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strategies for revenue cycle success

    In an era of healthcare reform, excellence across all areas of revenue
HFMA’s MAP                                 As healthcare reform leads to significant changes across the
Initiative: Taking...
revenue cycle staff in back-end processes, and vice versa. “This
Using Data to Drive Revenue
Cycle Performance
At Riverside Methodist Hospital                                             ...
A Snapshot of Award-winning Performance
About HFMA’s MAP Award                                                                           MAP Award Winners
HFMA’s ...
The collaborative approach to revenue cycle performance
Lessons Learned
Build the morale of your staff. The Valley Hospital in Ridge-               to the hospital. “Because our ...
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Mapping Out Strategies Supplement


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Mapping Out Strategies Supplement

  1. 1. strategies for revenue cycle success In an era of healthcare reform, excellence across all areas of revenue cycle operations is critical to a hospital’s success. Here, winners of HFMA’s MAP Award for High Performance in Revenue Cycle share their strategies for performance excellence. by jeni williams
  2. 2. HFMA’s MAP As healthcare reform leads to significant changes across the Initiative: Taking a industry, achieving optimal performance in revenue cycle opera- Closer Look tions has never been more important for hospitals. HFMA’s MAP initiative gives providers the tools they need “In an environment of healthcare reform, we’re going to need to measure revenue cycle performance, apply evidence- to drive toward excellence,” Richard L. Clarke, DHA, FHFMA, based strategies for improve- ment, and perform to the HFMA President and CEO, told attendees of HFMA’s ANI: The highest standards of revenue cycle excellence. HFMA’s Healthcare Finance Conference in June. HFMA announced its MAP initiative features the following. MAP initiative and the 2010 MAP Award winners at ANI. “The status quo and incremental change will not prepare us Map Keys are defining key indicators for the drastic changes in patient access, insurance, and payment of revenue cycle performance. Using MAP Keys, healthcare finance professionals can improve business coming our way,” Clarke says. “To thrive, we will need to provide intelligence, strengthen revenue cycle management, and decide—based on high-quality care and service at low cost. And we will need to industry-created metrics—where to focus for improvement. ensure that our revenue cycles are as efficient and productive as possible.” In 2009, HFMA created the MAP Award for High This award is an annual award recog- nizing healthcare organizations that achieve excellence in the revenue cycle. Performance in Revenue Cycle to honor hospitals that achieve Applications for the third-annual award will be available in early 2011. revenue cycle excellence. MAP Award winners excel in meeting key benchmarks for success, as established through HFMA’s MAP initiative while adhering to the principles The MAP App is a tool being piloted for tracking a provider’s performance throughout the revenue cycle and outlined by HFMA’s PATIENT FRIENDLY BILLING® project. comparing performance with that of other organizations. The MAP The award is sponsored by 3M Health Information Systems. App also offers tips on evolving best practices and includes a community Here, three MAP Award-winning hospitals share the discussion forum for airing common concerns. HFMA plans to roll out the specific strategies and tactics that made their organizations tool for general use later this year. high performers—and what your organization can do to enhance revenue cycle performance. The MAP Event will bring together the best ideas on how to improve revenue cycle performance. A MAP event will For be held Nov. 7-9 in San Diego; more abo mor ut H ei information is available at www.hfma. FMA nformat visit ion www ’s MAP org/mapevent. .hfm in a.or itiative, g/m ap.
