What are the “pros & cons” of centralized revenue cycle processing?

Provider organizations that have become multi-facility entities often consider centralizing revenue cycle and/or AR processing. The strategy is usually aimed at lower operating cost, performance improvement and better customer service. Nearterm has a lot of experience assisting clients with centralization (and decentralization) initiatives and so we could write volumes on this topic, but in lieu of that, this BLOG offers a just few “bite sized” observations that you might find interesting.

Homogeneous Volumes:
Banking, financial services, retail industries and others have been very successful with centralized billing, payroll, collection processing. If they can do it, we can do it, right? Not so fast. Every transaction processed through their clearing houses looks the same. A VISA charge transaction is the same in every state and for that matter, all over the world - homogeneous volumes. However, when two or more hospitals having different operating systems, contracts, policies and patient types consolidate, the volumes are different - heterogeneous. There are technical solutions but cost, lead time and maintenance of these conduits can be material in the centralization decision. If the organization does not achieve like volumes in the proposed processing environment, arguably, it has just combined things under the same roof, still functioning as before and with little or no gain of efficiency.

Distributed Impact:
There are two ways to capture the benefits of distributed impact through centralization of hospital revenue cycle processing; management and technology. Consolidation of organization structure usually results in a budget that improves compensation offerings available to build a new management team. This enables you to attract stronger talent and benefit from their expertise across the newly centralized operation. Likewise, surviving technology represents an opportunity.

Business Relationships & Communication:
Relationship challenges are often underestimated. We are referring to the multiple relationship and accountability changes that occur when for example a hospital moves billing and collections to a centralized business office (CBO). Who is responsible for AR performance? If the hospital is allocated CBO expense, does it have control over CBO budget? How are data collection and data entry problems that begin in access handled to the extent that they impact CBO performance? There are many questions to resolve well ahead of the decision to centralize. We recommend report design that clearly delineates accountabilities between entities and detailed policy statements about accountability. Drafting these and using them as compatibility “tests” prior to the decision may reveal crucial development opportunities that if addressed, promote a harmonious and successful transition.

Summary:
Centralization and consolidation of revenue cycle processing can be a very effective way to meet the challenges facing provider organizations in these changing times. Many have done it successfully. We also know that many “centralized” organizations would like to “decentralize” and would say they should never have done it in the first place. Generally, the key is consensus about expectations, timeline and accountability established as part of the decision process, not the implementation process.

The above are intended as broad overview. Nearterm Revenue Strategists are always ready to work with you in considering AR processing venue and any other Revenue Cycle initiatives under consideration.

Too busy to look at patient accounts?

I actually thought I was that busy myself early in my career. After all, there was a hospital budget to prepare, a seemingly unending stream of meetings to attend, performance appraisals to complete, AR reports to produce/review, a conversion right around the corner and a myriad of other priorities. Then one day I was asked, “What is the work product of the revenue cycle organization that you manage?” That’s an easy answer, I thought….it is 3 things-cash, patient satisfaction and cost effectiveness. Then came a lightning bolt that said those 3 things are certainly objectives but they might not be the work product. I asked myself what I could do to ascertain that the revenue cycle team was doing the things every single day that help us achieve those objectives. Conclusion; look at accounts and think of that as a review of our work product. Include that as part of my management practice.

The protocol was more than a look at random accounts. Reports were designed that queued a specific stratification of patient type, payor, balance range, age and alpha split at intervals that would provide me with statistically meaningful samples. I scheduled 3 consecutive hours each week to shut my door and review the designated accounts. The review was a discovery process so I looked at almost everything in each account history. When problems and/or questions came up, I would either call whoever in my organization was responsible, ask them to pull up the account and review it with them or else post a note to the account requiring a response. I was in a leadership position and had a lot of employees in several facilities reporting to me so these calls and notes came as a surprise to many until word was out that I had embraced this practice.

If I had to single out a management practice that effectively helped us improve revenue cycle performance and accountability, review of work product would be it. A number of positive things happened relatively quickly when this protocol was implemented. Here are a few examples;

• We learned that many of the things we thought we were doing were not really being done consistently or in some cases at all. By surfacing these items, we could address them. You can’t fix what you don’t know about.


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  The entire organization, not just the management team, became engaged in problem solving. When account history patterns surfaced, the people doing the work typically had the right solutions but had not been asked for their ideas before.


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  It became apparent throughout the revenue cycle organization that account documentation was of critical importance. When I would call an AR technician to ask why no work was documented on an account, the response was often that the work was done just not documented. We had a teaching moment to reiterate “If it is not documented, it was not done”.


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  Managers who reported to me were out of touch with the work product of their employees. When I personally began to get involved at the detail level, they quickly realized they had better do the same. When I identified a problem by talking with one of their staff, I would then contact the manager to discuss the problem and how we might solve it. It was not long until they too began account reviews similar to the ones I was doing so that they could identify and bring opportunities to me rather than their folks telling me. They were a very good team when we started and were even better as a result of this practice.


