| Exclusive Most Wired Survey Data | ||
| Percentage of hospitals using automated processes in the back office (weighted average) | ||
| 2005 Most Wired* | 2005 Least Wired** | |
| Charge and order matching | 79% | 36% |
| Charge capture reconciliation | 76% | 30% |
| Contract management | 77% | 19% |
| Denial management | 65% | 16% |
*Most Wired: Aggregate data for the 100 highest scoring respondents.
**Least Wired: Aggregate data for the 100 lowest scoring respondents.
Source: H&HN’s Most Wired Survey and Benchmarking Study, 2005
Electronic health records, computerized physician order entry, PACS—clinical departments in hospitals are awash in new technologies that promise big changes in how doctors and nurses deliver care. Behind the scenes, the pace of technological change for business processes may not be so sweeping, but hospitals are discovering the impact may be almost as powerful. New IT systems that capture previously lost Medicaid payments or improve cash flow by reducing outstanding receivables create a financial cushion that can soften the spending attitudes of even the most skeptical board members at budget time.
But for back-office automation to work, hospitals need to do more than computerize their existing workflows. Without reevaluating, and where necessary, reengineering their back-office pipelines, hospitals risk embedding old inefficiencies in new technology.
The first step is developing a game plan that looks beyond technology. As Benjamin R. Williams, senior vice president of strategic innovation and CIO at St. Joseph Health System, Orange, Calif., explains, “Before we implement and automate, we reengineer and reprioritize how we do things.”
St. Joseph Health System, Orange, Calif.
Knowing that back-office efficiency is more about developing the right processes than installing the latest and greatest technology, St. Joseph Health System brought together people from across the health care network two years ago to work on improving its financial systems. The goal was identifying best practices that departments could adopt systemwide.
“Because everybody came out from different parts of the country, we created a Hollywood theme with people doing skits about the business processes and making fun of themselves in terms of where we had some gaps and problems,” says Joe Randolph, senior vice president and CFO. “Then we broke out into work groups that talked about the problems and potential solutions. From there, we came up with a plan.”
Behind the fun, there was some serious business. “There hadn’t been an understanding of what difficulties were being passed or were accumulating” between departments, adds Williams. “As information flows through the health system from admission to discharge, it has historically not always been matched with the physical flow of the person or the test or the lab result. So there was always this wait state of information.”
Reengineering and new technology helped St. Joseph cut its outstanding receivables almost in half, from around 100 days to 56 days. Now, the health system more closely monitors key financial performance indicators and compares daily reports against established goals. Prime areas include discharged-not-final-billed (DNFB) cases, credit balances and cash collections. “We get reports from every one of our hospitals, and if we see a problem in a certain area, we can throw resources at it before it becomes a major problem,” Randolph says.
Technology plays a key role in the efficiency improvements by virtually eliminating the need to process claims manually. “That has freed up [our staff] so they can really focus on maintaining and reducing the receivables,” Williams says. The hospital uses a commercial claims processing service from NDCHealth, Atlanta, for commercial billings. CareMedic Systems handles Medicare claims. St. Joseph switched to the St. Petersburg, Fla.-based Medicare processor because the forms interface immediately flags any entry errors, which cuts down on returned claims and contributes to the reduction in outstanding receivables.
Whether a hospital is revising its technology, its processes or a combination of both, success often hinges on bringing the right people together from the start. “You really have to craft a story that people can understand in their hearts, in their guts and in their heads,” Williams says. Without diverse stakeholder involvement, the project risks becoming a mandate handed down from above rather than improvements brought about by the people who participate in the business processes.
“Those people are the experts, and what they can offer is far more valuable than a consultant or someone else from a distance saying you need to do this,” Williams adds. “The key is getting people to feel ownership of the processes because you are going to be a lot more successful once you get them to buy into what it is you are trying to accomplish.”
Denver Health & Hospital Authority
The Denver Health & Hospital Authority provides the last line of defense for many low-income or elderly patients when an illness or injury threatens their long-term health. But as a safety-net organization, the hospital was finding its own financial well-being compromised by unpaid Medicaid bills. The problem: The hospital was losing out on millions of dollars in payments for care given to patients who were entitled to Medicaid coverage.
In 2004, DHHA took action. It launched Eligibility Re-Verification, a custom system created for the hospital to bring order to the Medicaid verification process. Each night, ERV checks the eligibility status of patients who didn’t have their Medicaid cards or didn’t realize they qualified for Medicaid coverage at the time of their treatments. ERV compares new uninsured accounts or indigent-care cases against Colorado’s Medicaid database.
After a year of relying on ERV’s automated lookups, the hospital is enjoying a big payoff. “We have been able to recover a substantial amount of money that otherwise would have been lost,” says Peg Burnette, chief financial officer. During the past year, ERV recouped $2.5 million in Medicaid revenues that otherwise might not have been billed, she notes. Also, ERV automatically sends eligibility “hits” to patient accounting records in the hospital’s Invision patient registration and billing application from Siemens Medical Solutions. When patients return to DHHA, their Medicaid status is immediately available.