  3. 3. revenue cycle staff in back-end processes, and vice versa. “This helps front-end and back-end staff understand each other’s worlds. It also increases collaboration among the revenue cycle team,” Schick says. Saint Francis also hired two full-time and one part-time trainer for the department, with training programs held monthly for new staff and quarterly for staff who desire or need increased education in a particular area. Saint Francis measures performance against metrics such as days in A/R; aged A/R as a percentage of billed A/R by payer, which enables the health system to monitor its partnership with man- aged care payers; days in discharged not final billed (DNFB), with a DNFB goal of four days or less; point-of-service cash collections; insurance verification rate; and service authorization rate. When Strategies for a More performance falls below expectations, revenue cycle leaders discuss the issues with the directors of specific areas or with individual Collaborative Revenue Cycle employees, when appropriate, and develop plans for improvement. And when a claim is rejected, the claim is sent back to the staff Seven years ago, Saint Francis Hospital person who originally made the error to be corrected. “This helps in Tulsa, Okla., undertook an initiative to the person who made the error to learn from it,” Edwards says. “We’re a very productivity driven system,” Schick says. “For significantly overhaul its revenue cycle example, we count transaction codes on the back end and look operations. at the number of claims that are processed to make sure staff are meeting their monthly targets. Over the past year and a half, we’ve At that time, the hospital relied on four different IT systems for also paid increased attention to the intricate role that our medical revenue cycle management. The need for improved communication records department plays in revenue cycle performance, and have between front-end and back-end revenue cycle staff at Saint Francis worked with medical records staff and physicians to ensure that had become increasingly clear, and the hospital’s days in accounts charts are completed in a timely manner. It’s important for physicians receivable (A/R), which were in the mid-40s, were higher than the and medical records staff to recognize that when DNFB spikes from organization would have liked. Additionally, Saint Francis sought to three days to seven days for a period of 60 days, then 60 days from implement new tools that would enhance insurance verification. now, our organization is going to have trouble meeting our cash “We really imploded our revenue cycle operations to make goals, because that increase in DNFB days will have a domino effect them more efficient and much more collaborative,” says Eric Schick, throughout the revenue cycle.” vice president of finance for Saint Francis Hospital. “We studied our The hospital’s focus on tightening its revenue cycle operations revenue cycle from the front end to the back, and ran dry scenarios has paid off. Saint Francis has dramatically reduced its days in A/R, to determine where areas of improvement existed. Through that from the low 40s in late 2008 to the mid-20s today, and its days process, we determined that there were some processes that could in total DNFB measured just 3.42 in February 2010, when the be shifted from the back end to the front end of the revenue cycle. hospital’s MAP Award application was submitted. Now, the hospital We also made the decision to create a centralized scheduling is working with managed care payers on issues that have caused department and prearrival department.” delays in processing claims. Ultimately, Saint Francis’ efforts in this One of the first challenges Saint Francis’ revenue cycle depart- area will lead to claims being paid more quickly. ment tackled was the need to increase collaboration between front- “Our efforts to improve revenue cycle operations have really end and back-end revenue cycle staff. “At that time, the front-end given us the capacity to move our performance to the next level,” staff really didn’t connect with the back-end staff; they were both Schick says. in separate worlds,” Schick says. He and Renee Edwards, director of patient financial services, began to hold meetings with staff from both areas to show them how their work is connected and the ways in which their efforts are integral to the performance of the depart- ment as a whole. “They began to understand that they are one team—that they succeed together and that they fail together.” When Saint Francis implemented new software and tools for revenue cycle management, the hospital trained its front-end
  4. 4. Using Data to Drive Revenue Cycle Performance At Riverside Methodist Hospital This atmosphere of “systemness” among revenue cycle depart- ments throughout the health system has enhanced OhioHealth’s in Columbus, Ohio, one of five ability to effect significant improvements in its revenue cycle opera- OhioHealth facilities, an atmosphere tions. At Riverside Methodist Hospital, aged A/R as a percentage of billed A/R over 30 days is just 11.1 percent; over 60 days, 7.4 of teamwork among the health system’s percent; and over 90 days, 4.5 percent. Days in total DNFB were revenue cycle departments has helped 4.87 in February 2010, when the hospital’s MAP Award application was submitted, and cash collection as a percentage of adjusted net to propel the hospital’s revenue patient services revenue is 113.1 percent. And 80 percent of River- cycle performance. side Methodist Hospital’s customers would recommend the hospital. “One of the keys to our success in revenue cycle performance Several years ago, OhioHealth began to