As healthcare reform leads to significant changes across the industry, achieving excellence in revenue cycle operations has never been more important for hospitals.

"In an environment of healthcare reform, we're going to need to drive toward excellence," Richard L. Clarke, DHA, FHFMA, HFMA President and CEO, told attendees of HFMA's ANI: The Healthcare Finance Conference in June, where HFMA announced its MAP initiative and the 2010 MAP Awards.

"The status quo and incremental change will not prepare us for the drastic changes in patient access, insurance, and payment coming our way," Clarke says. "To thrive, we will need to provide high-quality care and service at low cost. And we will need to ensure that our revenue cycles are as efficient and productive as possible."

In 2009, HFMA created the MAP Award for High Performance in Revenue Cycle to honor hospitals that achieve revenue cycle excellence. MAP Award winners excel in meeting key benchmarks for success, as established through HFMA's MAP initiative, while adhering to the principles outlined by HFMA's PATIENT FRIENDLY BILLING® project. The award is sponsored by 3M Health Information Systems.

Here, three MAP Award-winning hospitals share the specific strategies and tactics that made their organizations high performers-and what your organization can do to enhance revenue cycle performance.

Strategies for a More Collaborative Revenue Cycle

Seven years ago, Saint Francis Hospital in Tulsa, Okla., undertook an initiative to significantly overhaul its revenue cycle operations.

At that time, the hospital relied on four different IT systems for revenue cycle management. The need for improved communication between front-end and back-end revenue cycle staff at Saint Francis had become increasingly clear, and the hospital's days in accounts receivable (A/R), which were in the mid-40s, were higher than the organization would have liked. Additionally, Saint Francis sought to implement new tools that would enhance insurance verification for patients.

"We really imploded our revenue cycle operations to make them more efficient and much more collaborative," says Eric Schick, vice president of finance for Saint Francis Hospital. "We studied our revenue cycle from the front end to the back, and ran dry scenarios to determine where areas of improvement existed. Through that process, we determined that there were some processes that could be shifted from the back end to the front end of the revenue cycle. We also made the decision to create a centralized scheduling department and prearrival department."

One of the first challenges Saint Francis' revenue cycle department tackled was the need to increase collaboration between front-end and back-end revenue cycle staff. "At that time, the front-end staff really didn't connect with the back-end staff; they were both in separate worlds," Schick says. He and Renee Edwards, director of patient financial services, began to hold meetings with staff from both areas to show them how their work is connected and the ways in which their efforts are integral to the performance of the department as a whole. "They began to understand that they are one team-that they succeed together and that they fail together," Schick says.

When Saint Francis implemented new software and tools for revenue cycle management, the hospital trained its front-end revenue cycle staff in back-end processes, and vice versa. "This helps front-end and back-end staff understand each other's worlds. It also increases collaboration among the revenue cycle team," Schick says. Saint Francis also hired two full-time and one part-time trainer for the department, with training programs held monthly for new staff and quarterly for staff who desire increased education in a particular area or whose performance indicates the need for further skills development.

Saint Francis measures performance against metrics such as days in A/R; aged A/R as a percentage of billed A/R by payer, which enables the health system to monitor its partnership with managed care payers; days in discharged not final billed (DNFB), with a DNFB goal of four days or less; point-of-service cash collections; insurance verification rate; and service authorization rate. When performance falls below expectations, revenue cycle leaders discuss the issues with the directors of specific areas or with individual employees, when appropriate, and develop plans for improvement. And when a claim is rejected, the claim is sent back to the staff person who originally made the error to be corrected. "This helps the person who made the error to learn from it," says Renee Edwards, director of patient financial services for Saint Francis.

"We're a very productivity driven system," Schick says. "For example, we count transaction codes on the back end and look at the number of claims that are processed to make sure staff are meeting their monthly targets. Over the past year and a half, we've also paid increased attention to the intricate role that our medical records department plays in revenue cycle performance, and have worked with medical records staff and physicians to ensure that charts are completed in a timely manner. It's important for physicians and medical records staff to recognize that when DNFB spikes from three days to seven days for a period of 60 days, 60 days from now, our organization is going to have trouble meeting our cash goals, because that increase in DNFB days will have a domino effect throughout the revenue cycle."

The hospital's focus on tightening its revenue cycle operations has paid off. Saint Francis has dramatically reduced its days in A/R, from the low 40s in late 2008 to the mid-20s today, and its days in total DNFB measured just 3.42 in February 2010, when the hospital's MAP Award application was submitted. Now, the hospital is working with managed care payers on issues that have caused delays in processing claims. Ultimately, Saint Francis' efforts in this area will lead to claims being paid more quickly.

"Our efforts to improve revenue cycle operations have really given us the capacity to move our performance to the next level," Schick says.

Using Data to Drive Revenue Cycle Performance

At Riverside Methodist Hospital in Columbus, Ohio, one of five OhioHealth facilities, an atmosphere of teamwork among the health system's revenue cycle departments has helped to propel the hospital's revenue cycle performance.

