1. Shouldn’t Supply Chain and Revenue Cycle Get Together?
Presenters:
Rex Fieck, Supply Chain Strategies, Nick Gaich & Associates
Douglas Goldfarb, Regional VP, DLG Consulting
This is the Title slide
Please do not alter the Track Name

2. FACULTY DISCLOSURE
The faculty reported the following financial relationships or relationships to products or devices they or their spouse/life partner have with commercial interests related to the content of this CE activity:
Rex Fieck -- None
Douglas Goldfarb -- None
This slide is for internal use. Please do not alter.

3. LEARNING OBJECTIVES
Identify the administrative challenges in integrating supply chain and revenue cycle operations.
List the technology changes needed to accomplish this merging of functions.
Specify how merging supply chain management and revenue cycle management advances cost-to-charge transparency and increases accuracy in terms of managing reimbursement costs.
This slide is for internal use. Please do not alter.

4. The principle aim of getting the supply chain and the revenue cycle together
To align and synchronize the supply chain item master and revenue Cycle charge description master in order to enhance operational effectiveness and maximize revenue capture.

5. The principle aim supports margin performance
Optimization
Synchronization
Alignment
Supply Chain/Revenue Cycle
Operating
Expense
Labor
Supply
Overhead
Operating Revenue
Contracting
Charge Capture
Collections
Acquisition
Reimbursement

6. Effects of the supply chain and revenue management not in synch
Guarding against “single minded” silo based strategies
Expense Reductions
Revenue MGT
Impact
High Return Opportunity
Uncoordinated efforts lend itself to unknown down stream consequences……High potential for the organization to be operating at cross purposes..
Optimizing organizational performance in both Economic Sustainability and Service Quality is severely jeopardized
Jeopardizes the organizations ability to fully leverage the inherent strengths, capabilities and resources

7. Qualifying the opportunity to work as a team
Advantages
Exposures
Optimize reimbursement
Decreased and inaccurate reimbursements
Mitigate compliance risk by creating greater transparency and increased flow of information
Hindered contract negotiations and decreased contract compliance
Create competitive market advantages
Decreased transparency
Improve operating margins
Difficulties in monitoring supply revenue and usage
Successful fact-based negotiations with both suppliers and payors
Inability to cross-check utilization of supplies
Accurate and defensible representations of supplies being accurately represented in the CDM
Inability to properly audit and adjust systems to capture cost-to-charge data visibility
Inaccurate billing
Excessive use of labor
* “Experience shows the annual value of adopting a margin management approach could help providers to reduce supply costs up to 10 percent, enhance net revenues by 2 percent, and generate an equivalent of a 1 percent to 5 percent improvement in their operating margins.”
Source: Health Sector Supply Chain Research Consortium at Arizona State University (HSRC-ASU)

8. 7 Reasons to Partner Supply Chain & Revenue Cycle
Increased and accurate reimbursements
Strengthened contract negotiations and enhanced contract compliance
Improved transparency
Streamlined cross-check utilization of supplies and ease of monitoring supply revenue
Capturing cost-to-charge data visibility will be smoother
Billing will be more accurate
Labor will be wisely utilized and not wasted
Source: Health Sector Supply Chain Research Consortium at Arizona State University (HSRC-ASU)

9. Strategies for Linking Revenue Cycle and Supply Chain
Linking Information Systems
For provider organizations to successfully manage margins, it is necessary for information to flow seamlessly and accurately across the various business and clinical functions so that all required staffs have access to complete information.
To facilitate the necessary flow of clinical and financial information, provider organizations should link and continuously validate their item description master and charge master to ensure accurate charge capture, inclusive billing, and uniform exchange of information
Strategic Contracting
Improved supply accountability also will facilitate more strategic managed care contracting. With a greater understanding of supply costs and receivables, hospitals are able to negotiate better managed care contract terms and ensure that their most expensive chargeable supplies are fully covered by payers.
Source: HFMA Article, Derek Patterson- Health Affairs : * US Hospitals Are Still Using Charge master
Markups To Maximize Revenues Ge Bai1,* and Gerard F. Anderson2

