How to Find Hidden ROI in Your Hospital or Healthcare System
CFOs of health systems must continually challenge staff to look for opportunities to run more efficiently. They need to search for and access the “Hidden ROI.”
Cost-cutting big ticket items may be an option, but many times the real opportunities are in better management of the ”small stuff,” specifically in revenue cycle and supply chain. These smaller line items can add up and produce significant improvements and savings.
In a recent article in Executive Insight Magazine, Hardesty partner Tim De Cou offered some advice on how to do that. Tim’s basic premise is that CFOs must foster an environment in their health systems that continually challenges the status quo and searches for better operation and the most effective ways to cut costs.
Revenue cycle management improves the entire continuum of care along with the patient financial experience. Health systems must establish ongoing end-to-end comprehensive system reviews from patient presentment to application of payment. Third party consultancies, who are specialists in this area, can aid or guide these reviews in a timely fashion.
Kevin L. Shrake, Executive Vice President & COO of MDR, a national best practices healthcare consulting firm, identifies key items to focus on in the revenue cycles at health systems:
- Collections. Intensify efforts to collect at or prior to time of service. This saves an expense collection process later that can cost more than the balance.
- Contract management. Conduct a routine review of contract terms to understand / detect areas for improvement, comparability, exposures, renewal timing, etc.
- Appeal / Denial teams. Aggressively and promptly file to obtain proper reimbursement and help with repeat issues.
- Payer Communication. Conduct routine meetings with major payers to streamline the process.
- Comparable payer analytics. Challenge the variances (e.g. why are the rates of payment or days in AR so high at a specific payer compared to the norm?)
- Practice management. Analyze and understand the variances between providers / settings / payers / specialties.
- Automated appeals process. Use e-solutions to process appeals and to collect small balance claims that you are writing off today.
- EMR analytics. Use the health system EMR to better understand your health system and its challenges & opportunities
- Transfer DRG process. Did the transfer happen or do you have additional reimbursement coming?
SUPPLY CHAIN CONCEPTS
Kirk Conole, Partner of DCI Solutions, Inc. a, Los Angeles-based cost reduction consultancy notes that healthcare companies often see attractive savings when SG&A is audited and benchmarked.
Unlike most consulting engagements, cost savings consultancies can produce and be paid on the basis of verifiable, hard-dollar increases to the bottom line. Kirk’s clients make improvement in many areas. Here are just a few tips:
- In telecom, don’t always assume you have the best pricing. Speak with multiple reps, or your rep’s supervisor. Make sure your mobile minutes are pooled correctly. Count your phone lines and make sure they all ring to a person.
- In courier service, pay attention to your courier’s routes and route data. Large organizations can easily be taken advantage of if the service is not double checked occasionally.
- For your power service, audit your meters regularly. You may save hundreds of thousands of dollars.
Examine everything under a fiscal microscope. You may be able to save significant costs on printing, parcel freight, laundry, bank fees, and conference calls, to name a few things.
And, when you hire a consultant, listen to him or her and have your staff ready to get on board. Assign a staff champion to monitor the new practices to achieve maximum systems improvements and savings.
One final word:
The healthcare CFO needs to trust those key colleagues and delegate properly to be efficient and effective. The process does not end there however. Delegation is appropriate but accountability is critical. If team members do not want to pursue an opportunity, ask them why and listen carefully for the answer. If the answer is some version of “we are too busy”, “we tried that years ago” or “we have that area covered”, then ask for better reasons or ask for their alternative plan. Routinely test your systems.
See the full article here: Executive Insight, January 2015.