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Analysis

Financial Turnaround: How Baptist Health South Florida Boosted Net Patient Revenue by $28M

By Jack O'Brien  
   October 10, 2019

The joint venture, which was first announced in April 2018, increased net patient revenue in its first year.

A revenue cycle joint venture (JV) between Baptist Health South Florida (BHSF) and Navigant Healthcare delivered an increase of $28 million in net patient revenue during its first year of operations.

Health System Solutions (HSS), launched in July 2018, combines the revenue cycle department from BHSF and data resources from Navigant. HSS is overseen by leaders from each organization and led by CEO Marilia Garner, who previously spent more than a decade at BHSF.

BHSF's primary reason for the JV was to make a financial turnaround, according to company leadership. It recorded a $31.3 million operating loss in 2017 while its doubtful accounts eclipsed $400 million. Revenue cycle management (RCM) became the main vehicle for BHSF to improve its bottom line

The results of the JV were immediate and significant, with net patient revenue totaling $28 million during its debut year, according to BHSF. Additionally, the system's point-of-service collections rose 9%, cost-to-collect dropped from 2.9% to 2.6%, and the monthly cost acceleration increased to $15 million.

Related: New CFO Matthew Arsenault Enlarges Role as Baptist Health Expands Operations

The Coral Gables–based health system also reported that the physician net collection ratio rose 15%, the discharged not submitted to payer rate fell 28%, and initial denials dropped 16%.

BHSF's RCM was boosted in large part by two important factors.

First, the program benefited from the establishment of HSS as an autonomous entity. Second, the program's results were achieved by the promotion of an interdisciplinary problem-solving culture, supported by a large workforce and guided by a new governance structure to create accountability. 

"The main thing is [the RCM team] is not competing for attention or resources," Garner told HealthLeaders. "There is a formal focus on the revenue cycle function. We were part of a health system—and it's just the nature of the beast—if you have limited resources, [then] you have to prioritize. By putting revenue cycle in a stand-alone company, we now have an improved focus on [the fact that] every day, every week, every month, every quarter matters."

Maintaining culture through change

Maintaining a strong culture for the 560 BHSF revenue cycle employees who moved over to HSS, along with the addition of another 60 employees, was a crucial aspect of the JV. This is part of the reason Garner, who has years of revenue cycle experience, was chosen to oversee the new entity in its first year.

Garner said that the RCM arrangement has exceeded the organization's expectations, both for financial results and employee morale.

"If we went back to April of 2018 when [HSS] was announced and asked the employees, they would've said this was like walking the plank," Garner said. "[HSS] was a shock to the system, but I'm happy that [employees] understood what we were doing, and that Baptist was a partner in this [JV]. That was a big deal for [the employees]." 

Matthew Arsenault, who has served as the chief financial officer at BHSF since September 2018, said that he had followed his predecessor Ralph Lawson's lead on the HSS project.

"What I think has been a positive is the focus on trying to continue [BHSF's] employee-friendly focus and employee culture," Arsenault said. "[Ralph's and my] vision were that [RCM] should be an area that differentiates BHSF."

Related: Revenue Cycle Venture Brings Together Navigant, Baptist Health South Florida

In an interview in April 2018 discussing the announcement of the JV, Lawson told HealthLeaders that one of the main priorities was fostering a strong employee culture around the impending changes.

"We’re good at revenue cycle, we’re just trying to take it from being an excellent revenue cycle to a world-class operation," Lawson said. 

Guided by governance

Despite the strong returns, HSS marked a noticeable departure from how BHSF had approached its RCM, which created a slight challenge for the organization in terms of answering employee concerns. However, both Garner and Arsenault emphasized the importance of constant communication with the revenue cycle teams to ensure that all workers were on the same page.

"One of the unexpected challenges was the shift in our mindset as we went from being peers to a vendor-customer relationship," Garner said. "Still, the end goal was that we worked together as we did before. It took some adjustments, but we do have a great governance structure with different committees that meet so there's transparency and open communication."

Dave Hampshire, managing director at Navigant, told HealthLeaders that the governance structure fosters trust and accountability between senior leadership at HSS, BHSF, and Navigant. He also added that there are lower-level program committees that meet monthly to promote a dialogue focusing on interdisciplinary problem-solving, which has been another boon for the organization.

Next steps

According to Hampshire, HSS is focused on three key performance indicators going forward, namely yields, the amount of self-pay patients, and the physician debt collection ratio.

Hampshire also said that Navigant, which inked a deal in 2016 to improve RCM for University of Alabama at Birmingham Health System, is supporting HSS as it looks at potential expansion opportunities with health systems throughout the southeast. Meanwhile, Garner said that HSS' success has prompted leadership to consider scaling the business with an eye on partnering with new organizations.

Correction (10/15/19): An earlier version of the story mischaracterized the nature of the financial improvement recorded by Health System Solutions (HSS). The $28 million improvement was an increase in net patient revenue, not savings.

Jack O'Brien is the finance editor at HealthLeaders, a Simplify Compliance brand.


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