Prior to ERV, the hospital had to manually work Medicaid cases, a tedious task that made it impossible to check every questionable record. Many accounts eligible for reimbursement ended up as unpaid bad debt or charity cases.
As it searched for solutions, DHHA investigated third-party services that perform Medicaid lookups, but per-transaction costs of 25 cents or more led the hospital to consider a custom-built, in-house solution. Interlink, a Denver IT consultant, developed the application and brought cost per transaction down to 3 cents or 4 cents. According to CIO Gregory Veltri, ERV’s core is the Microsoft BizTalk server, an application integration engine. “[ERV] leverages BizTalk and Invision,” Veltri says. “The application sees all the registrations and automatically culls the data.”
Today, ERV collects in a separate group all cases without an insurance classification or where Medicaid application status is pending. If necessary, business rules defined within the custom application present the business staff with 15- or 30-day reminders to recheck eligibility status for pending claims.
Veltri says integrating BizTalk and Invision was the easy part of the two-year project. The challenge was persuading the state to assign the hospital Micro Electro-Mechanical Systems (MEMS) status, which allows it to process its own Medicaid claims. “The state’s biggest concern was that the volume of claims we were going to be sending through using this methodology would somehow blow up the system. But then that proved not to be true,” Burnette says.
ERV now processes about 190,000 transactions per year. The system identifies approximately 5 percent, or 9,600, as eligible for Medicaid, Burnette says. The resulting revenue boost comes at an opportune time. Because of rising insurance costs, unemployment trends and other factors in the community, DHHA says its uninsured care cases grew from $247 million in 2003 to $285 million in 2004. “Despite being hit with that increase, we did not have a huge loss” thanks to ERV, says Burnette.
For a one-two processing punch, DHHA speeds Medicare claims processing using services from CareMedic, which verify the accuracy and completeness of claims before they’re submitted. Similarly, the hospital checks commercial claims accuracy using processing services from Health Data Exchange, Malvern, Pa. The combined systems have significantly reduced claims denials “because now everything is checked at the front end,” says Burnette, which also reduces staff time that had been devoted to manually following up problem submissions.
An added measure of efficiency is the direct link between the processing systems and Invision, which automatically bills patients once the hospital determines eligibility status. “We are at 90-plus percent automated billing in patient accounting,” Veltri says. Overall automation eliminated 10 FTEs, some of whom have been reassigned to other areas.
In the future, the hospital plans to add a credit reporting tool to its back-office arsenal to round out the financial picture of incoming patients. “We have financial counselors who meet with patients, and we think it will help to have a tool that can pull up some basic credit information from the three credit bureaus and also make sure we have an address match and a good Social Security number,” Burnette says.
DHHA hasn’t selected a specific product yet, but it expects to have the application in place sometime in 2006. “If it shows that the patient has credit available on credit cards, we can point that out and ask, ‘Would you like to put this visit on your credit card today?’ Otherwise they might have said, ‘You know, I don’t have any money.’ We’re hoping this kind of tool will also help us with getting more up-front collections.”
Marion (Ind.) General Hospital
For Marion General Hospital, an independent, 180-bed facility, back-office automation began as a effort to relieve the pain of paper. In 1998, the facility began a multiyear digital transformation effort that included a new document imaging system and collaboration with payers to move to electronic claims payments. A little over two years ago, Marion took another step forward when it replaced its outdated, 20-year-old financial application with a system from Meditech, Westwood, Mass. “We eliminated the need to re-enter patient data many times in many different systems, which had just multiplied the potential for errors,” says David L. Callecod, president and CEO.
Tying together these technology changes was a beefed-up enterprisewide network that ensured that business staff, clinicians, executives and physician practices could all share authorized data as they needed it.
“We just don’t have much paper anymore in the whole patient accounting function,” says Paul Usher, CFO and vice president of finance. The result has been financial efficiencies and time savings for staff, illustrated by a significant reduction in outstanding receivables. Prior to the automation push, MGH was seeing average accounts receivable days outstanding in the mid-60s to mid-70s. Since 1998, averages have ranged in the 50s.
One of the biggest challenges the hospital faced in its automation efforts was managing the ripple effects that innovations such as changes in billing procedures had on other areas, including clinical departments. “Hospitals are an integrated system. You can’t touch one area without touching others,” Usher says. “So we had to come together and find the right solution that gives everyone what they need.” For example, when MGH made its move to the Meditech system, the hospital knew the changes would affect both the business and clinical sides. To make sure everyone was in sync with the changes, MGH established a core team from various disciplines throughout the hospital. “They look at how information flows from department to department to department,” Callecod says.
The team became a permanent entity that evaluates any large-scale project. Complementing it is another group composed entirely of physicians from about six different specialties that monitors projects exclusively from a patient-care perspective. “We work with them before we make changes,” Usher says. “This hospital had never gone through a conversion before, but because of the physician advisory group, we received pretty good acceptance from our medical staff. And the medical staff can be pretty darn independent.”