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  I had always talked and written internally about what was important in our organization. However, I don’t think people embraced my guidance about what was important until they saw that I was investing my time focusing on lag times, wait times, quality of calls, frequency of contacts and other things I could see by looking at a patient account. As I shared in a previous BLOG, people decide what is important based on how we spend our time, not what we say or write in memos.


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  The whole process was not only revealing and educational but it was also fun! I got to know the people doing the work a lot better and enjoyed the collegial approach that grew from the process. I got a lot closer to the people in my shop.

As a revenue cycle strategist, I am critical of senior managers who are not attuned to the details of their operation. Patient account managers have to have a mechanism and the discipline to know what is happening in their offices.

What can revenue cycle professionals learn from military science?

As Revenue Cycle professionals, we are often asked to develop and present a “strategy” but we are rarely asked to address “tactics” per se. As a result, the defining line has blurred between the two. Take a moment to review the following and consider their importance and associated differences;

 

Strategy:

The science or art of military command as applied to the overall planning and conduct of large-scale combat operations.

Tactics:

The technique or science of securing the objectives designated by strategy, especially the art of deploying and directing troops, ships and aircraft in coefficient maneuvers against the enemy.

I submit that making this distinction is critical for healthcare revenue cycle and financial leaders. It is more than just semantics. The following illustrates its impact on how we approach things.

1. 
   
   Hiring:
   When asking job candidates interview questions about how they might handle certain situations or operating conditions, do you get a tactical response or a strategic answer? Perhaps if the candidate focuses mostly on tactics, you would consider them for different roles than if they provide more strategic responses.




2. 
   
   Managing Change:
   Your organization has acquired multiple facilities over the course of recent years and the question of centralized AR processing hits the table. Are you thinking about development of a strategic plan or are you speculating about how billing data will be transferred (and the multitude of other tactical challenges inherent in this initiative)? Unfortunately, businesses often “skip” strategic thinking and planning when addressing key opportunities. This often leads to the conclusion that the original idea was a bad one or that people have underperformed when the reality was simply that an absence of strategy caused a great idea to fail implementation.

So when you are considering a central business office, integration of physician billing, a computer conversion, a denial management plan, or any other initiative, develop and test a strategy before you leap into the tactical component.

We hope this and other practical experiences Nearterm has accrued over the recent 20 years will be of value to you. We have served in both strategic and tactical roles with our clients and we would welcome your call us at 281-646-1330 if you have questions.

How do healthcare financial management professionals influence employee focus?

We all want to contribute to the success of our respective organizations. A mentor of mine once imparted to me a simple management tenet that helped me over the years to do just that. He said, “Employees determine what is important based on how you spend your time”. Because my mentor was a brilliant healthcare leader and a great human being, I took this seriously and felt compelled to interpret his subtle advice. Here is what he really told me:

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  When people embrace importance, they act accordingly. In the workplace, when employees recognize that what they do is important and/or that their work will result in something important to their organization, they get engaged. This translates to creativity, harmony, efficiency, ownership and stability.


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  When people are asked to participate in tasks and activities that are not perceived as important, the result is very different, particularly in light of the generational diversity in the workplace today. If you want to test that, ask a GEN Y employee to do something without some explanation of purpose and why it is important. Or for baby boomers, a great example was the scene in the old movie “Cool Hand Luke” where a prisoner was repeatedly asked to dig a hole then fill it back in again to “break” him. It was not important and so the prisoner continued efforts to escape until his death, certainly not the behavior the warden was after.


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  The key question then, is how do employees determine what is important? It is less based on things like what a manager writes in a memo, what the manager says or posts on the wall. It is how the manager spends his/her time. Here are a couple examples:

1. In patient financial services, account documentation is an important part of the work process. In our revenue cycle consulting practice, we review work samples as part of our discovery process. That means looking at accounts. When we find absent or poor documentation and ask the business office manager about it, we find that they do not routinely look at a sufficient sample of accounts to have made the observation on their own. Employees no longer think it’s important so either discontinue writing up account history or do a hap-hazard job. Spend more time randomly reviewing account stratifications and discussing findings with employees. It becomes important and documentation improves.


2. Most hospital controllers and hospital chief financial officers would concur that maintaining logs is an important function. At the beginning of the fiscal year, they tell the accounting staff it is important and back it up with a memo or email. Fast forward as other priorities emerge over the course of the year. The CFO spends time working on the bond issue or the new building project and deploys the accounting staff accordingly. The accounting staff perceives those issues must be important and does a great job supporting those initiatives. Now it is time to do the cost report, the logs are summoned and we learn they have not been maintained since the second quarter. Nobody asked to see them or otherwise spent time on the logs all year.
3. The idea is to consider how you spend your time in the context of how your presence influences what people think is important. We can’t be everywhere and certainly there is nothing wrong with job descriptions, emails, memos, verbal direction and other communications. Just bear in mind that at the top of the communication hierarchy is “how you spend your time”.

In overview, you might want to reflect on how you have invested your time and presence over the recent month. Another effective way to assess what employees think is important is to ask them casually and privately, then listen carefully to what they say (not a survey that gives them a lot of time to construe what you want to hear in lieu of what they really think). Perhaps the result would represent an opportunity for you to rethink or fine-tune your management practices as I did.

