For health care finance executives, the adage “no money, no mission,” has never been more apropos, as they face both dwindling reimbursements and payments increasingly tied to outcomes.
But another adage, “If you’ve seen one hospital, you’ve seen one hospital,” also applies.
Delivery organizations vary widely by payer mix, local demographics, physician relations and even local I.T. talent available.
What follows are snapshots of how CFOs and senior level finance executives are using I.T. to streamline their financial organizations-and the tools they’re considering to meet their future needs.
Money Atwal: Manage Data, Not Interfaces
When it comes to I.T., Money Atwal wears two hats. He doubles as regional CFO and CIO for the Hawaii Health Systems Corp., which runs three hospitals on the islands, including 280-bed Hilo Medical Center. The payer mix is tilted toward Medicare and Medicaid, with the two public payers accounting for about three-fourths of revenue, the rest deriving from a variety of commercial plans.
The large portion of Medicare and Medicaid payments does absolve the health system from much of the chargemaster controversy widely covered in mainstream media that roiled the industry earlier this year, when CMS released national data on hospitals’ charges. Hawaii Health’s charges track closely with its Medicare DRG reimbursement rates, Atwal says. That’s in contrast to some hospitals with larger commercial payer bases, that might have to inflate their charges to balance out percent-of-Medicare commercial contracts and other demographic considerations.
After the famous Time magazine article on the vagaries of hospital economics came out earlier this year, Atwal had to explain the complex math that goes into industry chargemaster calculations to his board of directors. “The chargemaster is an easy target if you don’t understand health care finance,” he says.
But there are aspects of the health system’s financial operations that Atwal acknowledges are difficult for even a CFO to analyze. That’s why Hawaii Health is partnering with its hospital information system vendor, Meditech, as an alpha/beta site for the creation of a new analytics platform. Meditech will develop the platform to work in a seamless manner with its various hospital modules, which encompass both clinical documentation and financial transactions. Atwal currently has only limited analytics capability, and he was eager to sign on as a guinea pig for a new dashboard-driven system.
For example, he’d like to establish the exact cost of a given procedure. “That is a finite detail that requires very detailed reports,” he says. Part of the problem, Atwal explains, is that multiple systems house the needed data-such as the legacy supply chain system, which Atwal is converting to a Meditech module, and the time and attendance system, which tracks labor costs. In essence, Atwal lacks a reliable cost accounting technology. “Today I can guess at only a 70 percent confidence level the cost of procedures,” he says.
That figure’s not good enough in the accountable care era, however. And with bundled payments and shared savings looming on the industry horizon, Atwal wants to be prepared before taking risk on a service line. “With an ACO, I’m not going to guess at 70 percent. I need to be at 99 percent to say this is the service line we are going to promote.”
Atwal has a clear vision of what he would like in an analytics package. Ask him to explain, and he launches into an enthusiastic-and highly detailed-portrait of progress. “Say you want to know what the exact cost of a procedure is. So you look at a monthly dashboard. You can see OR increased net revenue by $500,000. Revenue there is normally flat, so you drill down. You see revenue by procedures. You look at the number of procedures, but they didn’t increase. So you drill down again, and find out you get higher revenue from hip implants. But volume there didn’t increase. Then you open up the data on the surgeons. It looks like one doctor has the same amount of revenue, but his equipment costs much less or he spent less time on procedures. This analysis would be done in a manner of minutes. That is a hypothetical example, but it would take me a week to do that now.”
Analytics self-service would be a blessing for Atwal’s I.T. crew as well. “I have a small staff, with 12 devoted to I.T. and six data analysts.” He also understands the complexity of the analytics effort, which would require his staff to “put together many data cubes” to generate the type of creative data mining Atwal envisions. “One month we might need volume data, another month it might be medication costs,” he says. And I.T. analysts don’t always think like CFOs, he says. “They don’t drill down into the next layer” in their thinking.
With a dashboard, Atwal could present high-level data to the C-suite, such as gross revenue, current census and costs. ” In the same screen, we could drill down to the level of detail we need to make better business decisions.” Even with non-employed physicians, the health system could analyze their relative supply costs and help steer them to more cost-effective vendors, Atwal says. Using the integrated supply chain module will expedite the task, he says. “If there is a separate supply system, the item is not tracked in Meditech, unless you have staff enter duplicate data.”
Transitioning to an integrated suite of Meditech modules also means fewer interfaces to maintain. “Do I want to manage interfaces or do I want to manage data?” Atwal asks rhetorically. “This is where having a dual role as CFO and CIO helps. You want to put your money with the data, not trying to support the infrastructure. You want good data analysts versus true technical people who watch interfaces and hardware. I will put my money where the data is.”