consolidate its business is that all components of the revenue cycle report to finance,” says office operations as a new IT system was introduced. The health Jane Berkebile, vice president, revenue cycle for OhioHealth. “It’s system also brought its patient access, health information manage- very hard to achieve the same level of results in revenue cycle per- ment, and central business office operations under the leadership formance if staff in health information management or patient ac- of the health system’s vice president of revenue cycle, who reports cess don’t report to the same leaders as your billing staff. All revenue to OhioHealth’s corporate CFO. cycle staff need to be on the same train, going in the same direction. Weekly, OhioHealth’s revenue cycle leadership team meets If you don’t have that level of systemness, when there are problems, to discuss challenges, results, projects, training, and resources. you’ll have people pointing fingers at each other rather than working Monthly, OhioHealth’s revenue cycle leaders, hospital CFOs, and together toward a solution.” other key finance representatives meet to review results and discuss OhioHealth also relies on data to measure and drive revenue action plans. Cross-departmental revenue cycle teams meet at least cycle performance at facilities such as Riverside Methodist Hospital. monthly, and targeted revenue cycle improvement teams meet as The health system recently implemented an automated quality as- frequently as needed. Additionally, OhioHealth hired IT personnel surance system for registrars that monitors all registrations, includes who work solely with the revenue cycle team, as well as full-time more than 200 real-time edits, returns errors to registrars to cor- trainers who develop orientation and continuing education rect, and provides detailed error reporting and quality assurance sessions for staff. data down to the individual registrar. “Following implementation of this system, our overall percentage of returned mail dropped from 2 percent to 1 percent, and our clean claim rate increased,” Berkebile says. Data from revenue cycle operations also are used to set goals for revenue cycle staff and to measure progress; results are regularly shared with staff. “Last year we had significant targets around patient cash and around write-offs. They were stretch targets for us—and we exceeded those targets,” Berkebile says. “Our point-of-service [POS] collection goals are developed by facility and down to the department level based upon the percentage of opportunity. We provide feedback to individual registrars and financial counselors, comparing their individual collections with the target goal.” The increased focus on POS collections has paid off for OhioHealth and Riverside Methodist. In the previous fiscal year, POS telephone collections at time of preregistration averaged $180,000 per month. With focused efforts and targets, this year, that average has increased to $370,000 per month. “This is just one component of a very successful POS program that increased POS collections year over year by 21 percent,” Berkebile says.
  5. 5. A Snapshot of Award-winning Performance R surance system for registrars that monitors all registrations, includesHospital The Valley Hospital Saint Francis Riverside Methodist Tulsa, Okla. Ridgewood, N.J. Hospital Columbus, Ohio Net Days in A/R 23.2 36.8 35.2 Operating Margin 10.3% 6.0% 7.7% Cash Collection as a Percentage of 105.7% 100.5% 113.1% Adjusted Net Patient Services Revenue Total Bad Debt Write-Off 4.1% 1.02% 1.4% Total Charity Care Write-Off 3.7% 1.59% 4.29% Days in Total Discharged Not Final Billed 3.42 5.6 4.87 Patient Would Recommend 82% 79% 80% *Exhibits reflect responses provided by the organizations in February 2010, when applications for MAP Award were submitted. Estimating Patient Financial Obligations Prior to Service To What Extent Do You Provide Saint Francis Hospital The Valley Hospital Riverside Methodist Estimates of Patient’s Financial Tulsa, Okla. Ridgewood, N.J. Hospital Obligations Prior to Rendering Services? Columbus, Ohio To nearly all patients receiving an elective procedure (75% or more of all elective x procedures) To some patients (below 75% of all patients) x At scheduling upon request x x x At registration upon request x x x At time of service upon request x x x “One of the keys to our success in revenue cycle performance is that all components of the revenue cycle report to finance.” Jane Berkebile, vice president, revenue cycle, OhioHealth
  6. 6. About HFMA’s MAP Award MAP Award Winners HFMA’s MAP Award for High Performance in Revenue Cycle, sponsored The following organizations received HFMA’s MAP Award for by 3M Health Information Systems, recognizes healthcare organizations Revenue Cycle Excellence in 2010. that are distinctive, innovative, and effective in revenue cycle process improvements and patient satisfaction. In addition, it recognizes sustainable • Baylor Medical Center at Irving, part of Baylor Health financial performance that serves the mission of the organization. Care System, Irving, Texas For more information, visit • CHRISTUS Schumpert Health System, part of CHRISTUS Health, Shreveport, La. • Hospital of the University of Pennsylvania, part of the University of Pennsylvania Health System, Philadelphia • Riverside Methodist Hospital, part of OhioHealth, Columbus, Ohio • Danbury Hospital, part of Danbury Health System, Danbury, Conn. • Saint Francis Hospital, part of Saint Francis Health System, Tulsa, Okla. • The Valley Hospital, part of Valley Health System, Ridgewood, N.J. • Princeton Medical Center, part of Baptist Health System, Birmingham, Ala. • Geisinger Medical