Jeff Drake
Cheri Kane

Manual processes, lack of accountability for errors, and a low emphasis on front-end collections all contributed to severe revenue shortfalls at Atlanta's Grady Health System. Learn how the health system enhanced skill levels of staff, decreased error rates-and improved revenue.


At a Glance 

Steps that Grady Health System in Atlanta undertook in transforming its revenue cycle include:

  • Conducting a complete revenue cycle assessment
  • Enhancing staff skill levels and customer service techniques-and holding staff accountable for errors
  • Automating processes that previously were performed manually
  • Validating applications for financial assistance electronically
  • Screening for Medicare/Medicaid eligibility among self-pays


Grady Health System in Atlanta was facing severe budget and revenue shortfalls that were threatening its viability and drawing national attention. The system's flagship safety net hospital had been struggling against a 10-year cycle of steadily decreasing revenues and rising costs, which had contributed to losses of $39 million in 2006 and $33 million in 2007. Grady's senior leaders understood the pressing need to improve the organization's bottom line. They also saw that such improvements could not be accomplished without key changes in the system's revenue cycle.

In 2007, Grady initiated a complete revenue cycle assessment to determine key areas for improvement, and then implemented the actions needed to enhance revenue cycle performance. The results: a more than 20 percent reduction in days in accounts receivable (A/R), decreased registration error rates, a more than 50 percent increase in front-end collections, and an increase in clean claim rates from 40 percent to 90 percent.

Identifying Areas for Improvement

With more than 200 days in A/R, approximately 1 million patient visits per year, and 250,000 financial assistance applications evaluated annually, Grady faced a dire, and daunting, need to overhaul its revenue cycle. More than 84 percent of the system's payer mix falls under self-pay, Medicare, and Medicaid, presenting reimbursement challenges for the organization. The initial revenue cycle assessment showed that to make any significant systemwide impact, immediate changes were required in the front end of the revenue cycle, specifically in the patient access department.

"Transforming the front end of the revenue cycle is vital to optimizing
revenue," said Tommie McCommon, director of patient access services for Grady. "Patient access is the driver, not the passenger, of the revenue cycle; therefore, sustainable changes are necessary to effect long-term improvement."

Because of frequent changes in senior leadership and philosophy over the previous several years, the direction of Grady's patient access function changed often. This volatility, coupled with the system's critical financial difficulties, created a high rate of staff turnover in the patient access department.

For the system's more than 200 patient access employees, more focus was needed on enhancing registration skill levels and customer service techniques to improve registration accuracy. Three trainers were hired to provide quality assurance and customer service training to patient access staff. Additionally, job descriptions for patient access employees were revised to more fully capture the extent of their duties. 

The assessment indicated key areas for improvement:

  • Grady's registration error rate was more than 25 percent.
  • The system needed more than 10 FTEs to perform registration audits. Because of the registration errors and the manual intervention, more focus was needed on enhancing the front-end registration process.
  • Manual audits determined that 4 percent to 6 percent of self-pay accounts could have qualified for Medicare and Medicaid, indicating missed opportunities for reimbursement.
  • Front-end collections were low because financial counselors focused on identifying patients for financial assistance rather than collecting copayments and deductibles.
  • No printed materials were available to help explain Grady's credit and collection policy, and patients were not fully aware of collection expectations.
  • Credit card and check clearing machines were either not present or inoperable, resulting in frequent credit card and check denials by the bank or credit entity.

Grady's leaders recognized that the registration errors and the need for manual intervention were indicators that more focus was needed on enhancing the front-end registration process. They decided that automating the audit process using an electronic registration quality monitoring tool would both improve the audit process and give auditors more time to focus on the necessary staff training.

A Need to Automate Manual Processes

The assessment indicated a need for technology that could improve the clean claims rate for the financially struggling organization by automating certain revenue cycle processes to enhance efficiency, accuracy, and timeliness.

At the time of the assessment, computers used at the front end of the revenue cycle were more than 10 years old and could not support new software and technology upgrades. Some computers took 30 minutes or more to boot up. Some forms did not automatically populate, which resulted in long registration times. In general, the antiquated equipment was slow to respond and even forced staff to periodically abort and restart the registration process.

Insurance verifications were performed on a separate system that was not integrated with the billing system and required the patient access representative to write down the insurance number and type the number into the registration screen. This process led to a number transposition and other registration errors.

Common registration elements such as precertifications and preauthorizations were not typically obtained. Employees performed preregistrations by "pulling forward" old patient demographic information, and did not verify current address, phone number, insurance, and other key data at the point of appointment scheduling.

