Dignity Health's physician group cut patient increased cash collection and cut patient bills in accounts receivable.
A revenue-cycle initiative at a California-based physician group has boosted the organization's finances, including a 20% decrease in accounts receivable over 90 days and an increase in cash collections to 108% over budget.
Dignity Health Medical Foundation’s affiliated medical groups serve as the primary employment model for Dignity Health in California, with more than 1,000 clinicians. San Francisco-based Dignity Health operates 39 hospitals in California, Arizona and Nevada.
In January, DHMF sought to reverse downward trends in accounts receivable, cash collection, and earnings before interest, tax, depreciation, and amortization. In response, the organization launched an effort that focused on accounts receivable management, charge integrity, vendor strategy, and clinical documentation.
One of the primary goals of DHMF's revenue-cycle initiative was to improve accounts receivable performance without relying on increased effort—and expense—at accounts receivable vendors. This goal was met by increasing staff time in the DHMF central business office created mainly with overtime hours.
With the additional staff hours, AR was assessed on a weekly basis. The assessments targeted several classes of accounts that had aged beyond 120 days, including these:
- Rejections of claims over $1,500 due to medical record requests
- Claims rejections for surgeries and infusions due to missing information such as operative report notes
- Government claims that could be collected potentially quickly, such as Medicare claims
- High-dollar recurrent patients
- Commercial payers with a history of paying relatively quickly
DHMF focused on accounts aged beyond 120 days for two reasons, says Diane Butler, a director at Chicago-based consultancy Navigant, which helped implement the physician group's revenue-cycle initiative. First, the difficulty of collecting accounts increases significantly after 120 days. Second, AR aged greater than 120 days is customarily "reserved," with organizations setting aside cash in the event of failure to collect and eventually transferring the outstanding balance to bad debt.
The AR effort has generated significant gains, says Christopher McGoldrick, DHMF’s chief financial officer. "When we began this initiative, approximately 50% of our accounts receivable was less than 90 days. Now, it represents 70%."
DHMF, part of a health system that is slated to merge with Englewood, Colo.-based Catholic Health Initiatives, has set a goal of 85% of AR at less than 90 days, he says.
Christopher Cheney is the senior clinical care editor at HealthLeaders.