Center, Danville, Pa. • Brookwood Medical Center, part of Tenet Health System, Birmingham, Ala. Key Performance Indicators for Tracking Performance HFMA recently developed a common set of revenue cycle key performance indicators (KPIs) known as MAP Keys in collaboration with multiple stakeholders. The MAP Keys promote the consistent reporting practices and peer-to-peer comparisons needed to achieve significant revenue cycle performance improvement. Embracing the MAP Keys for tracking revenue cycle performance can help hospitals identify revenue cycle performance trends and pro- actively prioritize and address areas in need of attention. The following 19 KPIs comprise the MAP Keys: • Aged A/R as a % of Billed • Denials Overturned by Appeal • Point-of-Service Cash Collections A/R by Payer Group • Net Days Revenue in Credit Balance • Cost to Collect • Days in Final Billed Not Submitted • Preregistration Rate • Cash Collection as a Percentage of to Payer • Insurance Verification Rate Adjusted Net Patient Services Revenue • Days in Total Discharged Not • Service Authorization Rate • Bad Debt Submitted to Payer • Net Days in Accounts Receivable • Charity Care • Late Charges as % of Total Charges • Aged A/R as a Percentage of • Days in Total Discharged Not Final Billed • Initial Denial Rate—Zero Pay Billed A/R • Initial Denial Rate—Partial Pay
  7. 7. The collaborative approach to revenue cycle performance improvement has pushed revenue cycle performance to a higher level at The Valley Hospital. Department by department, operating margins have increased, from 2.1 percent in 2000 to 3.5 percent in 2009. Managers’ yearly goals are tied in part to the hospital’s financial performance, so that all hospital leaders have a stake in the hospital’s revenue cycle performance. Monthly reports that compare each department’s performance with its target goals keep departments on track. Notably, the hospital’s patient satisfaction scores, quality indicators, and employee satisfaction have demon- strated improvement. “I think the continual feedback we provide for managers and employees throughout the hospital helps them to participate in working toward the hospital’s revenue cycle goals,” Klutkowski says. “ It’s important to take the time to sit down with individual departments Accelerating Revenue and talk with them regarding their concerns, because every depart- Cycle Improvement through ment is different. For example, what’s going on in radiation therapy? What problems is the department experiencing with managed care a Change in Culture contracts? What are the concerns of leaders and key stakeholders At The Valley Hospital in Ridgewood, in the department? It’s also important to involve medical records in these discussions, where appropriate, so you can really concentrate N.J., a change in the hospital’s culture on any coding issues that exist and help the department take steps and the mindset of staff have fueled toward improvement.” One of the keys to effecting change in individual departments significant improvements in revenue is to include all the appropriate stakeholders in discussions, not cycle performance. just the department leaders. “Often, revenue cycle leaders choose to meet with the department director when in fact a staff member “ We’ve always been strong in revenue cycle performance, but not might have more influence in improving the department’s revenue as strong as we are today,” says Bill Klutkowski, CPA, assistant vice cycle performance,” Klutkowski says. “In some instances, including president of finance for the hospital. “We weren’t struggling for cash, an IT person in discussions with a department also can be key. Bring but we knew our revenue cycle performance could be even better. payment records with you—most departments have no idea what The challenge for us was how to go from ‘good’ to ‘great.’” they actually get paid. Show the departments what they charged in The Valley Hospital began its quest toward excellence in relation to what Medicare and insurance companies actually paid, revenue cycle performance in 2000 by educating all employees without saying, ‘You missed a charge.’ Information such as this will regarding their contributions to the hospital’s financial performance. be an eye-opener for leaders and staff and will help them to better “ Everything changed with the introduction of Medicare’s ambula- focus on the actions needed for improvement.” tory payment classification system. Edits and payments were all in turmoil. We learned something new every day and realized quickly that we couldn’t do it alone. We needed department head involve- “We began to offer revenue cycle educa- ment and accountability to the revenue cycle,” Klutkowski says. tion to everyone throughout the hospital— “We began to offer revenue cycle education to everyone throughout the hospital—specifics that really mattered to their specifics that really mattered to their department—and provided the support to help people improve department—and provided the support performance as it relates to the revenue cycle. Our organization also offers a leadership institute series for department leaders to helppeople improve performance as three times a year, and we’ve given presentations to leaders that it relates to the revenue cycle.” address common budget issues, expense management, and various aspects of the revenue cycle. When new managers join the Bill Klutkowski, CPA, assistant vice hospital, they meet with our director of budgets and reimbursement president of finance, The Valley Hospital staff to review their responsibilities. Each of these initiatives helps to set targets and expectations related to revenue cycle performance earlier.”
