Since 2003, hospital operating costs have increased less than the national average, according to a study done by actuarial and consulting company Milliman Inc. for the Greater Milwaukee Business Foundation on Health. Aurora Health Care showed the sharpest decline compared with other health care systems, with operating costs now in line with the market average. The study also found that operating costs for area hospitals increased about 10 percent from 2003 through 2006--roughly 4 to 5 percentage points below the national average. A 2005 study by the U.S. Government Accountability Office found that the Milwaukee area had the fifth-highest hospital costs in the country.
Accountants cannot find records to support $469,365 spent over four years by the Jefferson (AL) Metropolitan Health Care Authority, created by Larry Langford, then commission president and now Birmingham's mayor, established to oversee all county health operations and assets, including Cooper Green Mercy Hospital. The missing documentation included paperwork supporting payments to a consultant who now is Mayor Langford's chief of operations, a Birmingham lawyer, the IRS, and the U.S. Treasury.
I was minding my own business, digging out of the lethargy, weight gain and e-mails that accompany a very rare full week off from work to celebrate the holidays. While I was catching up on the news I missed, I ran across this comforting story with the headline: "$45 trillion gap seen in U.S. benefits." That means the U.S. government is promising $45 trillion more than it can deliver, based on the government's projected revenue stream over the next 75 years. Most of that shortfall comes from promised Medicare and Social Security benefits.
Let me say that it's no surprise to me (and probably isn't to you either) that the federal government isn't able to meet its financial obligations, especially when it comes to these two entitlement programs. Many people in my generation already have written off Social Security as a guarantee. The track record for deficit spending in the U.S. over the last half-century or so isn't good. But what staggered me is the magnitude of the shortfall. The total U.S. budget was about $2.3 trillion in 2006, if that gives you any indication of how much of a deficit we're facing in promised social benefits over the next 75 years. That's a long time, and the $45 trillion number is governed by a lot of assumptions that may change, but it's a best unbiased guess. So what does that piece of bad news mean for society as a whole? My guess is we'd better get used to either getting a lot less help from the federal government in all areas or we'll be paying a much higher tax bill.
But I wonder whether that information causes a chill to run down your spine as a healthcare finance professional, or does it elicit only a simple shrug of the shoulders? Certainly, it looks as though the feds are going to have to cut back in coming years. I know, cutbacks in such popular programs are difficult, if not impossible, to get through Congress. Until you try to pass the alternative: tax increases. So the choices are bad and worse. Does that mean the inevitable belt-tightening will filter down to hospitals and physician practices, or is the problem simply too big, governed by too many variables, and too far off to worry about?
Drop me a line and let me know your feelings on this subject. Clearly, most healthcare providers are depending on the federal government's ability to fully fund the commitments it has made to its citizens as far as Medicare is concerned. According to most estimates, healthcare providers depend on Medicare and Medicaid for as much as half of their revenue. As Medicare slowly works more pay-for-performance incentives into its payment structure for healthcare service providers--and commercial insurers do the same thing on a much larger and faster scale--the writing seems to be on the wall that smart healthcare providers are going to have to work to be more entrepreneurial and customer service-oriented in how they conduct their business. If Medicare funding is on the long-term wane, (and that's a big if, I'll grant you) getting cash in the door seems to take on ever greater importance to the long-term success of hospitals and physician practices.
Meanwhile, as for me, I think I'd better increase that 401(k) contribution rate and fully fund my Roth IRA. Meanwhile, maybe I should look into funding an HSA. I'll get right on that--tomorrow.
Imagine you are on a plane, seated in row 13F, and everything is going smoothly until the pilot makes an unexpected announcement. "Good afternoon, folks," he says. "We've reached our cruising altitude of 31,000 feet, but we have a situation. There's a problem with the wing, but not to worry. The passenger in 13F is going to take care of everything."
