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By Lola Butcher
Mission-oriented revenue cycle leaders recognize that the amount of money collected needs to be balanced with the use of patient-friendly practices. Patients do not typically distinguish between a hospital that provided excellent care and the collection representatives who contacted them after the care was delivered.
"Never forget that those folks represent your hospital. If they do a poor job, it tarnishes the reputation of your organization," says Greg Meyers, vice president-revenue integrity at INTEGRIS, a 14-hospital system in Oklahoma.
To ensure a patient-oriented approach, INTEGRIS moved its collections in house. Cleveland Clinic has taken the opposite approach and is trying to form close partnerships with collection agencies that share its mission.
Cleveland Clinic contracts with 10 billing agencies, five of which handle accounts receivable. The others deal with bad debt accounts or estate collections. Many healthcare financial executives would refer to these collection agencies as "vendors," but Lyman Sornberger, executive director of revenue cycle management, prefers the term "partner."
"Our philosophy is that we want a partnership, not necessarily a vendor/provider relationship," he says. "That partnership means they know our business, they know our mission and philosophy, and they will adhere to it."
As a result, the health system will not choose outside agencies based only on the lowest bid. "Cheaper isn't always best because that cheaper vendor, no matter how you hold them accountable, will probably only do the minimum, which leaves you at some risk," he says. "We want more of a personal touch, and we're willing to pay for that."
Cleveland Clinic creates partner relationships with outside companies through three key steps: evaluating bids, negotiating contracts, and monitoring performance, Sornberger says. The Clinic's policies, standards, and "Patients First" principles are continuously communicated to its partners, and these agencies are expected to mirror the Clinic's approach in their interactions with patients.
Bidding and contracting. The creation of a Cleveland Clinic partnership starts during the request-for-proposal process. The Clinic scrutinizes bids to find organizations that share its values. "We want to make sure they are doing due diligence in, for example, the selection of employees. If they don't agree with our philosophy of due diligence, then we're probably not a good partner," Sornberger says.
Similarly, Sornberger puts a high priority on giving employees training on the Fair Debt Collection Practices Act, HIPAA privacy regulations related to collections, applicable state laws, and other compliance issues?and expects outside agencies to do the same. Cleveland Clinic believes that new collections personnel need formal classroom training program that includes interactive scenarios and testing. "So if a vendor says, 'We have a buddy program where trainees sit with an experienced worker,' we don't tell them it's the wrong thing, we just say that is not our culture," Sornberger says.
Details of the partnership relationship are spelled out in the Clinic's contracts, which include the following statement: "Company ABC will adhere to all client policy and procedures and adhere to the Cleveland Clinic Health Systems mission." This means that any time the Clinic changes a billing or collection policy, contracted agencies must adapt their procedures to comply.
Evaluating performance. Sornberger introduced a quality program to ensure all revenue cycle employees and vendors are meeting the Clinic's standards. Dedicated auditors review anywhere from 10 percent to 100 percent of accounts, depending on the area, each month. "They audit accounts, internal and external, to see whether policies are being followed and whether we are living up to our mission," he says. "If I see anything glaring, then I reach out."
In addition, each of Cleveland Clinic's revenue cycle units and external vendors is required to hit the 95th percentile of certain benchmarks and thresholds. Cleveland Clinic distributes a monthly report card to each of the five agencies that handle accounts receivable. Each agency's report shows how its performance compared to the (blinded) results of the other four agencies (see the exhibit below). Any agency that is the lowest performer for three consecutive months receives a termination letter. In the past six years, only two agencies have been terminated.
The report card reflects not only the agency's collection results but other factors, including the number of complaints received from patients and the number of VIP complaints that have escalated to the C-suite. "We measure agency performance beyond just the financial exposure to the health system," Sornberger says.
Two years ago, INTEGRIS, a 14-hospital system in Oklahoma, moved its accounts receivable collections in-house to accomplish two goals: Increase the amount of money collected and improve the patient experience.
The health system hired six additional staff members and invested about $400,000 in technology to drive a largely automated collection process. "By the fifth month, we had paid for the system and increased our collections by more than $350,000 a month-with a much more patient-centric approach," says Greg Meyers, vice president-revenue integrity at INTEGRIS. "The complaint calls from patients who are being sought out by collections dropped significantly. It turned out to be a good decision."
INTEGRIS' decision hinged on two factors. First, the emergence of new technology convinced Meyers that collections could be handled efficiently in-house. Furthermore, the system's unannounced audits of collection agencies revealed that the agencies were not always representing INTEGRIS with a patient-friendly approach.
