On Hospital Revenue Cycles Management

Operational Considerations for Improvement

By Dr. David Edward Marcinko, FACFAS, MBA, CMP™

By Hope Rachel Hetico; RN, MHA, CPHQ, CMP™

One of us has been an acute general care hospital administrator while the other vice-president of a clinical and medical staff.

Throughout our respective tenures, providing high quality care with improved health outcomes was our primary concern – and actually is that of most hospitals of any size, geography, or demographic. Conflicts of interest were inevitable of course, and occasionally the interest of stakeholders collided, or was ignored. And, continually we realized – and were reminded – that money matters and the maxim “no margin, no mission” applies.

Strong Management Required for Success

Nevertheless, the foundation of strong financial health ultimately lies in effective management of the hospital revenue cycle. And, strong internal management and leadership is the basis of an enhanced revenue cycle. In practical terms, effective management means understanding the process and targeting the core of the revenue cycle in order to fine-tune and support fiscal health and business growth.

A Triad of Processes Groupers

For us, the processes of hospital revenue cycles were grouped in three areas corresponding to the journey of a patient through the system: the front door, the middle, and the back door; to the extent possible.

1. Front-door processes are termed patient access functions and revolve around scheduling, registration, pre-admission, and admissions. When these processes are streamlined and swift; the value is most evident to a hospitals’ customers, the patients, but it is also vital to the revenue maintenance (and enhancement) of the facility. The most effective and efficient time to accomplish patient access activities is when patients and their caregivers are together. Patient access needs to be handled by highly skilled and motivated employees who can accomplish a hospital’s goals for information capture while carrying out customer service objectives. This is also the optimal stage for achieving denial management.

2. Middle processes include case management (CM) and health information management (HIM).  Those involved in the CM function act as gatekeepers to review the appropriateness of clinic referrals and ensure financial clearance is established.  CM also involves developing a plan for discharge and monitoring to ensure it is timely and appropriate to the level of care.  Another important focus of CM is the freeing up of acute care beds.

The HIM functions revolve around document management, coding, transcription, and charge capture. Financial performance can be significantly improved when case management and HIM activities are optimized by using information technologies that are integrated with process and workflow. The end result can be an increase in revenue and reduction in regulatory risk.

3. Finally, back-door processes are termed patient financial services (PFS) functions and revolve around billing, collections, follow-up, and resolution. These are the business office billing and administrative functions that support the front-line caregivers and that interface with external payers and patients to resolve outstanding accounts receivable. Back-door processes bring significant value to hospitals by reducing administrative costs, increasing collections levels, and dramatically lowering the percentage of aged accounts receivables [ARs].

Assessment

Modern hospitals today that are seeking to improve their bottom lines through better-managed and enhanced revenue cycle operations in these three areas front, middle, and back usually encounter challenges with people, processes, and technology. These challenges may be addressed by incorporating following:

  • optimizing organizational structure;
  • raising the bar through benchmarking; and
  • adopting appropriate technology.

Editors: We appreciate the ME-P input of Karen White PhD and Ross Fidler. 

www.HealthcareFinancials.com

Conclusion

Now, please tell us your hospital revenue cycles story and how these challenges were executed; successfully or not!  What benchmarks did you use for them, and were any others required. Do these operational activities conflict or compliment each other; how and why or why not?

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4 Responses

  1. Co-Management Arrangements – Aligning Physicians and Hospitals

    According to Robert James Cimasi MHA, ASA, AVA, CBA CMP™ of Health Capital Consultants LLC in St. Louis, the alignment, integration and engagement of physicians is a key strategy for health systems seeking to create high-performance, high-quality, and high-efficiency organizations. Hence, enhancing the revenue cycle.

    One way physicians and hospitals are trying to achieve this common goal is through co-management arrangements, which provide physicians and hospitals an opportunity to achieve safety, quality, cost efficiency, and patient satisfaction.

    Click to access Comanage.pdf

    Ann Miller RN, MHA
    [Managing Editor]

    Like

  2. Hospital Revenue Cycle Organizational Structure

    The optimal organizational structure for hospital revenue cycle operations is one in which the leaders (or department managers) of the process areas — patient access, case management, HIM, and PFS — report to a director of revenue cycle management who in turn reports to the chief financial officer (CFO) of a hospital.

    It is important to have a single point of executive leadership in order to align the financial goals and objectives, as the Healthcare Financial Management Association (HFMA) points out.

    For example, results of an annual HFMA survey a few years ago, suggested that it is ideal to have a director of revenue cycle management (although this title varies among institutions). This structure does not increase the total number of direct reports for a CFO, but provides a way to assemble the process areas of a hospital’s revenue cycle under the finance arm.

    In smaller facilities (100 beds and under), the director of revenue cycle management may also fill one or more of the manager positions (patient access, CM, HIM, PFS). Financial bonus incentives for the director and managers should be based on meeting and exceeding revenue cycle goals, and set and paid out yearly. If a member of this management team vacates the position prior to the end of the financial year, the bonus is not paid out.

    Dr. David Edward Marcinko MBA CMP™
    http://www.CertifiedMedicalPlanner.com
    [Publisher-in-Chief]

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  3. CMS to Release Podiatry Services Comparative Billing Report

    In April 2011, the Centers for Medicare & Medicaid Services will release its fifth national provider Comparative Billing Report (CBR). The purpose of this CBR is to inform podiatric providers of billing information for selected services billed to Medicare and to help prevent improper payments. The data in this report illustrates peer comparisons of debridement codes billed, Evaluation and Management (E/M) high level code use, and the number of patients billed per day in both the office and skilled nursing facility settings. The CBRs will be released to approximately 5,000 podiatry providers nationwide.

    The CBRs, produced by SafeGuard Services, under contract with CMS, provide comparative data on how an individual healthcare provider compares to other providers by looking at utilization patterns for services, beneficiaries, and diagnoses billed. CMS has received feedback from a number of providers that this kind of data is very helpful to them and encouraged SafeGuard Services to produce more CBRs and make them available to providers. These reports are not available to anyone but the provider who receives them. To ensure privacy, CMS presents only summary billing information. No patient- or case-specific data is included. These reports are an example of a tool that helps providers comply with Medicare billing rules and improve the level of care they furnish to their Medicare patients.

    Source: SafeGuard Services via Joseph Borreggine, DPM via Podiatry Today

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  4. Milliman grouper chart addition

    http://legoheart.shikshik.org/2012/04/03/milliman-grouper/

    Thanks and enjoy.

    Legoheart Weblog

    Like

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