| Copyright (c) 2008 Jim Yarsinsky | | | | effectively implement the identified new methods |
| It happens. Sometimes hospital receivables go | | | | and systems. |
| awry, at times a lot awry! But how do receivables | | | | - Do not restrict your focus to Patient Accounting: |
| become out of kilter, and what is the best | | | | Although patient accounting is where it all ends up, |
| approach in fixing your organization's receivable | | | | do not neglect the other components of the |
| turnover rate? | | | | revenue cycle in performing your assessment and |
| Reasons for Poorly Performing Receivables | | | | developing a roadmap for change. Patient Access, |
| A major contributor to a slowdown in cash | | | | ancillary departments, and Health Information |
| collections is that third party insurance companies, | | | | Management (HIM) are major players in the |
| Medicare, and Medicaid effectively avoid paying | | | | revenue cycle and inefficient or ineffective |
| claims by requiring that invoices comply perfectly | | | | operations in these areas can have a significant |
| with their individual requirements. To further | | | | impact on the management of the accounts |
| burden the provider, they frequently change | | | | receivable. |
| those requirements. | | | | - Conduct a top-to-bottom operational review |
| In addition, hospitals that are in need of an A/R | | | | including an analysis of billing systems, billing |
| turnaround may have a lack of internal controls | | | | practices, staffing methodologies, staffing levels, |
| (i.e., the ability of the patient financial business | | | | and a comprehensive accounts receivable analysis: |
| office to control itself), low morale, anxiety on the | | | | This should be the first phase in improving |
| part of the staff, and a staff that lacks the skill | | | | revenue cycle performances. Interview all |
| sets necessary to perform effectively. Often, | | | | management personnel within the business office |
| contributing factors are that IT systems are not | | | | and key staff members during the fact-finding |
| working properly, revenue cycle departments do | | | | effort. |
| not collaborate, and management does not | | | | - Develop an action plan: Review the current or |
| provide the necessary support or guidance. | | | | most recent training program utilized by the |
| Considerations | | | | hospital and assess whether revisions or new |
| When Undertaking an A/R Turnaround If you | | | | training program is most appropriate.. |
| believe that you need drastic action towards an | | | | - Communicate the vision and set goals with |
| immediate "turnaround", you first need to write a | | | | everyone: Be sure you spend considerable time |
| game plan (and you will always know what the | | | | educating the staff on what life will be like after |
| next step needs to be). This is key! The busier | | | | the implementation. Make them part of the |
| you are, the more you need to plan. | | | | process by keeping them informed every step of |
| The next important consideration is to determine | | | | the way. People are more wary of what they do |
| if you have enough resources to reach your cash | | | | not know than what they do know. |
| and AR objectives. More and more, savvier PFS | | | | - Vigorously pursue the collection of all accounts |
| managers are hiring resources on a short-term | | | | receivable in excess of 45 days: Efforts beyond |
| basis to work down backlogs. Their hospitals are | | | | the usual will be necessary to just maintain the |
| willing to pay the short term costs associated | | | | status quo since the change process will inevitably |
| with obtaining a trained person for the time period | | | | result in some productivity loss in the short term |
| required rather than obligate themselves to costs | | | | during the transition period. Have your collectors |
| of employing a full-time permanent employee. | | | | work a couple of "prime-time" evening hours a |
| Interim staff can be an excellent solution to | | | | week, give staff incentives to improve their |
| resolve bottlenecks and backlogs. This approach | | | | productivity, and reassign work responsibilities to |
| can be very cost-effective if the interim staff is | | | | achieve optimal results. |
| dedicated, capable, and dependable. Another | | | | - Reduce denials: Another main focus area in any |
| approach used by many health care providers is | | | | turnaround program should be implementation of |
| to outsource portions of it s accounts receivables | | | | an effective denials management program. Many |
| to an outside vendor specializing in health care | | | | healthcare financial managers do not have a good |
| receivables and collections. A/R outsourcing has | | | | understanding as to the reasons for their |
| become more common in healthcare as hospitals | | | | payment denials. You will need to have specific |