"Collections activities can be the last voice of INTEGRIS," he says. "When patients leave the hospital, and they have gotten wonderful care and life-saving care, all that goodwill can disappear if they have bad collection experiences. We felt it was so important to keep the patient-centered focus that we moved all that back into our business office."
Segmenting patients. INTEGRIS uses a software program that assigns a propensity-to-pay score to each patient at the time of registration (see the exhibit below). Those scores, which reflect a patient's payment history and payment ability, are combined with account balances to segment patients into categories, each of which has a pre-determined protocol for collection activities. For example, patients whose scores indicate they are very likely to pay quickly get what Meyers refers to as a "concierge call."
"For folks who have high scores, it's really not a collection activity," Meyer says. "It's more like, 'How was your visit, was there anything we could do better, anything you didn't like, and by the way, since we have you on the phone, we can go ahead and take care of your account now, if you'd like.'"
Different automated workflows are programmed into the collection software to drive the various protocols. "Letters with different verbiage on them go out at different points in time, based on where someone falls on the propensity-to-pay chart," Meyers says.
"Now that we have a lot of history, we can see pockets of opportunity where people with certain scores usually always pay," he says. "We didn't know that in the past, so those accounts would get sent on to collection agencies. Now, we collect those internally, eliminate fees, and provide a better experience to the patients."
Automating charity designation. INTEGRIS further automated its processes by creating a presumptive charity program for patients with very low propensity-to-pay scores that translated to a low ability to pay. Historically, staff devoted hours to the tedious process of getting patients qualified for charity care. After it implemented the propensity-to-pay technology, INTEGRIS analyzed data for patients with very low scores below a defined threshold and found that more than 99 percent of them eventually qualified for charity care.
Meyers' staff used that analysis to convince INTEGRIS' outside audit firm that automatically assigning accounts with certain scores to charity care was appropriate. "That cut down on a whole internal administrative hassle that we used to have," he says.
Collecting bad debts. About 4 percent of INTEGRIS' gross revenue winds up in bad-debt collections, which Meyers considers an acceptable level for the Oklahoma market. "Our self-pay population has increased, but our bad debt has held fairly stable over the last several years," he says. "That indicates to us that moving collections back internally has been a good decision."
INTEGRIS contracts with two external agencies for bad-debt collections and one secondary-placement agency that pursue accounts when the primary agencies are unsuccessful. To be selected as a vendor, the agencies must:
INTEGRIS monitors the agencies through unannounced visits to audit their collection practices and ensure that the agencies are representing INTEGRIS in a professional manner.
Because the technology needed to segment the patient population for specific collection protocols is so expensive, Meyers says small stand-alone hospitals may not be able to justify it. But he recommends technology-driven, in-house collections to those health systems that can afford it. Since it started bringing A/R collections in-house two years ago, INTEGRIS has fine-tuned the system to reach the right balance of patient-friendly methods and collection success-and eliminated the worry that an overzealous outside agency might be heavy-handed in pursuing money from an INTEGRIS patient.
"We're at the point now where we have a multi-tiered focused approach and have a lot of different collection strategies based on the financial profile of the patient," Meyers says.
Lola Butcher is a freelance writer and editor based in Missouri.
Interviewed for this article:
Greg Meyers is system vice president revenue integrity, INTEGRIS Health, Oklahoma City, Okla., and a member of HFMA's Oklahoma Chapter (Greg.Meyers@Integris-Health.com).
Lyman Sornberger is executive director of revenue cycle management, Cleveland Clinic Health System, Cleveland, Ohio, and a member of HFMA's Northeast Ohio Chapter (email@example.com).
Publication Date: Monday, September 17, 2012
A leader from McKesson discusses how healthcare reform is forcing hospitals and health systems to take a different approach to capacity management and patient flow.
Patient financial engagement is more challenging than ever – and more critical. With patient responsibility as a percentage of revenue on the rise, providers have seen their billing-related costs and accounts receivable levels increase. If increasing collection yield and reducing costs are a priority for your organization, the metrics outlined in this presentation will provide the framework you need to understand what’s working and what’s not, in order to guide your overall patient financial engagement initiatives and optimize results.
Emad Rizk, MD, president and CEO of Accretive Health, discusses the uncertainty facing hospitals and the transitions affecting revenue cycle management.
No two patients are the same. Each has a very personal healthcare experience, and each has distinct financial needs and preferences that have an impact on how, when and if they chose to pay their healthcare bill. It’s no longer effective to apply static billing techniques to solve the complex challenge of collecting balances from patients. The need to tailor financial conversations and payment options to individual needs and preferences is critical. This presentation provides 10 recommendations that will not only help you improve payment performance through a more tailored approach, but take control of rising collection costs.