Why you should consider using a search firm?

Over recent years, approximately two thirds of those hired in healthcare management positions were acquired through a search firm. Most hiring authorities and HR professionals are therefore acquainted with the significant differences among these firms and the various levels of service they provide. That said, there are a number of reasons healthcare provider organizations use search firms and the following is a brief summary you might find useful in confirming the value of such services:

• Search professionals help you access “hidden candidates”. These are candidates who are very happy in the current employment scenario. They typically do not have the time or interest to look at ads and they would not answer them if they did. They are not looking for jobs. Often, these are highly desirable candidates for obvious reasons. Through research and other techniques, competent recruiters identify and build relationships with hidden candidates on your behalf.
• Search professionals help you avert “sight seers”, people interviewing without serious interest or compatibility. This saves you considerable time, money and aggravation.
• Search professionals help you by bringing “confidence” in the probability that a candidate you are working with would accept the position if offered. Issues like compensation, relocation, family/personal matters and others are addressed by the firm before you advance too much time and energy in the process of considering the candidate.
• Search professionals uphold the highest standards of “confidentiality” in all they do. That allows them to conduct search activities inside your organization as well as individuals you have targeted outside of your organization but were reluctant to pursue directly for various reasons.
• Search professionals are experts in “on-boarding” and can assist you with this process. On-boarding is a critical element of a successful transition of the newly hired candidate into your organization. It is well documented that organizations that have adopted an active on-boarding process experience fewer failed hiring attempts.

The above is only a summary. If you would like to discuss this topic further or you have comments, please feel free to contact Nearterm at 281-646-1330.

Considerations when hiring Revenue Cycle Consultants and/or Interim Managers

Almost all provider organizations engage Revenue Cycle Consultants or Interim Revenue Cycle Managers from time to time. A lot has been published through HFMA about vendor selection criteria and vendor management. Most professional organizations offer a resource guide that lists options.

That said, here are two practical things to consider when hiring these resources:

1. 
   
   Far too often when organizations hire external resources that will be deployed to their patient financial services, finance or health information management departments, they consider only the person OR the company supplying the resource.
   
   In order to better leverage your investment; be certain that you are hiring quality resources supported by an offering company with deep expertise in revenue cycle management operations.
   
   You are importing expertise and human capital to your organization and those values are not found in the company logo, rather they are delivered through the people serving you. Therefore, it is important to interview the specific people who will be working with you. Is the chemistry good? Do they have the technical background required? Have their achievements with other clients been commensurate with expectations you have in your organization? This interview process allows you to access what you are buying without the influence of a logo, business development person or other external factors.
   
   It is then a value added if you select a professional services company with the capacity to leverage the people selected. Once you have interviewed the consultant or interim director, pursue how the offering vendor achieves synergy by supporting the engagement with a brain trust, technical depth, management practices and other props. At Nearterm, we have (a) a quality assurance program called Q-100, (b) Principals with successful background leading provider organizations and (c) a mechanism for our field professionals to access our collective resources and expertise on a real time basis when engaged in development and/or problem solving endeavors. As a result our clients have the benefit of professionally managed resources with access to a cache of experience, eliminating the “trial and error” approach.


2. 
   
   We always have to consider cost. I submit that in most cases, when provider organizations identify sustained operating deficits, performance problems, extended vacancies in key positions and backlogs, the real cost is in NOT getting help from an external resource.
   If these items could have been addressed internally, they would have already been resolved. Losses can be measured in terms of cost of cash and also balance sheet losses. Often the extra set of eyes and new ideas represented by an interim CFO or interim Business Office Director are just the change catalyst needed to improve performance. An Interim Controller can assist finance with accelerating close schedules and new formatting so that management reports are more timely and useful. Regardless of the issue, always think about the cost of inaction in terms of financial performance and even career development.

Billing backlog, collection backlog, posting backlog – what is the right option?

There is no “cookie cutter” solution because the factors contributing to processing backlogs vary. Here are just a few:

• System conversion


• Limited labor pool


• Space constraints


• Volume increase


• Training deficits


• Ineffective work flow design


• Change in payor requirement


• IT problems

The first step is to understand the root cause of the backlog and establish (a) an acceptable timeframe for resolving the backlog and (b) a mechanism to prevent recurrence. The result is almost always a determination that part of the game plan should include additional resources. That is when the question of options becomes critical. Conventional options have summarily included:

• Hire more staff and accept the time required to train them to the point where they are effective


• Outsource to a vendor with a remote processing venue


• Bring in skilled temps (interim collector, interim biller)


• Some combination of the above

There is another viable option not mentioned above that is very effective – REMOTE AR SPECIALIST. This would be a highly skilled, experienced collector, biller or insurance follow-up person(s) that would work from home with access to the provider system. Typically, this resource would initially work at the provider site for a short time getting familiar with the systems, people, policies and other critical orientations. Work standards would be established and the AR SPECIALIST would then work from home, saving travel cost and eliminating the need for work space at the facility. This very contemporary approach is available through Nearterm Corporation and has worked very well for many provider organizations.