Grady provides more than $200 million of charity care per year-at a rate of two-and-a-half times federal poverty guidelines-using manual financial evaluation processes. There are more than 50 financial counselors verifying patient eligibility with no electronic method to appropriately determine the patient's ability to pay for services rendered. Misuse of the financial assistance program was believed to be prevalent because financial counselors relied solely on documentation provided by the patient to validate the patient's ability to pay.

Overall, the manual registration processes were slow and ineffective and contributed to the Grady's operating losses. Immediate changes were needed to create a faster, automated electronic process for obtaining accurate patient information.  

The need for a new, state-of-the-art patient access model was evident but could not be accomplished overnight.  The system's newly hired interim vice president of revenue cycle and her team began by developing and implementing a comprehensive, 12-month plan for improvement.

Changes in Culture and Process

Employee job descriptions were revised to include new job requirements such as accuracy of typing/words per minute, knowledge of basic computer software, registration productivity, and accuracy rates. Employees were initially concerned about the job description changes, but were assured that training would be provided, adequate time would be allotted for them to attain the required speed and accuracy levels, and leaders were committed to their success.

Three FTEs who previously performed the registration quality audit function in the patient financial services department moved to patient access roles. These FTEs are responsible for auditing all inpatient registrations, reporting results, training staff, and testing and retesting staff to substantially reduce registration error rates. The new electronic quality monitoring system is being implemented to further automate the process so the trainers will spend more time retraining the employees versus manually auditing registrations.

Grady provides monthly training and testing for patient access staff. Topics include how to accurately complete the Medicare secondary payer questionnaire, insurance identification/verification, coordination of benefits, self-pay collections, and other critical registration information.

"Staff now have not only the ability to identify and correct registration errors, but also the authority to directly consult with and retrain the employees found to be deficient in targeted areas," said Richard Posey, director of patient financial services for Grady. "When the dotted-line reporting from patient accounting was replaced with direct oversight from patient access, it improved the process of monitoring staff and maintaining individual accountability."

Grady leaders worked toward improving employee morale, and employees were rewarded for solid improvements.

Key performance indicators were identified, and daily, weekly, or monthly reports were created to share billing hold rates, registration quality data, collections data, call wait times, and abandonment rates. In central scheduling alone, call wait times dropped from more than 15 minutes to less than five minutes, while billing clean claim rates increased from approximately 40 percent to more than 90 percent during a six-month period.

Exhibit 1

f_drake_exh

Rather than obtaining third-party payer precertifications and preauthorizations at the point of registration, central scheduling increased the number of preregistrations and identified areas where precertifications and preauthorizations were needed. The department also began an initiative to reduce denial rates. Each month, central scheduling staff phased in these new processes to a new department.  

Improvements to Front-End Collections and Financial Assistance

Grady's credit and collection policy was updated and communicated to patients through new brochures that were available at the point of service and throughout the hospital. Financial counselors and patient access representatives were trained on front-end collections and collection targets were established for each front-end department. To date, in 2009, monthly self-pay collections by patient access have increased by more than $650,000.

To assist patient access representatives with estimating and collecting a patient's self-pay balance, a new point-of-service technology is being implemented to estimate the patient's financial responsibility and ease the collection effort by requiring payment in full at the point of service. If the patient is unable to pay in full, the patient will be required to pay a deposit and enter into a payment plan. The new system also requires the patient to sign a payment plan contract prior to service(s) being rendered. Check and credit card terminals also are being implemented at all point-of-service locations.

More than 150 new computers were installed in central scheduling, patient access, and patient financial services. The set up and installation were challenging, but managed in such a way to avoid additional burden on the hospital's delicate infrastructure and busy IT staff. Once installed, the new machines required virtually no wait time to boot up, tremendously increasing registration speed, even during the busiest morning periods.

The new computers support the implementation of software that improves billing, integrates insurance verification, and validates medical necessity, eliminating the need for manual intervention during the registration process. Insurance verification is now automated for all payers, and an automatic search for Medicare and Medicaid eligibility is provided at the point of service for self-pay patients. The electronic search for Medicare/Medicaid eligibility resulted in more than $5 million in cash recoveries in the first year of implementation and is estimated to have continued to increase cash recoveries by more than $3 million a year.  

Currently, Grady is evaluating the number of registration screens used by patient access staff, with a goal of reducing the total number of screens from 14 to 10 to speed the registration process. In addition, Grady is developing system flags to identify patients who may have provided incorrect address information and patients whose accounts have been placed with collection agencies at the point of service. Medical necessity software also is being updated and implemented, with the goal of reducing medical necessity denials by more than $1 million annually.