10. Strategies for Linking Revenue Cycle and Supply Chain
Tactical Pricing and Charge Capture
Implement a system of upkeep designed to ensure the linkage is supported by the most current and accurate cost-data available, identifying supplies used in a targeted procedure and tracking them from the point of purchase through patient billing will paint a clear picture of what is working in terms of cost recoupment and what is not
Securing the Bottom Line
Linking supply chain systems with revenue cycle management and focusing greater attention on margin management, providers stand to substantially improve their overall revenue integrity and prevent significant revenue leakage.
* “one-unit increase in the charge-to-cost ratio (charge master price divided by Medicare-allowable cost) was associated with $64 higher patient care revenue per adjusted discharge”.
Source: HFMA Article, Derek Patterson- Health Affairs : * US Hospitals Are Still Using Charge master
Markups To Maximize Revenues Ge Bai1,* and Gerard F. Anderson2

11. Common themes that delay success
Not implementing a Best Practice approach to charge capture
Monitor and Maintain “Best Practice “Methodologies
Failure to define and manage an organization-wide policy
Design a defensible organizational wide strategy
Not assigning roles and responsibilities
Define, assign and hold accountable
Lack of adherence to new charge policies and procedures
Establish accountable enforcement strategies
Item Master-Charge Master duplication
Ongoing review and cleanse monitoring process
Disparate departmental pricing amongst like charges
Item-CM synchronization
Consistency in applying item and services cost structures

12. Challenges Maintaining accuracy and completeness of chargeable items
Charge descriptions uniformity
Adherence to Policy and Procedures
Synchronization between master data bases
Resource constraints
Technology limitation
Interdepartmental communication
Standardization of processes (system wide)
Data master maintenance

13. Consequences & Exposures
Financial Exposure
Siloed Response
Lack of Governance & Policy
Misrepresentation of Billing
Variation in Practice/Compliance

14. Real Actions for Results Shouldn’t Supply Chain and Revenue Cycle Get Together?

15. Real Actions for Results Shouldn’t Supply Chain and Revenue Cycle Get Together?

16. Real Actions for Results Shouldn’t Supply Chain and Revenue Cycle Get Together?

17. Results Shouldn’t Supply Chain and Revenue Cycle Get Together? Yes

18. “Desired State” Accuracy of items charged
Acquisition Cost correct per contract in Item Master
CDM price is accurate based on utilization of matrix
Accuracy of items charged

19. Transforming the Supply Chain and Revenue Cycle Process
Review, Refine, Enforce Margin Management Policy and Procedures (strengthen alignment and synchronization)
Policy for margin management should include the strategic sourcing processes and include all elements that involve revenue capture
Must be a single procedure that creates standard work for processes
Requires active daily management to ensure compliance
Annual review of policy and update as required to ensure relevance

20. Transforming the Supply Chain and Revenue Cycle Process
Establish clear roles and responsibilities that ensure revenue integrity with respect to:
Strategic Contracting
Data base accuracy
Charge Master methodology adherence
Charge capture optimization

21. Transforming the Supply Chain and Revenue Cycle Process
Management and Staff Ongoing education (Connecting people to process)
Standard work
Active daily management principles
Annual review
Policy
Process
Data base
Responsibilities
Audits

22. Transforming the Supply Chain and Revenue Cycle Process
Establish self-audit process that includes operational performance metrics with clearly defined goals (precision monitoring):
Daily huddles
Quarterly audit review, Administrative & Clinical
Determine defects and establish any course corrections with accountability as required
Item Master/CDM Integration
Strategic Contracting
Strategic Pricing and Charge Capture
Use of Technology
Relevant metrics utilized

23. “Desired State” Accuracy of items charged
Acquisition Price correct per contract in Item Master
CDM price is accurate based on utilization of matrix
Accuracy of items charged

24. Q&A Slide