The Road to Effective RCM

April 1, 2009

Drawing on the expertise from multiple departments, this regional healthcare provider develops a top-notch revenue cycle team.

Pittsburgh’s St. Clair Hospital (SCH), a 329-bed general and acute care facility, serves 300,000 residents across 21 communities in western Pennsylvania. Despite being a recognized health information technology leader for more than a decade, like most hospitals, SCH continues to face a never-ending challenge to streamline workflows, reduce A/R days and maximize collections while still providing the best care and customer service to our patients.

Drawing on the expertise from multiple departments, this regional healthcare provider develops a top-notch revenue cycle team.

Pittsburgh’s St. Clair Hospital (SCH), a 329-bed general and acute care facility, serves 300,000 residents across 21 communities in western Pennsylvania. Despite being a recognized health information technology leader for more than a decade, like most hospitals, SCH continues to face a never-ending challenge to streamline workflows, reduce A/R days and maximize collections while still providing the best care and customer service to our patients.

Early in fiscal year (FY) 2007, the organization identified an area of net revenue loss, as well as the financial opportunities that could be gained by addressing it. One of our goals was to maximize efficiencies gained from the existing health information technologies (HIT) at the facility. Drawing from the hospital management staff’s extensive background in revenue cycle management (RCM), patient financial services and registration management, our organization concluded that it had the internal resources to develop a revenue cycle team to tackle the various areas in need of improvement.

The Challenges

SCH’s collections and charge capture challenges began more than a decade earlier when we began to update our system’s infrastructure to meet Y2K compliance. The hospital simultaneously began a relationship with information solutions provider Eclipsys, installing several tools from the vendor’s RCM suite of solutions, including Access Manager and Patient Financial Manager software.

As our team examined ways to streamline workflows and overall revenue cycle performance, we soon realized that SCH had overlaid new systems and software onto pre-existing processes and workflows — a common situation. In other words, the initial installation and rollout, as well as subsequent upgrades, were shaped by pre-existing processes and workflows rather than the other way around. The result was profound system underutilization and inefficient patient financial/charge capture workflows, leaving us with 32.4 A/R days, a 1.8 percent denial rate and 1.2 percent loss of total potential collections at the end of FY 2006.

SCH’s attendance at the 2006 Eclipsys User Network Conference had shown us a potential level of system functionality that could enable our organization to optimize its existing technology to achieve our revenue cycle goals. One major example was the Eclipsys system’s automated 835 electronic data interchange (EDI) posting capability. At the time, SCH was employing an outside vendor to post a fraction of what the organization could cleanly post in-house with less resources.

To ensure that staff understood how to fully leverage the software’s capabilities and functionality, our team utilized the Lean Toyota Production System methodology as a template for our process improvements. This approach allowed SCH to draft a long-term revenue cycle performance improvement plan for re-working systems and processes to maximize automation and reduce waste.

The Solution

With senior management support, a comprehensive revenue cycle performance improvement plan was developed. The heart of the plan centered on six critical revenue cycle initiatives focused on a major rework and reconfiguration of interfaces and the necessary redevelopment of the processes and workflows.

A cornerstone of the plan and its rollout was called the Guiding Project Strategy (GPS), which gave senior management and staff the structure to develop a step-by-step approach to realize the stated goals.

Development of goals, creation of effective initiative teams, consistent communication, defined expectations and comprehensive tracking of accomplishments were key components of the plan.

Staff education on the new processes had to impart a full understanding of how the patient financial process worked on the “front-end” (patient access and registration) as well as the “back-end” (billing, follow-up and charge capture) for the hospital’s successful identification and capture of lost revenue.

A prime example of lost revenue and productivity was traced to the back-end of patient financial services. All too often, claims had to be reworked because of incomplete or inaccurate information, causing delays in filing claims. This led to billing/collection write-offs and increased A/R days.