To validate applications for financial assistance, an electronic program was implemented to verify income eligibility within 24 hours of receipt of the patient's application for financial assistance. Among patients who historically received 100 percent financial assistance, more than 16 percent were identified for re-evaluation due to inconsistent financial information.

Implementing a denials program was the most time-consuming initiative for Grady to accomplish. Initially, a homegrown product was developed due to financial and hardware limitations. When the product was close to implementation, however, concerns and limitations were identified, and a new bolt-on product was purchased. The new product required the original specifications to be reshaped, which extended the timeline of the overall project.

Lessons Learned

Grady is just beginning to realize the full gains from the transformation of its revenue cycle function. More changes are planned over the next year. For example, Grady plans to eliminate more than $2 million in expenses by converting to a paperless registration process.  It is expected that ongoing technology upgrades and process enhancements will not only continue to improve registration quality, but also reduce the number of employees at the front end of the revenue cycle by more than 25 percent through voluntary attrition and not refilling positions.

Grady's revenue cycle transformation required a wide-ranging set of specific action plans, goals, and objectives for improvement. The following are lessons the system learned during the overhaul of its revenue cycle processes.

Start the revenue cycle assessment with a broad-based, honest evaluation of the people, process flows, and IT infrastructure involved in revenue cycle functions.The assessment should include both qualitative and quantitative research as well as interviews with staff to ensure a comprehensive view of the revenue cycle's strengths and weaknesses. During the assessment, Grady discovered that one of the biggest obstacles it faced in transforming its revenue cycle processes was the culture of the organization: Some departmental directors rarely disciplined or discharged staff regardless of their ability to fulfill job responsibilities, and employees used a variety of methods to eliminate leaders and push their own goals.

Execute tasks and objectives in a timely and effective manner. Prioritize actions for improvement and evaluate and identify appropriate resources to accomplish the necessary tasks. During its revenue cycle transformation, Grady often found that it would begin implementing one solution, then put the implementation on hold when another, higher-priority solution was identified. Simultaneously engaging in and managing large-scale implementations is not an efficient tactic. Using limited resources to accomplish a variety of goals slowed the process and the organization's progress.

Communicate changes to staff both verbally and in writing. Test new systems and process prior to full implementation and afterward to ensure the desired results are being achieved. Once an initiative is under way, provide continuous follow-up to ensure ongoing improvement and proper implementation.

Ensure that vendors quickly communicate issues that are blocking implementation of new processes or technologies. Grady used several external vendors to support various aspects of the revenue cycle initiative. At times, the culture of the organization and the limited abilities of staff slowed implementation processes throughout the project-but often, Grady's senior leaders were unaware of these "slowdowns" as they occurred. As a result, some initiatives were delayed months and targeted results were not achieved as quickly as they could have been. It's best for senior leaders to meet with vendors at the start of projects and direct vendors to immediately share issues that could potentially block implementation with the organization.

Develop key performance indicators to continually monitor program implementation and compliance. Key metrics are needed for every initiative and should be monitored daily, weekly, or monthly to monitor progress. Frequent changes in staff and leadership changes can halt new processes and create lost opportunities for progress; thus, there should be measures in place for the ongoing evaluation of new people, processes, policies, and procedures.

Be patient. The culture of an organization will likely be deep-rooted-and difficult to change.  Doing so requires a slow and deliberate transformation through repeated and consistent communication and role modeling, with positive reinforcements and rewards for jobs well done and constructive feedback, when needed. Even with consistent communication and behavior modeling, it can take several years to realize a desired culture change.


Cheri Kane, FHFMA, is division president for The Outsource Group, St. Louis, and a member of HFMA's Kentucky Chapter. She was formerly interim vice president of revenue cycle, Grady Memorial Hospital, Atlanta (ckane@togarm.com).

Jeff Drake is chief sales and marketing officer, Passport Health Communications, Franklin, Tenn., and a member of HFMA's Tennessee Chapter (jeff.drake@passporthealth.com).


About Grady Health System

Grady Health System is staffed by physicians from nearby Emory and Morehouse universities.  The system provides tertiary care services such as trauma, burn, and neonatal intensive care, and operates more than 100 outpatient clinics. It is the largest Level I trauma center in the Southeast and has a deep-seated history in the region.

In mid-2008, Grady transitioned from a public facility managed by the Fulton and DeKalb Hospital Authority to a 501(c)(3) organization with the hopes that a private board could orchestrate a financial turnaround. Along with the change to its not-for-profit status, a new CEO experienced in hospital financial turnarounds, Michael Young, was hired in September 2008.

Publication Date: Tuesday, September 01, 2009

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