According to the January 2008 issue of the Healthcare Financial Management Magazine Hospitals were losing anywhere from 8% to 14% of their managed care and commercial revenue because of improper payments. I am sure with inflation the figure has probably grown, and in this economy how many hospitals can really afford to write off 8-14% of their revenue?

In Performing a Retroactive Managed Care/Commercial Underpayment Review on our most recent client it really hit me in the face how much money Hospitals are leaving on the table. I am sure most CFO’s and Managed Care Directors believe all you have to do is bill the claim and the managed care and commercial companies are going to pay the proper amount. There is nothing further from the truth. Other facilities have Managed Care Contract Monitoring Systems to insure proper payment is received. In today’s environment there are to many variables, complex calculations and very ambiguous wording in contracts for any technological system to monitor. Only a thorough analysis of contracts and a line by line audit of payments ensures correct and proper amounts were received. We only review Outpatient Accounts for the above mentioned client and already, in 12 months, have recovered over one million dollars on their behalf. This is money that would have been lost forever, but now is in the bank of our client. I urge all Hospitals to take a look or have someone audit their payments to see what amounts are being lost.
-Bruce Jacbs
Director, Financial Management Services

Are you reading this while at HIMSS 2010 in Atlanta? Unfortunately I’m not there with you if you are. If you’re elsewhere like me and wish you were at HIMSS let me know – maybe there are enough of us that I’ll start a Facebook group! If you’re elsewhere and happy to be far away from the educational sessions and tradeshow floor, then let me be one of the few that will try to convince you to attend in future years.

If you work for a vendor and are happy to be one of the “lucky” ones not drafted to work the booth, let me tell you that is a duty I’d pull any time the opportunity was presented. Where else can you be that potential customers (maybe not decision makers but often influencers) come to you? Sometimes they WANT to hear your elevator speech. Others are just there for the trinkets. Either way, this is a chance to sharpen your skills. What do you need to say to capture the attention of the woman who only came in to get a mint or bouncy ball for her kid? This is where you have hundreds of people who are there for you to become better at what you do. Maybe the last prospect got away not because of the content of the message but the way it was delivered.

Are you working for a vendor in a customer-facing position and don’t want the chance to meet new people? I can’t understand that. Yes, it absolutely wears me down. Long hours standing, shaking hands, talking. But this is what WE do! For me, it charges me up and revitalizes me for the next year of trying to sell.

OK… so what about the employee of the hospital, physician practice or other organization that is glad to be in the safe confines of your office? HIMSS is a tremendous learning experience. Sure there are education sessions that are similar to ones you saw last year and the year before that, but you don’t have to pick those again! Branch out. Learn about something outside your comfort zone. What a crazy thought! Come back with a fresh idea that could change the way your organization uses information technology because you picked an educational session that had NOTHING to do with your day to day job!

Tired of being schmoozed by your HIS vendor? Don’t go to their booth! Check out the competitors! Learn what they are doing that your vendor is not. Not to change vendors, but to get your vendor to enhance their product – to add functionality that you didn’t even know you were missing until you saw the other guy had it!

There are lots of reasons not to go. There are just as many to attend. I miss HIMSS. Maybe next year.

-Jeff Kerber
Director, General Consulting

I still keep reading that Healthcare bad debts and charity care are rising due to our country’s economic status and the continuous increase in unemployment.  I believe hospitals have tried to cut costs especially in the area of reducing staff, another topic I keep reading about.  I also see that hospitals keep expanding as well as increasing the services they provide.  As a result, I began wondering when will hospitals stop trying to be all things to all people by providing everything they can to patients in hopes of attracting new patients and increasing their revenues?  I personally feel that it is about time hospitals begin to take a look at their core services or the services that give them the biggest bang for the buck then focus on providing only these services and forget about providing other services that are not profitable.  We all see this in other businesses.  For example, if we need an appliance we go to an appliance store, if we need clothing we go to a clothing store, if we need groceries we go to a grocery store.  I think we all get the idea.  Now I am sure all of you are saying well what about Walmart, they provide clothing, groceries even some appliances, and I will admit they do.  But Walmart understands merchandising and knows what products they can and can’t sell profitably a concept hospitals have not yet been able to grasp because they, in my opinion, do not have the tools to evaluate profitability on a service line basis.  This is exactly what I am preaching: hospitals have to start analyzing what services they do best at a lower competitive price, use this as a starting point and stop trying to be a Walmart with no clue as to what is profitable and what isn’t.

-Bruce Jacobs
Director, Financial Management Services

This past week I had the opportunity to speak with about 30 CFOs. Some were from community hospitals and others were from critical access hospitals. All were there for the same reason: to learn about the federal EHR Incentive Program. But before I went into the details of Stage 1 of “Meaningful Use” I took a quick poll. The results were quite disturbing.

The first two questions merely defined the group as either CH or CAH. From there, it got ugly. I asked which facilities had a strategic business plan. Only about 20 percent of them raised their hands. One CFO actually asked what that was. I then asked of those six, which had a strategic information technology plan that was aligned with the business plan. A single hand went up. Here was a room of the leaders of hospitals centered around a particular region of the country and only three percent have an IT plan! Surely this isn’t indicative of the country.