In the end, these efforts affect more than just the financial office. Recent additions include PACS, and, in the near future, the hospital will install a high-speed, fiber-optic network backbone for fast image sharing. “Part of this is possible because the accounts receivable automation helped generate more cash,” Usher says. “We have good cash reserves, great days in cash. That means financially you can afford to do some of these other things.”
Alan Joch is a freelance writer based in New Hampshire.
| Vital Statistics |
| St. Joseph Health System, Orange, Calif |
| President and CEO: Deborah A. Proctor Senior Vice President, Strategic Innovation, and CIO: Benjamin R. Williams Number of Beds: 3,548 Number of Employees: 17,880 Number of IT Employees: 311 IT Operating Budget as a PercentAGE of Total Operating Budget: 1.3% IT Capital Budget as a PercentAGE of Total Capital Budget: 29.6% |
Joe Randolph
Bio: CFO, St. Joseph Health System, Orange, Calif.; bachelor’s degree in accounting from California State University/Fullerton, master’s degree in business administration from Pepperdine University.
Rewards of the Job: This is a ministry that provides a vital service to the community. We care for the whole person—body, mind and spirit.
Biggest Challenge: We turn no one away based upon their ability to pay, but at some point we will need to see reform in order to curb the growing need for access to care.
IT Philosophy: We rely heavily on technology to reduce patient errors, improve efficiency, and standardize our processes.
E-Mail:jrandolp@stjoe.org
| Vital Statistics |
| Denver Health & Hospital Authority |
| CEO and Medical Director: Patricia A. Gabow, M.D. CIO: Gregory Veltri Number of Beds: 398 Number of Employees: 4,200 Number of IT Employees: 111 IT Operating Budget as a Percentage of Total Operating Budget: 3.3% IT Capital Budget as a Percentage of Total Capital Budget: 23.5% |
Gregory Veltri
Bio: CIO, Denver Health & Hospital Authority; bachelor’s degree in applied science in information technology from Spokane Community College.
Rewards of the Job: The potential to impact in a positive way the patient care experience by using IT-enabled processes and tools to reduce errors and provide patient data when and where needed by clinicians.
Biggest challenge: Resistance to change in a business where perfection is required.
IT Philosophy: Electronic information should augment the physicians’ knowledge, adding value for the patient with limited intrusion into the care experience.
E-mail: gregg.veltri@dhha.org
| Vital Statistics |
| Marion (IND.) General Hospital |
| President and CEO: David L. Callecod CIO: Emmanuel Ndow Number of beds: 150 Number of employees: 1,100 Number of IT employees: 11 IT operating budget as A percentage of total operating budget: 2.5% IT capital budget as percentage of total capital budget: 20.9% |
Paul L. Usher
BIO: CFO and vice president, finance, Marion (Ind.) General Hospital; B.S., accounting, Ball State University.
Rewards of the job: Knowing that I am in the business of caring for people and that what I do helps ensure delivery of quality health care services for people in our community.
Biggest challenge: Helping our organization to understand and appropriately respond to the many complex issues that we face.
IT Philosophy: IT can best be used to provide access to information for caregivers at the time and place needed.
E-mail: pusher@mgh.net
Toolkit
Resources
- 2003 Data Compendium, Centers for Medicare & Medicaid Services. An annual data compendium of statistics about CMS programs and health care spending, http://new.cms.hhs.gov/DataCompendium/02_2003_Data_Compendium.asp.
- Changes to the Hospital Outpatient Prospective Payment System for Calendar Year 2006, Centers for Medicare & Medicaid Services, http://new.cms.hhs.gov/HospitalOutpatientPPS/HORD/list.asp.
- Business Research in Information and Technology, a portal for business technology, includes features about business process reengineering, www.brint.com.
- Capterra Enterprise Software Center, a directory of claims processing software, www.capterra.com/claims-processing-software.
- Association for Electronic Health Care Transactions, www.afehct.org/aboutus/index.htm.
- Workgroup for Electronic Data Interchange, host of the Strategic National Implementation Process (SNIP) for health care electronic commerce activities, www.wedi.org/snip/index.shtml.
Dos & Don’ts
For Automating the Back Office
Do:
- Bring together people from different functional areas to discuss current business processes and identify bottlenecks that need to be eliminated.
- Review how legacy systems have been configured. Outdated business rules could be costing the hospital money.
- Focus on ongoing technology education for business and executive managers, so when it’s time to present a new initiative, the focus is on potential benefits, not technology primers.
- Develop a pilot project for large technology initiatives.
- Monitor ongoing financial performance after new automation systems come online. Daily reports can help quash budding financial problems before they become serious.
Don’t:
- Skimp on up-front planning. Organize cross-departmental groups to identify ways of streamlining existing processes before beginning to evaluate potential hardware and software purchases.
- Automatically buy the latest and greatest technologies.
- Force new technology on the business staff. Instead, form partnerships with business managers.
- Overlook the ripple effect of changes in interrelated hospital systems.
- Bypass integration opportunities between custom applications, such as insurance verification systems and larger patient accounting programs.
This article first appeared in the Winter issue of HHN's Most Wired Magazine.
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