Gary Davis: Automation Across the Revenue Cycle
Gary Davis is an industry veteran-and experienced I.T. devotee to boot. During the last 10-plus years, Davis has turned to information systems to uphold a vision of “automating whatever we can.”
Davis is CFO at Southcoast Medical Group, a multi-specialty practice based in Savannah, Ga. The member-owned group includes 70 physicians and 22 mid-level providers who deliver care across 15 locations. The group encompasses an imaging center, a pharmacy, and most recently, an optical care center. In addition to managing his own revenue cycle, Davis oversees the billing and collections that Southcoast does on behalf of another four group practices in the area, comprising some two dozen physicians. “If you have the capacity, it is a good way to leverage your equipment and reduce some of your own costs,” he says.
Davis says his strongest I.T. tool has been a hybrid EHR/practice management system, from Allscripts. The package he’s running has been bought and sold twice, before landing in the Allscripts brand. With the integrated package, converting clinical documentation to billable services is more streamlined he says. But Davis quickly adds that the group practice revenue cycle has many touchpoints beyond an EHR. And he’s working to automate and tie together as many of those workflows as possible.
Davis encapsulates his progress in one key statistic: since 2003, the practice’s AR days has dropped from 51 to 33. And he’s also reduced the number of FTEs needed to run the financial shop-although like most group practices, Southcoast still must employ a sizable number of people to manage the revenue stream. He has 29 devoted to insurance follow-up alone.
Southcoast’s improvement in its receivables owes to a number of factors, he says, including enhanced reporting capabilities from his Allscripts practice management system. The system easily identifies claims outstanding, so his follow-up staff can pursue recalcitrant payers. Automation of their many chores has facilitated the drop. “Insurance follow-up used to be this huge, labor-intensive thing,” Davis recalls. “Previously we would get a stack of paper [explanation of benefits and denials] from the payers, and call them, or call the patient. Now we can organize the effort around type of service and carrier. We let the follow-up person become an expert in their area.”
One of Davis’ biggest headaches has been processing and posting paper EOBs. The group works with hundreds of payers, and big ones send back their remittance advice electronically. But the practice still gets about 25 percent of its EOBs back in paper, largely from third-party administrators handling claims on behalf of self-insured companies. “In the South, you have many smaller insurance companies and a lot of self-insured companies,” Davis says. “Few of them send an 837 electronic remittance advice transaction.”
To tackle the problem, Davis partnered with his clearinghouse, Navicure. The clearinghouse now scans the paper EOBs, and converts them to an electronic image, which Davis’ staff can use to post the payment and allocate the reimbursement to the proper account. Davis says the scanning service streamlines the operation and has enabled him to save “3 to 3.5 FTEs” in likely additional labor that would be required to manually process the paper.
Davis describes the group practice revenue cycle as a series of discrete steps, which often require boutique applications to automate. The cycle begins at patient check-in, with the gathering of insurance information and collection of co-pays. The workflow also defines the nature of the patient visit, which drives ultimate reimbursement. To automate check-in, Southcoast recently deployed wireless tablets, which interface with the Allscripts system. Patients use them to answer a number of clinically and financially oriented questions. The check-in set-up, from a vendor called Phreesia, enables two-way communication between the tablet and the practice management system.
As part of the workflow, the front desk initiates an eligibility check, which is done via Navicure. The eligibility information flows back to the Allscripts system and Phreesia, where the patient checking in can see any co-pays and current eligibility information. The system also alerts the patient to any outstanding balances from previous visits. The patient can opt to pay any balance due by using the tablet, which has a built-in swipe bar for a credit card. Davis says that having a computer tablet remind patients about their financial obligations is far more effective than having a front-desk staff person do it. “We get better results collecting with the tablet than we do with a body,” he says. In-house collections have gone up 15% since the practice deployed the tablets in November 2012.
Southcoast turns to other boutique systems to manage both upstream and downstream aspects of the revenue cycle. It runs a stand-alone system, from Symed, to manage its physician credentialing with both payers and hospitals. “Unless credentialing is set up properly, it becomes a big problem down the road,” he says.
The system keeps tabs of the credentialing status of the medical staff-and the mid-levels-across the multiple payers with which Southcoast contracts. Payers have varying credentialing requirements around mid-level providers, so the automation helps, Davis says. Medicare is the group’s largest payer followed by Blue Cross, Davis says. Patients themselves are a fast growing component of the cash flow as well, with increased co-pays and larger responsibilities under emerging plans.