| seek ways to improve their operational | | | | policy and procedures surrounding the handling of |
| performance. Using a specialized medical billing and | | | | pre-certification and authorization denials. More |
| collection service is often effective, but does not | | | | significantly, a monitoring process will be required |
| always guarantee proper, timely payment. Good | | | | to track the causes on an ongoing basis and |
| planning is crucial before starting an outsource | | | | continually take steps to eliminate them. |
| arrangement. This approach can fail horribly if | | | | - Eliminate all billing backlogs: Identify those |
| proper consideration is not given to the key | | | | accounts within the accounts receivable that have |
| issues, system interfaces are not adequately | | | | low probability of collection. Either allowance these |
| established, or a long term game plan is not | | | | accounts or outsource them to a vendor capable |
| integrated into the process.. | | | | of making an effective final collection effort. If |
| Enlisting the assistance of a revenue cycle | | | | you believe that adequate internal resources are, |
| consultant is another consideration in that most of | | | | or can be made, available, organize the accounts |
| these individuals are seasoned and have no | | | | to be worked in descending balance order, offer |
| agenda or bias that may affect the | | | | overtime if needed, and implement a |
| decision-making process. As a result, they make | | | | concentrated follow-up effort. If internal resources |
| the necessary decisions regardless of the | | | | are not available consider hiring well-trained interim |
| popularity of those decisions or the political | | | | staff to work on backlogs while the permanent |
| implications. Revenue cycle consultants can assist | | | | staff concentrates on maintaining current |
| hospital management to re-engineer ineffective | | | | accounts and implementing system, procedural, |
| workflows, procedures, and processes while | | | | protocol, and workflow changes. Contracting with |
| spending considerable time in training the staff. | | | | a good temp agency lets revenue cycle |
| These individuals concentrate on managing | | | | departments staff up only when they need extra |
| operational aspects relating to change without | | | | help, holding down costs. Also, in some cases, it is |
| becoming unnecessarily wrapped-up in the internal | | | | a good idea to bring in a temp when a permanent |
| battles that can often sidetrack turnaround | | | | spot opens as a way to audition a candidate. More |
| efforts. | | | | and more hospital patient accounting departments |
| Beginning a Turnaround Project | | | | are incorporating temp workers in long-term plans, |
| Should you attempt an A/R turnaround without | | | | whereas 10-15 years ago they used temps just |
| any outside interim assistance? If the goal is to | | | | to fill occasional holes. |
| create an environment conducive to change as | | | | Achieving Success |
| opposed to struggling with the barriers that likely | | | | As hospitals deal with the ever changing financial |
| contributed to the receivable problems in the first | | | | environment, the billing and collections operations is |
| place, the answer is clearly that, at a minimum, | | | | one of the most crucial aspects of managing a |
| this approach should be given serious | | | | healthcare business. Cash-starved health systems |
| consideration. Another important consideration is | | | | are generally the victim of a declining A/R |
| whether the internal management team has the | | | | turnover rate and a deteriorating A/R aging |
| necessary time to devote to turning around the | | | | schedule. |
| patient financial services department quickly while | | | | Turning around a troubled revenue cycle is no |
| operating their day-to-day business at the same | | | | easy feat. Most hospitals first need to determine |
| time. More and more, in-the-know health care | | | | precisely what is wrong with the infrastructure of |
| financial managers around the country are getting | | | | their revenue cycle, and then construct a |
| their business offices in shape by bringing in | | | | workplan that will achieve the necessary changes |
| interim outside help. | | | | while maintaining cash flow in the interim. |
| Regardless of whether you choose to bring on | | | | Whichever road you decide to take during a |
| board outside assistance, there are some basic | | | | Patient Accounting turnaround attempt, |
| guidelines to follow in affecting an accounts | | | | remember that proper planning and allocating the |
| receivable turnaround: | | | | right resources to produce maximum |
| - Create a sense of urgency to everyone that | | | | performance are the keys to any successful A/R |
| business as usual must change: Once you decide | | | | turnaround effort. |
| to go forward, you have to be determined to | | | | |