HFMA Utah Chapter Fall Meeting “Benchmark Comparisons” September 2007

Preview Definitions Characteristics of participants Comparative Graphs Successes Conclusions Next Steps

Introductions re|solution –Revenue cycle AR clean up, management training, interim staffing, chargemaster reviews, revenue cycle assessments, payment reviews, APC performance improvement plans and self-pay management plans Mike Ronning –Vice President, Client Services of re|solution –Over 20 years of administrative, revenue cycle, managed care contracting, and operations experience

Quiz #1 The Acid-Test Ratio is: 1. The amount of hydrochloric acid needed to burn through to the “real” numbers in your financial statements 2. The amount of LSD that must be ingested by Finance Committee members before your financial reports start looking good 3. A stringent test that indicates if your facility has enough short-term assets to cover current liabilities

Definitions, Process, and Benchmarks Submission of data Best Practices HARA and Zimmerman Peer Groups

Reporting Package Elements Benchmark Indicator Analysis –Input data sheet – who, what and when –Graph comparing peer group and best practice for six indicators –Opportunity analysis –APC analysis Group Analysis –Blinded report –Confidentiality –Scrambled A-?

Participants HighLowAvg Bed Size Census AR 179,000,000 4,200,00051,000,000 Cash 52,000,000 1,000,00014,000,000 Revenue 81,000,000 1,400,00025,000,000 AR over 90 days 41,000,000 1,400,00012,000,000 Registration Cost 198, ,000 Bus Office Cost 100, ,000 Write Offs – Total 6,300,000 67,000 1,900,000 % in Self Pay 61% 7%32% Discharged Not Final Billed 11,000,000 31,000 3,300,000

Gross Days in AR Measures the general effectiveness of the Business Office in liquidating A/R Days in DNFB vs. Days in Billed A/R Gross vs. net Days in A/R by financial class Easily manipulated by write-offs Must be reviewed with other benchmarks Trend internally and externally Standard—varies by bed size, geographic region, hospital type, payer mix, etc. Success stories?

Cost to Collect Bottom line impact Opportunity to invest in front end technology Factors that affect this number in reporting –Admissions, billing and collecting costs –Outside vendors –Cost of technology Key indicator of business office effectiveness Standard—$.03 per dollar or less

Bad Debt and Charity Write Offs Must be considered in light of hospital mission and community expectations Policies can dictate this number Patient responsibility impact Reasons for high number –Local/regional economics –Credit/collections and charity policy –Payer mix –Experience of staff –Technology in the B.O. –Effectiveness of early out and primary bad debt collection agencies –Timely filing issues, lack of pre-registration program, lack of self pay management program. Standard—will vary from hospital to hospital and geographic region. HARA—5% or less Successes?

Days in A/R are up, cash is down, and your capital budget was just slashed by 30%, but it could be worse…

AR over 90 days Key indicator for effective follow up Is DNFB included in current or 0-30 aging bucket? If so, the percentage of billed A/R greater than 90 days will be understated Look at makeup –Over 365 –Any Medicare or Medicaid –How much in self pay Greatest cash acceleration opportunity Focus on largest dollars per collector (80/20 rule) and quick wins Standard—no more than 20% of total billed A/R over 90 days. Best practice—15% to 18% Successes?

DNFB Another opportunity for cash acceleration Components—inhouse, suspense, accounts requiring coding beyond suspense days, billing processing Find the root cause Potential solutions –Fix the system –Periodic super coders –Monitor top ten –Regular meetings between admissions, medical records and business office Standard—Six (6) days or less including suspense days Successs?

Quiz #2 Quiz #2 APC stands for: A. Another Payment Catastrophe B. Almost Paid Correctly C. Annual Payment Cut D. Ambulatory Payment Classification

Are you getting paid for the services you provide? APC Medpar analysis Chargemaster review ER acuity level and E/M review Outpatient charge capture review Reimbursement review All can improve your bottom line

Next Steps Review the data at facility Determine action plan to improve numbers – set goals Comparison to another facility will be brokered by re|solution Consider whether you want to attack the opportunities Individual BIA discussions will be set up as needed

Questions

Mike Ronning