As a financial manager, you may sometimes feel like you are in a similar scenario. You are the person everyone expects to solve all of the revenue cycle problems, but you may not have the tools or background to fix all the problems. This is precisely when it's appropriate to take a hard look at your situation and ask if it's time to bring in outside resources. Before you do, you should consider these 10 variables:
No. 10. The who, what, when, where and why of hiring a revenue cycle consulting firm. Ask yourself the following questions: Whom will you hire? Do you need someone with a particular specialty? What will make your success sustainable? When will you need their help? What is the expected timeframe of the project? Will it be ongoing? Where will you meet to discuss the parameters of the project with potential vendors? How often will you meet before you make a decision? Why do you think you need to outsource?
No. 9. Take a hard look at your current situation. Before you begin the process, it's crucial to be honest with yourself and your team and ask the hard questions. Define the core problem and ask yourself if you have the people on your "airplane" to help you fix the problem. Use your internal resources to make some decisions about where you are and where you need to be.
No. 8. Know when a consulting firm is not necessary. Obviously, a consulting firm probably is not necessary if your cash is on target, you have 98 percent collection of your accounts receivables, and you have established a proactive revenue cycle team that is dedicated to continuous improvement of the revenue cycle process.
No. 7. Ensure revenue cycle engagement success. From the consulting firm's standpoint, an on-site champion--someone who will drive the process--is key. From an internal standpoint, you must identify all stakeholders and make sure you have their buy-in. Make sure appropriate levels of communication and collaboration between departments are in order.
No. 6. If you need help, decide what kind of firm you should hire. What kind of firm you hire depends on your specific needs. Do you have a tools-related issue or a process-related issue? Both? There are firms that specialize in each type of situation.
No. 5. Identify all of the pieces in your revenue cycle. Consider all of the segments involved in the revenue cycle. These could include:
Business office/accounts receivable performance
Admitting and registration
Finance and reimbursement
Case management
Health information management
Managed care contracting and administration
Coding and charge description master
Information technology
Additional pieces to consider that often fall into the clinical revenue cycle:
Clinical/nursing unit performance
Clinical documentation
Bed control and patient placement
Patient flow and levels of care monitoring
Resource management and denial prevention
No. 4. Consider which portions of the revenue cycle need to be outsourced. Examine all of the aspects of operations that point to revenue or cash flow. Pieces that may need to be managed by an outsourcing agency include Medicaid eligibility, bad debt, business office function, coding, chargemaster maintenance, and managed care contracting.
No. 3. Find a good fit. You have to be able to work closely with your consulting firm, so you should ensure that it will be a good fit for both parties. Before hiring a firm, take the time to fully investigate their experience in the specific areas that you are interested in. Do they have the background and hands-on achievement experience you need?
No. 2. Consider personalities. If the consulting firm breezes in with a condescending attitude, the stakeholders will quickly retreat. Conduct multiple face-to-face meetings to gauge the personalities of the consultants you will be working with. When checking references, find out whether the company has worked in a facility like yours with similar problems. What were the results? Would that facility bring the firm back again? Did the consultants provide a process to ensure sustainable results?
No. 1. Know what to expect. Based on the firm's experience, know what kinds of gains are possible as a way to set goals. For example, one consulting firm showed the following results in a medium-sized hospital in the Southeast:
Late charges fell from monthly high of 1,300 to less than 200
Accounts receivable days decreased from 75 to 35
Improved collections by 18 percent resulting in a $5.9 million cash infusion over 12 months
An increase in coding accuracy resulted in $1.2 million boost to the annual bottom line
Keeping all of these points in mind will help you ensure that hiring a revenue cycle consulting firm will be a successful engagement for both your staff and the hospital as a whole. Good luck, and remember, you are sitting in 13F, which means that it's up to you!
Devika Kumar is associate vice president of revenue cycle solutions for QHR Consulting Services in Brentwood, Tenn. Kumar may be reached at devika_kumar@qhr.com.
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Leesburg Regional Medical Center and The Villages Regional Hospital have announced they will now operate under one name, Central Florida Health Alliance. The new name reflects the regional scope of the facilities, which together provide more than 500 beds and 30 healthcare specialties, said hospital officials.
Community Hospital in New Port Richey, FL, may decide to leave something behind when it leaves its current campus for a new one in Trinity: An emergency room. With the statewide moratorium on freestanding emergency rooms having ended, Community Hospital is trying to decide whether keeping an ER in the city would make financial sense.