To quantify that scenario, 10 minutes is the average time for a billing department representative to identify, research and correct denials. The organization estimated that more than $45,000 annually was spent on the back-end for rework. This represented time and money that could have been spent increasing net revenue.

Statistically, we knew that for every dollar spent on registration accuracy, patient financial services would save up to $10 in rework, denial management and write-offs. The GPS approach showed that addressing patient data inaccuracies up front — using the vendor’s Access Manager software — would yield a 10-to-1 return in the areas of denial management and write-offs in billing and collections.

This savings enabled us to re-allocate back-end staff to a new post-payment review function to recoup insurance underpayment.

Plan Rollout

Based on the potential financial opportunities, SCH decided to implement the six critical initiatives in two phases over a 2-year period. Phase I included the re-design of patient access functions, patient accounting functions, discharge not final billed, denials management process and an accurate charge entry process.

Phase II would encompass the design and implementation of the hospital call center model.

During SCH’s FY ending June 30, 2008, our team began Phase 1 to optimize the patient access and patient accounting functionality within the system as it relates to charge capture, claims clearance, insurance collections, patient-friendly billing and improved patient experience.

At the end of FY 2008, the organization began studying ways to merge the registration and scheduling functions into patient financial services to complete the financial clearance with one interaction with customers (patients and physician offices). In the last six months (FY 2009), SCH began Phase II — looking at ways to incorporate a comprehensive call center strategy and initiative, as well as continuing with our Phase I initiatives and process improvements.

These collective actions would further streamline the patient financial process for all affected internal and external customers. Patients would also greatly benefit in terms of process simplification, benefit education and time savings during the administrative aspects of their encounters with the hospital.

Education

The initial registration training took place in December 2007 and included all 55 members of our registration staff and an almost equal number from Information Services, Case Management, Financial Services and other affected departments.

After undergoing comprehensive training, these super users then shared their expertise with the rest of their respective departmental staff.

In order to make training ongoing and self-replicating, the organization relied on the report function in the Eclipsys system, an open-door policy for improvement and e-mail alerts. The software’s report function provided us with real-time feedback that enabled departments to go back to specific users, correct their errors and re-educate them on the proper procedures.

The open door policy supported simplified communication and the ability to tailor it broadly or to a single staff member. This policy enabled staff to bring challenges or new solutions directly to management, who reviewed it and then communicated interdepartmentally via e-mail to the rest of the staff.

Results

SCH’s achievements at the end of FY 2008 included a total recurring net revenue realization of $1.8 million, total outstanding A/R reduction to 29.3 days and a reduction in outstanding unbilled revenue to just 4.5 days. Additionally, we increased self-pay collection by 36.5 percent for a total of $1.9 million while decreasing bad debt to just 0.8 percent of gross revenue. Denials (both clinical and administrative) were reduced to just 1 percent of net revenue. Ultimately, the streamlined processes and workflows enabled us to increase our patient volume by 11,873 visits without a staff increase.

SCH is well on its way to equal and greater achievements for FY 2009. As of last January — just six months into FY 2009 — total incremental net revenue realization was at $710,000. Total outstanding A/R was reduced to 28.9 days while outstanding unbilled collections saw a further reduction to just 4.7 days. Bad debt reduction has kept pace with last year at just 0.8 percent of gross revenue while we have further reduced total denials (clinical and administrative) to 0.4 percent.

The Long View

SCH is now in the last phase of our revenue cycle performance improvement plan rollout — a one-stop/one-number customer solution for scheduling services.

By leveraging the full capabilities of our organization’s deployed HIT solutions, and by combining that technology optimization with a thorough, ongoing staff training program, SCH will continue to evaluate its need for revenue cycle process improvements to achieve its vision of “service excellence” and to provide superior patient care with the utmost efficiency and effectiveness.

John DeZulovich is director of Patient Financial Services and Roxanne T. Marhefka is manager of Patient Access at St. Clair Hospital. Contact them at [email protected]  and [email protected].

April 2009

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