Several years ago, Ohio Health began to consolidate its business office operations as a new IT system was introduced. The health system also brought its patient access, health information management, and central business office operations under the leadership of the health system's vice president of revenue cycle, who reports to OhioHealth's corporate CFO. Weekly, OhioHealth's revenue cycle leadership team meets to discuss challenges, results, projects, training, and resources. Monthly, OhioHealth's revenue cycle leaders, hospital CFOs, and other key finance representatives meet to review results and discuss action plans. Cross-departmental revenue cycle teams meet at least monthly, and targeted revenue cycle improvement teams meet as frequently as needed. Additionally, OhioHealth hired IT personnel who work solely with the revenue cycle team, as well as full-time trainers who develop orientation and continuing education sessions for staff.

This atmosphere of "systemness" among revenue cycle departments throughout the health system has enhanced OhioHealth's ability to effect significant improvements in its revenue cycle operations. At Riverside Methodist Hospital, aged A/R as a percentage of billed A/R over 30 days is just 11.1 percent; over 60 days, 7.4 percent; and over 90 days, 4.5 percent. Days in total DNFB were 4.87 in February 2010, when the hospital's MAP Award application was submitted, and cash collection as a percentage of adjusted net patient services revenue is 113.10 percent. And 80 percent of Riverside Methodist Hospital's customers would recommend the hospital.

"One of the keys to our success in revenue cycle performance is that all components of the revenue cycle report to finance," says Jane Berkebile, vice president, revenue cycle for OhioHealth. "It's very hard to achieve the same level of results in revenue cycle performance if staff in health information management or patient access don't report to the same leaders as your billing staff. All revenue cycle staff need to be on the same train, going in the same direction. If you don't have that level of systemness, when there are problems, you'll have people pointing fingers at each other rather than working together toward a solution."

OhioHealth also relies on data to measure and drive revenue cycle performance at facilities such as Riverside Methodist Hospital. The health system recently implemented an automated quality assurance system for registrars that monitors all registrations, includes more than 200 real-time edits, returns errors to registrars to correct, and provides detailed error reporting and quality assurance data down to the individual registrar. "Following implementation of this system, our overall percentage of returned mail dropped from 2 percent to 1 percent, and our clean claim rate increased," Berkebile says.

Data from revenue cycle operations also are used to set goals for revenue cycle staff and to measure progress; results are regularly shared with staff. "Last year we had significant targets around patient cash and around write-offs. They were stretch targets for us-and we exceeded those targets," Berkebile says. "Our point-of-service [POS] collection goals are developed by facility and down to the department level based upon the percentage of opportunity. We provide feedback to individual registrars and financial counselors, comparing their individual collections with the target goal." The increased focus on POS collections has paid off for OhioHealth and Riverside Methodist. In the previous fiscal year, POS telephone collections at time of preregistration averaged $180,000 per month. With focused efforts and targets, this year, that average has increased to $370,000 per month. "This is just one component of a very successful POS program that increased POS collections year over year by 21 percent," Berkebile says.

Investments in revenue cycle technology and IT staff whose work is dedicated to revenue cycle operations also has been key to Riverside Methodist's success. "At OhioHealth, we're constantly looking at different types of technology that will make our employees' jobs easier," Berkebile says. "The bottom line is that you need technology that will help your employees become more efficient and effective to achieve high-level revenue cycle performance."

Accelerating Revenue Cycle Improvement through a Change in Culture

At The Valley Hospital in Ridgewood, N.J., a change in the hospital's culture and the mindset of staff have fueled significant improvements in revenue cycle performance.

"We've always been strong in revenue cycle performance, but not as strong as we are today," says Bill Klutkowski, CPA, assistant vice president of finance for the hospital. "We weren't struggling for cash, but we knew our revenue cycle performance could be even better. The challenge for us was how to go from 'good' to 'great.'"

The Valley Hospital began its quest toward excellence in revenue cycle performance in 2000 by educating all employees regarding their contributions to the hospital's financial performance. "Everything changed with the introduction of Medicare's ambulatory payment classification system. Edits and payments were all in turmoil. We learned something new every day and realized quickly that we couldn't do it alone. We needed department head involvement and accountability to the revenue cycle," Klutkowski says.

"We began to offer revenue cycle education to everyone throughout the hospital-specifics that really mattered to their department-and provided the support to help people improve performance as it relates to the revenue cycle. Our organization also offers a leadership institute series for department leaders three times a year, and we've given presentations to leaders that address common budget issues, expense management, and various aspects of the revenue cycle. When new managers join the hospital, they meet with our director of budgets and reimbursement staff to review their responsibilities. Each of these initiatives helps to set targets and expectations related to revenue cycle performance earlier."