Before claims go out the door, Davis relies on an internal claims scrubber housed within the Allscripts system, which checks for medical necessity and other self-edits the group has built into the system. For example, if an MRI requires a pre-certification from the payer, the system will check to see if the proper attachment is with the claim. Navicure does additional claims scrubbing on behalf of the practice. “A cleaner claim gets paid quicker,” Davis says.
And while Davis says the group has made headway in expediting claims and submitting all the required information, he still doesn’t leave payment to chance. Southcoast uses another system, from Experian, to match all its payments by CPT code against its insurance contracts. The software also keeps track of payer changes in CPT reimbursements. The group primarily uses the software to vet its more complex procedures, such as imaging.
His I.T. armament in place, Davis is ready to face the future. The group has just begun a joint venture with CMS and will participate in a Medicare shared savings ACO. “We will have 9,000 patients in the Medicare program,” he says. “We want to be on the front end.”
Davis’ I.T. wish list is simple. He’d like software that could monitor the entire revenue cycle and identify where mistakes commonly happen. “A charge posting goes through a lot of phases,” he says. “So many things get buried and there is so much detail, we have no way of getting a metric.”
Frank Grella: In Search of Patient-Friendly Billing
The director of patient financial services at 210-bed Conway (S.C.) Medical Center, Frank Grella is mindful of costs all around. The independent community hospital is designated by HHS as a “disproportionate share hospital,” meaning it serves a larger than typical population of low-income patients. According to HHS, these hospitals receive an annual allotment to help cover the costs of care treating patients not eligible for Medicare or Medicaid. Local demographics, however, are just one factor leading Grella to couch his discussion of finance I.T. in the context of the frugality required to run the hospital. “We want patient friendly billing and transparency,” he says. “But the I.T. needed is so expensive. It’s $20,000 for this system, and now you need an interface, and that’s fifty grand. For a small, not-for-profit private hospital, these things add up.”
Like many community hospitals, Conway is running a core hospital and financial information system from Meditech. And a handful of niche systems figure in the revenue cycle as well. In the ED, for example, Conway runs MedHost for its clinical documentation and facility charge capture, which are routed through the Meditech billing component via interface. Professional service fees for the physicians are routed to a third-party billing company, T-System. Meditech offers an emergency department module, but Grella notes that “the doctors drive a lot of these systems. They drive the decision to use certain companies.”
There’s another reason Grella favors a best-of-breed approach when it comes to automating workflows. “We can’t get good I.T. support in this area,” he says. “So instead of hiring labor to build the systems, we have looked for the best systems to take people out of the picture.”
The outsourced ED billing arrangement has paid off, however. Grella says the medical center has seen an overall 40 percent increase in physician collections during past two years since bringing T-System on board. Grella credits the increase to the vendor’s expertise in ED billing and a package of renegotiated contracts it spearheaded with Conway’s key payers. “They can look at what physicians are documenting and figure out the right level to charge. Sometimes it is best to let the experts do what they know best.”
Grella keeps tabs on a number of financial metrics using a data warehouse that works in conjunction with the Meditech system. Built by the Shams Group, the warehouse enables Grella to run reports in an Access Database. It’s also boosted his popularity in the hospital. “I can see all the payments for bariatric surgery, for example, or pull out all the denials. I can see all the C-sections we did, by physician practice and see the related payer mix. People have been coming to me and ask me to run reports, even for the clinical areas.”
Grella says his next big task will be to uphold the ideal of patient-friendly billing. “You should be able to go to the hospital and know exactly what you have to pay,” he says. “I don’t think that’s too much to ask.”
To offer that however will require investment in another I.T. system. Grella says the medical center may turn to another vendor partner, RelayHealth, for the service. Conway recently deployed RelayHealth’s eligibility system, which replaces a manual process. Staff working patient accounts in Meditech had to go directly to the Web sites of various payer s to run eligibility queries. RelayHealth ostensibly will streamline that, offering connectivity to multiple payers, with eligibility and other insurance information fed back electronically via an HL7 feed. “We are going to try to take the people errors out of this,” Grella says, referencing the ease with which mistakes happen when information is transferred manually from payer systems to the in-house financial management system.
But even with a good eligibility verification set-up, Grella says there will always be holes-particularly in the era of growing co-pays and deductibles. “If you check on Tuesday, for someone coming in Friday, there is a good chance that by the time the bill goes out, the patient will have had another claim come through. That changes the deductible or co-pay. Or if a patient leaves their employer, the insurance doesn’t get updated immediately at the payer. We have gotten an eligibility confirmation, but by the time we send the patient the bill, they have quit their job and we get a denial.”
