June 13, 2007
Other industries have relied on banking automation to improve the speed and efficiency of payment processes and reduce transaction costs. Can health care optimize electronic payment posting and remittance data exchanges for similar benefit?
During a recent HFMA roundtable discussion sponsored by McKesson, healthcare finance executives and a banking representative explore the potential roles of banking in health care. In this excerpt, they describe their experiences and expectations of ideal lockbox and other banking transactions, and weigh potential benefits and challenges associated with implementing the banking industry's technology solutions.
Moderator:
Lockboxes have been a tool in the healthcare industry for several years with limited acceptance. In this new age of consumerism, some hospitals are examining electronic remittance as a foundation for an electronic claims processing process for payer and consumer payments and for other process and posting improvements. What has been your experience in this area, and what do you see as primary benefits and challenges associated with using a lockbox for receiving payment?
Robert Hemker, CPA, CFO, Palomar Pomerado Health, San Diego:
We have explored the plusses and minuses of using a lockbox to shorten the posting cycle. Cost was a primary consideration when we decided not to get a lockbox.
On the plus side, though, a lockbox could help us better deploy the resources that are going into the reconciliation process and could improve the timeliness of posting. So we're keeping the lockbox option open, it's just not a clear hands-down solution.
Mary Lee DeCoster, vice president of revenue cycle, Maricopa Integrated Health System, Phoenix:
We use a lockbox for consumer and insurance payments. More than half of our business comes from Arizona Medicaid plans, which cannot send us payments electronically. So the lockbox helps us save a day. As a safety net healthcare system, my organization counts cash very closely, and the lockbox makes a difference. But we want more services from our lockbox. We can't yet accept electronic payments from our self-paying patients, so we're still doing a lot of manual posting. We have seven cash posters in addition to the lockbox. To me, there's something wrong with that picture.
Belle Butler, director of patient financial services, Scottsdale Healthcare, Scottsdale, Ariz:
We also use a lockbox. The primary benefit of the lockbox is in managing high volume. We have approximately 2,500 patient payments per month that come in through the lockbox. Payments from some of our smaller payers also come in through the lockbox; they're not all electronic. The lockbox does give us a bit more control on the cash side. And it's preferable to having our accounting department handle the checks. Ideally, all of our payments would come in electronically and we wouldn't have to do any manual posting.
Michael Bernick, CMA, is vice president of finance/CFO, Southwest Mental Health Center, San Antonio:
We don't use a lockbox; we probably don't have quite enough volume for it to make a real difference for us.
Fred Pigeon, director of patient accounting, John C. Lincoln Hospitals, Phoenix:
We don't use a lockbox, either. We looked into it and concluded that the expenses associated with the lockbox were not warranted. We did want to find a way to regain the day we lost while the armored truck was delivering checks to the bank, however, so we bought a desktop deposit system and recaptured that day.
Brian Kay, CFO, Bay Regional Medical Center, Bay City, Mich:
We've looked into the feasibility of getting a lockbox, but concluded that our cashier's office is a better solution. They handle mail-in payments as well as payments from walk-ins. So there really isn't any additional cost for processing the mail-in payments, since we want to keep an open cashier's window, whereas there would be cost associated with a lockbox.
Scott Nelson, CPA, director of finance, Virginia Mason Medical Center, Seattle:
We use a lockbox for patient payments. Most payers send us an electronic remittance advice and the money goes directly to the bank. But we don't have that capability for patient payments, so that's where our lockbox comes in.
Overall, we don't have any trouble with the lockbox for patient payments. Occasionally payers will make changes or upgrades that will take a while to straighten out, but that's a minor inconvenience.
Moderator:
Let's take a step back for a moment and talk about how you envision the general role of banks in health care.
Hemker:
Why shouldn't we use banks rather than spending our limited capital dollars to implement technologies like OCR internally? It's not a revenue dollar or a revenue-producing asset. This is a classic case where it doesn't make sense to reinvent the wheel. The banks can do it faster and cheaper than we can.
Pigeon:
The banking industry has done a wonderful job of bringing electronic processes to debit and credit card transactions. In health care, we need to learn from that.
SOURCE: Executive Roundtable: Paving the Way for Medical Banking, May 2007
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HFMA Wants You to Know ISSN: 1540-0697. Volume VI, Issue 11. Copyright 2007, Healthcare Financial Management Association. All rights reserved.