The collaborative approach to revenue cycle performance improvement has pushed revenue cycle performance to a higher level at The Valley Hospital. Department by department, operating margins have increased, from 2.1 percent in 2000 to 3.5 percent in 2009. Managers' yearly goals are tied in part to the hospital's financial performance, so that all hospital leaders have a stake in the hospital's revenue cycle performance. Monthly reports that compare each department's performance to its target goals keep departments on track. Meanwhile, the hospital's patient satisfaction scores, quality indicators, and employee satisfaction also have demonstrated improvement.

"I think the continual feedback we provide for managers and employees throughout the hospital helps them to participate in working toward the hospital's revenue cycle goals," Klutkowski says. "It's important to take the time to sit down with individual departments and talk with them regarding their concerns, because every department is different. For example, what's going on in radiation therapy? What problems is the department experiencing with managed care contracts? What are the concerns of leaders and key stakeholders in the department? It's also important to involve medical records in these discussions, where appropriate, so you can really concentrate on any coding issues that exist and help the department take steps toward improvement."

One of the keys to effecting change in individual departments is to include all the appropriate stakeholders in discussions, not just the department leaders. "Often, revenue cycle leaders think to meet with the department director when in fact a staff member might have more influence in improving the department's revenue cycle performance," Klutkowski says. "In some instances, including an IT person in discussions with a department also can be key. Bring bills with you-most departments have no idea what they actually get paid. Show the departments what they charged in relation to what Medicare and insurance companies actually pay, without saying, 'You missed a charge.' Information such as this will be an eye-opener for leaders and staff and will help them to better focus on the actions needed for improvement."

Buy-in from the executive team also is critical to the success of revenue cycle initiatives, he says. Additionally, Klutkowski recommends providing departments with the tools they need to audit their own performance. For example, use input from key stakeholders to build department-specific reports that will help departments better manage their expenses.

"Changes in culture take time," he says. "Our goal has been to achieve sustained success-and that's what we're accomplishing through initiatives such as these." 

Lessons Learned

Build the morale of your staff. The Valley Hospital in Ridgewood, N.J., created a "finance morale committee" to discuss issues that could affect employee satisfaction and ways to boost the spirits of staff. Each quarter, representatives who are chosen by their peers plan events for the staff (the group once held a carnival for revenue cycle staff in the hospital parking lot) as well as community service activities, such as contributing to a compassion fund set up to help hospital employees who are experiencing financial hardship.

"Finance is a very stressful environment; we're all expected to do more with less. It's good to invest in the morale of your staff," says Josette Melillo, director, patient financial administration, for The Valley Hospital. In 2009, employee satisfaction scores ranked in the 91st percentile for revenue cycle staff, with a mean score of 85.7, 12.6 percentage points higher than in 2000.

Invest in continuing education for revenue cycle staff. MAP Award winners have dedicated trainers for their revenue cycle departments. At Brookwood Medical Center in Birmingham, Ala., trainers provide reeducation for staff who are struggling and conduct mandatory education refreshers for the revenue cycle team. "We also encourage our staff to obtain certification," says Doug Carter, CFO. "Staff who achieve certification receive an increase in pay, so there is an incentive for them to meet this goal."

At Saint Francis Hospital in Tulsa, Okla., where front-end staff have been trained in back-end revenue cycle processes, and vice versa, "Staff realize that they are one team, and that they succeed together," says Eric Schick, vice president of finance.

Meet regularly with managed care payers to address issues that are delaying processing of claims. Such meetings have enabled Saint Francis Hospital to address problems with contract enforcement and claims processing that are delaying payments to the hospital. "Because our revenue cycle is as tight as it is, we're able to pay attention to details such as why some claims aren't being paid quickly, and to dial down into those issues and address them with payers," Shick says. "It takes diligence, perseverance, and a lot of data to effect change, but it can be accomplished. There are a lot of other providers in our market who are benefiting from our efforts in this area."

Maintain a dedicated IT staff for revenue cycle. "I have my own IS team that works solely on revenue cycle projects," says Jane Berkebile, vice president, revenue cycle, for OhioHealth. "This allows us to move very quickly to resolve any issues with technology within the revenue cycle."

Celebrate successes. OhioHealth keeps a treasure chest full of dollar-store items in each of its revenue cycle departments to reward employees who reach certain targets. This year, the health system also held a "Right Choice Awards" program to honor individuals and teams who contributed to the health system's revenue cycle success. Staff at Saint Francis Hospital are treated to an afternoon at the zoo or the movies to celebrate the achievement of significant goals. "It's important to let your staff know that they are doing a great job and that their efforts are appreciated," Schick says.

It's also important to recognize the efforts of other departments in the organization that contribute to the organization's revenue cycle success. At The Valley Hospital, revenue cycle staff recently showed their appreciation to employees in other departments by inviting them to a "sweets party," complete with a chocolate fountain. "You have to develop a good relationship with other departments that contribute to your organization's revenue cycle success," says Bill Klutkowski, assistant vice president of finance.

Publication Date: Wednesday, September 01, 2010

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