Jim Bohnsack, vice president, solution & corporate development for Conifer Health Solutions, explains how the company helps healthcare providers leverage data to deliver better outcomes while optimizing reimbursement for all payment arrangements.
This white paper, written by Apex Vice President of Solutions and Services, Carrie Romandine, discusses the importance of patient segmentation and messaging specifically related to the patient revenue cycle. Applying strategic messaging that is tailored to each patient type will not only better educate consumers on payment options specific to their billing needs, but it will maximize the amount collected before sending to collections. Further, targeted messaging should be applied across all points of patient interaction (i.e. point of service, customer service, patient statements) and analyzed regularly for maximized results.
Steve Scibetta, senior director of channel sales for Ontario Systems' healthcare product line, shares insights into effectively managing receivables.
This white paper, written by Apex President Patrick Maurer, discusses methods to increase patient adoption of online payments. Providers are now seeking ways to incrementally collect more payments due from patients as well as speeding up the rate of collections. This white paper shows why patient-centric approaches to online payment portals are important complements to traditional provider-centric approaches.
Elena White, vice president of risk, quality, and network solutions for Optum, discusses how healthcare providers can leverage data and technology as they enable risk in their organization.
Increased electronic engagement between healthcare providers and patients provides significant opportunities for improving revenue cycle metrics and encouraging patients to access EHRs. This article, written by Apex Founder and CEO Brian Kueppers, explores a number of strategies to create synergy between patient billing, online payment portals and electronic health record (EHR) software to realize a high ROI in speed to payment, patient satisfaction and portal adoption for meaningful use.
Somnia President and CEO Marc Koch, MD, MBA, explains how hospitals can drive transformative change in the perioperative experience for outstanding clinical and financial outcomes.
Faced with a rising tide of bad debt, a large Southeastern healthcare system was seeing a sharp decline in net patient revenues. The need to improve collections was dire. By integrating critical tools and processes, the health system was able to increase online payments and improve its financial position. Taking a holistic approach increased overall collection yield by 10% while costs came down because the number of statements sent to patients fell by 10%, which equated to a $1.3M annualized improvement in patient cash over a six-month period. This case study explains how.
PMMC President Roger L. Shaul discusses the effects of healthcare reform on revenue cycle management and how PMMC's products help clients adapt to a changing financial environment.
With the ICD10 deadline quickly approaching and daily responsibilities not slowing down, final preparations for October 1 require strategic prioritization and laser focus.
Greg Burgess, Founder and Chief Product Officer at Burgess Group shares insights and opportunities for payment integrity in the rapidly changing healthcare IT landscape.
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To maintain fiscal fitness and boost patient satisfaction and loyalty, healthcare providers need visibility into when and how much they will be paid–by whom–and the ability to better navigate obstacles to payment. They need payment clarity. This whitepaper illuminates this concept that is winning fans at forward-thinking hospitals.
Financial services staff are always looking for ways to improve the verification, billing and collections processes, and Munson Healthcare is no different. Read about how they streamlined the billing process to produce cleaner bills on the front end and helped financial services staff collect more than $1 million in additional upfront annual revenue in one year.
Effective revenue cycle management can be a challenge for any hospital, but for smaller providers it is even tougher. Read how Wallace Thomson identified unreimbursed procedures, streamlined claims management, and improved its ability to determine charity eligibility.
Before launching an energy-efficiency initiative, it’s important to build a solid business case and understand the funding options and potential incentives that are available. Healthcare leaders should consider taking the steps outlined in the whitepaper to ease the process of gaining approval, piloting, implementing, and supporting sustainability projects. You will find that investing in sustainability and energy efficiency helps hospitals add cash to their bottom line. Discover how hospitals and health systems have various options for funding energy-efficient and renewable-energy initiatives, depending on their current financial structure and strategy.
Health care is a dynamic mergers and acquisitions market with numerous hospitals and health systems contemplating or pursuing formal arrangements with other entities. These relationships often pose a strategic benefit, such as enhancing competencies across the continuum, facilitating economies of scale, or giving the participants a competitive advantage in a crowded market. Underpinning any profitable acquisition is a robust capital planning strategy that ensures an organization reserves sufficient funds and efficiently onboards partners that advance the enterprise mission and values.
The success of healthcare mergers, acquisitions, and other affiliations is predicated in part on available capital, and the need for and sources of funding are considerations present throughout the partnering process, from choosing a partner to evaluating an arrangement’s capital needs to selecting an integration model to finding the right money source to finance the deal. This whitepaper offers several strategies that health system leaders have used to assess and manage capital needs for their growing networks.
Copyright 2016, Healthcare Financial Management Association.
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