  8. 8. Lessons Learned Build the morale of your staff. The Valley Hospital in Ridge- to the hospital. “Because our revenue cycle is as tight as it is, wood, N.J., created a “finance morale committee” to discuss issues we’re able to pay attention to details such as why some claims aren’t that could affect employee satisfaction and ways to boost the spirits being paid quickly, and to dial down into those issues and address of staff. Each quarter, representatives who are chosen by their peers them with payers,” Shick says. “It takes diligence, perseverance, and plan events for the staff (the group once held a carnival for revenue a lot of data to effect change, but it can be accomplished. There are cycle staff in the hospital parking lot) as well as community service a lot of other providers in our market who are benefiting from our activities, such as contributing to a compassion fund set up to help efforts in this area.” hospital employees who are experiencing financial hardship. Maintain a dedicated IT staff for revenue cycle. “I have “Finance is a very stressful environment; we’re all expected to my own IS team that works solely on revenue cycle projects,” says do more with less. It’s good to invest in the morale of your staff,” says Jane Berkebile, vice president, revenue cycle, for OhioHealth. “This Josette Melillo, director, patient financial administration, for The allows us to move very quickly to resolve any issues with technology Valley Hospital. In 2009, employee satisfaction scores ranked in the within the revenue cycle.” 91st percentile for revenue cycle staff, with a mean score of 85.7 Celebrate successes. OhioHealth keeps a treasure chest percent, 12.6 percentage points higher than in 2000. full of dollar-store items in each of its revenue cycle departments to Invest in continuing education for revenue cycle reward employees who reach certain targets. This year, the health staff. MAP Award winners have dedicated trainers for their system also held a “Right Choice Awards” program to honor individ- revenue cycle departments. At Brookwood Medical Center in Bir- uals and teams who contributed to the health system’s revenue cycle mingham, Ala., trainers provide reeducation for staff who are strug- success. Staff at Saint Francis Hospital are treated to an afternoon gling and conduct mandatory education refreshers for the revenue at the zoo or the movies to celebrate the achievement of significant cycle team. “We also encourage our staff to obtain certification,” goals. “It’s important to let your staff know that they are doing a great says Doug Carter, CFO. “Staff who achieve certification receive an job and that their efforts are appreciated,” Schick says. increase in pay, so there is an incentive for them to meet this goal.” Recognize the efforts of other departments in the At Saint Francis Hospital in Tulsa, Okla., where front-end staff organization that contribute to the organization’s revenue have been trained in back-end revenue cycle processes, and vice cycle success. At The Valley Hospital, revenue cycle staff recently versa, “Staff realize that they are one team, and that they succeed showed their appreciation to employees in other departments by together,” says Eric Schick, vice president of finance. inviting them to a “sweets party,” complete with a chocolate fountain. Meet regularly with managed care payers to address “ You have to develop a good relationship with other departments issues that are delaying processing of claims. Such meetings that contribute to your organization’s revenue cycle success,” says have enabled Saint Francis Hospital to address problems with con- Bill Klutkowski, assistant vice president of finance. tract enforcement and claims processing that are delaying payments For m ore or to informa www regis tion, .hfm ter, v isit /map even t. Learn Strategies for Transforming Your Hospital’s Revenue Cycle Performance Move your organization’s revenue cycle performance to the HFMA’s MAP Event, to be held Nov. 7-9 at the Coronado Island next level at HFMA’s MAP Event. The event will feature revenue Marriott Resort and Spa in San Diego, will offer interactive op- cycle leaders from high-performing hospitals, who will discuss portunities for participants to learn best practices for revenue cycle proven tactics for achieving revenue cycle excellence. performance. Additionally, the event will feature a tour of MAP Award-winning Sharp Grossmont hospital and insight from keynote speaker Quint Studer, who will discuss the importance of evidence- based leadership