology to be a success.
"We added a new policy that non-contracted insurance gets 3% if they pay within 15 days—that has made a big difference," says Wilson. "But for us it was the technology component that really turned this around."
Now, technology can be a hindrance, it can be expensive and it's not always necessary to purchase new technology to fix financial worries. On the other hand, sometimes it is a blessing. In the case of Vail Valley, Wilson says its new system made all the difference. After adding RelayHealth Financial Solutions to correct work flow and other technological deficiencies, the Medical Center was able to turn its financial nightmare around.
Just by tweaking some policies and using better technology, in two years the facility:
- Increased the percentage of claims being submitted electronically from less than 50% to more than 90%
- Slashed AR aging from 178 days to 78 days
- Bolstered 58 days cash on hand to 166 days cash on hand
- Notched point-of-service cash collections up by 15%
- Pushed down bad debt of more than 12% to just under 4%
Vail Valley's policy and systems changes also meant it was able to steady its cash flow and collect more than $1.4 million in payments via the Web in just six months. It's not always fun to flip over the seedy underbelly of a financial operation, but doing so can be both enlightening and lucrative.
Karen Minich-Pourshadi is a Senior Editor with HealthLeaders Media.
- CEO Exchange: Preparing for Population Health
- Advocate, NorthShore Deal Would Create 16-Hospital System
- 3 Strategies for Retaining Millennial Employees
- Better HCAHPS Scores Protect Revenue
- Power of price: In South FL and the nation, healthcare costs often are shrouded in secrecy
- CEO Exchange: Pressure is On to Partner, Drive Quality
- Top Reason for Nurse Turnover: Managers
- Hospital mergers may lead to higher prices
- Healthcare data of 1 million NJ patients compromised since 2009