Grella’s also looking to add more patient financial services online. For starters, he’s looking to provide charity care applications online, a requirement under a proposed IRS rule governing maintenance of tax-exempt status. He’d also like to add online payment capability. But nothing comes cheaply, Grella laments. “For the ease of the patient payment, we’ll get dinged an extra charge on top of any merchant fees for using credit cards. Nobody says they will give you a front end and all you are charged is your normal merchant fee. They want a percent charge on top of what you are already paying. When you are a small hospital, every percent counts.”
Donald Longpre: Coping in the High-Deductible Era
Describing North Ottawa Community Health System, CFO Donald Longpre says, “We have all the problems of a large health system wrapped up in a tiny bundle. We have a lot of stuff.” Indeed. Headquartered in Grand Haven, Michigan, North Ottawa encompasses an 81-bed hospital, an 84-bed nursing home, a home health agency, a hospice program, an ambulance service, a durable medical equipment supply house, a retail pharmacy, a home infusion program and a 19-physician primary care group practice with an obstetrics practice in its midst. Its payer mix comprises a little more than 40 percent Medicare, 10 percent Medicaid, around 40 percent commercial, and some 4 percent coming from uninsured patients. North Ottawa’s finance I.T. set-up is equally mixed, says Longpre. “We run 10 sets of A/R feeds through seven computer systems,” he says.
Longpre says the hospital is in strong financial shape, in part due to its healthy payer mix and in part due to strong cash flow oversight. The bulk of revenue derives from hospital operations, which run on a Meditech platform. A variety of other systems also figure in the revenue cycle. The group practice recently adopted a hybrid EHR/practice management system, from Greenway Medical Technologies; the nursing home runs on PointClickCare; and the ambulance services bills through Zoll, to name a few.
It sounds like a complex array of cash flows to manage, but Longpre says his treasury management set-up with his local bank helps him monitor total cash flow.
In essence, each AR system logs and posts payments to a “zero balance account” maintained by the bank, as a type of intermediary record keeping step. From then, the balances are transmitted to a main account, which Longpre monitors. The transactions are later divvied up among the various A/R systems in play as the hospital posts payments.
Longpre describes the treasury management set-up as fairly straightforward. But he’s less certain about the future when it comes to managing patient responsibilities. “We want to find ways to improve the patient experience,” he says. “Patients increasingly have high deductibles or co-insurance and we are getting more calls about those plans. You can’t find a biller who won’t tell you that patients ask ‘What do you mean-I owe this much? Had I known that, I would never have had the service done, or I would have planned for the payment.’ Patients are not very happy.”
Longpre attributes the patients’ malaise to poor understanding of their own health insurance coverage. In fact, he says the hospital’s biggest contributors to its bad debt ledger are patients with insurance.
“Just because patients have insurance doesn’t mean they have money to pay their bills,” he explains. “They think they have insurance, but they don’t. They have a $6,500 deductible. They have catastrophic coverage, but nothing for day to day.”
To address the problem, the health system is evaluating two vendors-InstaMed and Passport-which offer patient estimation software. These systems would query a patient’s insurance plan with a proposed procedure, match the anticipated charge of the procedure against the health benefits, and return a likely obligation facing the patient. Longpre’s already using the two vendors in other capacities: InstaMed for credit card and payment plan transactions; Passport for eligibility verification. He’s also shopping for another, related service: propensity to pay.
This is a measure of a patient’s likely ability to pay for a given procedure, based in part of credit score, in part on other factors.
Such a score, Longpre says, would help the hospital to know where to target its collection efforts and appropriately line up patients as charity care designees.
In the long term, Longpre says the health system will need a better financial analytics system with the ability to track care episodes across the continuum. Right now, North Ottawa has well-defined clinical pathways for many procedures, such as joint replacement, with discharge and follow-up protocols in place.
But when it comes to linking together the corresponding financial picture from the various episodes-which take place in different settings-Longpre says the health system falls short. “It’s a clinical process, an I.T. process and a finance process. Right now we can’t do it very well.”
Although its physicians are compensated in part based on quality outcomes, the health system to date has no ACO-type contracts, such as bundled payment arrangements.
Nonetheless, Longpre figures that such payment models will one day be the norm. His biggest concern has little to do with I.T. or even orchestrating care management.
“With Medicare, the issue is, we have no control. Nothing stops a patient from coming here for a joint replacement and then going to whatever nursing home or therapy provider they want. It’s difficult to be accountable for the care if you have no control over the care or where the patient goes.”