Preparing for the changes in healthcare: Part 2 Operational Improvement

Both healthcare providers and payers are under a lot of pressure due to rising costs as well as governmental requirements and regulations. To better serve their customers and to stay ahead of the challenges, health care enterprises must improve their operational as well as financial performances. Many organizations will have their own in-house consultants or management team, but not all. Any health care organization will benefit from seeking healthcare management consulting to improve their strategies and achieve their goals.

Congress passed health “insurance reform” on Sunday night and the President will sign into law shortly, we as both consumers of healthcare as well as those who work in healthcare will see changes as costs go up and government increases its regulatory role. It is also likely that reimbursement will decrease. It will be interesting to see how it all unfolds over the next few years but preparing for the future is now even more important. Not only is the financial aspects critical but making sure your healthcare organization is running at peak efficiency is critical.

Improving Operational Performance
The operational aspect of a health care organization must also be strengthened through the help of healthcare management consulting. With a strong backbone, organizations can implement the right programs and services. The organization can set new goals in order to increase effectiveness, efficiency and productivity.

With these elements in the right place, the programs can better serve the customers and provide higher quality care. With a new focus, the organization will meet government regulations and have enhanced ways of communicating with physicians and other health care professionals.

Preparing for the changes in healthcare: Part 1 Financial Improvement

Health care organizations are under a lot of pressure due to rising costs of health insurance and governmental requirements and regulations. To better serve their customers and to stay ahead of the challenges, health care enterprises must improve their operational as well as financial performances. Many organizations will have their own in-house consultants or management team, but not all. Any health care organization will benefit from seeking healthcare management consulting to improve their strategies and achieve their goals.

Health care is a business and those running the show must understand how to manage the business. This means that administrative information, financial data and clinical data must be taken and analyzed in order to put the information obtained into new strategies and other actions. In other words, health care managers need access to this information in order to understand the nature of the business.

Improving Financial Performance
By working with healthcare management consultants, a health care organization will be able to better manage its operational costs, present new growth opportunities, and ultimately increase revenue. With better financial performance, an organization can provide better health care to patients and eliminate problems with cash flow.

Competition is high in the health care industry and optimized financial performance will put an organization above its competitors. With healthcare management consulting, an organization can have access to necessary tools and data analysis.

Improving Healthcare Profitability for Providers Part 5: Putting It All Together

I hope the past week’s postings on ways to improve healthcare profitability was useful. If you have questions we do offer free consultations. The areas covered include a number of  tips that if implemented can improve your companies bottom line fairly quickly.  These include reducing no shows, collecting at time of service, improved coding and ways to optimize collections for third-party payers. We have found that by utilizing even a few of these techniques that practices can increase revenue  by at least 10 to 25% with little to no increased expense. It is important to utilize technology as much as possible. For example the importance of submitting claims electronically not only decreases time from submission to payment but allows claims to be pre reviewed ( scrubbed) for errors both on the practice end as well as the payers end.  Thus errors are found in hours or days as opposed to weeks. An efficient claim shop can have the errors corrected and resubmitted before the next claims submission cycle.

Please email or write comments about this series or future blog post that could be helpful.

Improving Healthcare Profitability for Providers Part 4: Improving Collections

I hope the past three posts have helped healthcare practices begin to think about all the important ways that they can improve profitability without working harder, seeing more patients or laying off staff. This post will focus on methods to improve collecting what you bill.  I have seen many practices increase production as a solution to increase profits.  Typically that is done without an eye towards collections.  When this happens everyone works harder, gets burnt out and administrative cost rise but total revenue barely goes up.  We at BHM Healthcare Solutions recommend to first improve the collection process.  We also have a saying that what is measured is managed so our first step is setting up metrics and benchmarks.

Here are three ways to measure performance in collections:

1. Months in gross fee-for-service AR – this benchmark tells you how many months it takes to get paid –Divide total AR by 1/12 annual gross fee-for-service charges.

2. Percent of total AR over 120 days –Top performing organizations will see less than 10% of AR more than 120 days old

3.Adjusted fee-for-service collection percentage – focuses on the money you expect to collect. Take 12 months of collections, subtract refunds to insurers and patient, and multiply the difference by 100.  Divide this figure by gross charges for the same period minus contractual discounts set by insurers.

The above three simple measures are a good place to start tracking monthly. The next step is to set organizational goals. Because collecting balances is numbers oriented, it is important to set quantifiable work goals which helps produce results. Set both organization wide, and individual collector goals. Develop standard processes for collection of account receivables. Finally award employees for meeting collection goals.

Finally it is critical to utilize collection technology. Some examples would include:

1. Utilize Electronic Claims –Will enable you to receive payment much more quickly –Send claims directly to the payer, rather than going through a clearinghouse whenever possible

2. Utilize Electronic Remittance and Fund Transfer –Automatically post payments and capture information eliminating hours of manual data entry

3. Scan documents instead of making copies

4. Utilize online statements and payments

5.Utilize PDAsUtilize charge-capture software and take it to the hospital where doctors often forget to document services rendered

Slumping Profit Margins Predicted for Health Plans Through 2011

We published the above headline in our February Newsletter. Since we published the newsletter a number of large insurers have released their quarterly results.  See article on Aetna Healthcare.

 As we pointed out, health insurance companies are getting both downward pressure due to loss of  members. That unfortunately does not tell the whole story.  Layed off workers that are healthy do not elect cobra.  Layed off workers that have significant medical problems elect to pay for their insurance through cobra.  This creates a self-selection.  Insurance companies are feeling the pinch of lower revenue and  increased care cost per member they are insuring.  Insurance companies can react in a number of ways.

1. Increase premiums

2. Increase scrutiny of medical services they are paying.  This will result in increased denials of care.

3. Try to remove high cost groups or members

We at BHM believe that most insurers will do a bit of all three methods to improve profits but because of the current economic environment we believe that increased denials maybe the method of choice. In future blogs I will be addressing what insurance companies can do to help reduce the cost of care in a strategic way.   We will also address what providers of care as well as consumers can do to prepare for these changes and possible increase in insurance denials.