I and others can help explain what will help a hospital and physicians demonstrate meaningful use of an electronic health record. We can work together as consultant and client to assess the current state of information technology in the hospital and prepare a gap analysis. But in the end, it will take a strategic plan to move the organization down the path of meaningful use. How the IT departments of these organizations achieve anything is beyond me. Not only does the IT department lack a plan to give them direction, the hospital itself does not have a plan to grow the business – to offer new services to patients.

Where are the goals to educate the community? Is there a need for home health? Maybe a rehab facility? Whatever direction the hospital plans to take, the documentation must be available to whomever is developing the IT plan so that IT can be prepared to adequately support the business growth and needs.

I won’t identify the area of the country where I was, but I sure hope they took heed. It’s time for them to make a u-turn. The road they are all traveling together is a bumpy one.

-Jeff Kerber
Director, General Consulting Services

Over the past few months, I have had numerous conversations with Hospital CEO’s. Each of these conversations seem to center around their respective hospital’s financial operations and the fact that their net profits have deteriorated over the last one or two years to the point that they are now showing losses. These CEO’s are now asking their CFO’s the hard questions as to what is happening and what can be done. Most responses from their CFO’s are generally the same whether it is increased bad debts due to the recession and people loosing their jobs or people increasing their health insurance deductibles for lower premiums even forgoing their health insurance altogether, resulting in increased bad debts and charity care. Some blame healthcare reform and the unknown parameters surrounding it. While others say it is as a result of increased costs associated with wanting to improve the quality of care and customer service.

I believe all these factors and others definitely contribute to declining profits, but placing blame does not eliminate the realities of their respective situations. I usually tell these CEO’s that it is like an individual having health problems and then placing the blame on something or someone, it does not alleviate the problem; only going to a doctor, getting a diagnosis and then treatment will eliminate or control the problems. Hospitals have to do the same thing, get help. By help I mean get some expert advice from other financial resources such as bringing in a financial consulting firm or another CFO, on an interim basis, to work with your existing CFO and other individuals in order to get a fresh look at the facility’s finances and operations from a different point of view and then develop a diagnosis and treatment plan. This treatment plan, I am sure, will eliminate or at least control the real problem of declining profits or increasing losses by increased efficiencies, lower costs, and newfound revenue from doing things differently.

-Bruce Jacobs
Director, Financial Management Services

I just read another article in the January/February issue of Healthcare Finance News entitled, “Healthcare hiring could boom in 2010,” by Richard Pizzi, the editor. According to this article the demand for healthcare professionals in 2009 was stronger than any other sectors. According to the Federal Bureau of Labor Statistics, healthcare has added over 600,000 jobs since the start of the recession. Unfortunately on the very next page there is an article entitled, “You thought 2009 was challenging,” by Scott Downing, whereby he indicates that in 2009 hospitals had their fiercest fight laying off employees, curtailing expenditures and experiencing unparalleled bottom line shortfalls. Mr. Downing goes on to say that these same stress provoking factors that hospitals grappled with in 2009 will continue through 2010 and beyond and that hospitals will have to do more with less.

In my opinion I am not sure hospitals knew what they did in 2009 or why they did it. Those that laid off workers in 2009 blame the recession when in fact they were probably overstaffed to begin with but the economy became an easy way to post blame and justify these layoffs. Now were are entering 2010, I still believe hospitals don’t know what they are going to do when it comes to making smart business decisions and doing more with less. As a consultant and in talking with several prospective clients I am seeing the age old trend that everything has a way of working itself out. This old adage may be true but is this really the way hospitals should be run? I don’t think so, but let’s wait and see. Hopefully hospitals and executive staffs will step up to the plate and tackle the tough decisions that will have to be made regarding staffing, Information Technology, AARA funding requirements, pay for performance and quality care issues.

-Bruce Jacobs
Director, Financial Management Services

I think it’s great that the federal budget proposed on Monday, February 10, 2010 included $110 million for healthcare IT. But is the money going where we need it and is it enough? OK, you’re right. I’m asking the question because I don’t think so.

The money is earmarked to strengthen healthcare IT policy coordination and research activities. But providers are still wanting funds in the form of grants and loans. The investment required to implement a full EHR is significant – hundreds of thousands for physicians and millions for hospitals. The $20.6 billion to be spent over the next 10 years (allotted in February 2009) is to advance adoption, but again – show us the money!

The president’s fiscal year 2011 budget includes $78 million, an increase of $17 million, for the Office of the National Coordinator for Health Information Technology (ONC) to advance the adoption of electronic health records. According to HHS, the increase will enable ONC to lead and coordinate federal health IT efforts, while implementing and evaluating Recovery Act health IT programs.

Obama wants to improve care coordination and patient safety. He wants to see IT help. IT should also be used to prevent duplicate testing and promote evidenced-based medicine. But hospitals are still trying to decide is spending the money now worth it when the stimulus money is small and won’t be available up front to help implement. As I said in a previous blog, don’t hesitate on this.

But the money being thrown at the “solution” is just small potatoes. Let’s see some real meat to encourage hospitals to start spending.

-Jeff Kerber
Director, General Consulting
http://www.inteck-inc.com/arraservices.html

By now I think most of us in healthcare IT have either spent time reading the requirements for Stage 1 of meaningful use. Others have listened to the many webinars that are helping hospitals and physicians understand “42 CFR Parts 412, et al” and “45 CFR Part 170”– the fancy name on the Federal Register documents we should all be familiar with.

So what’s missing and will we see it in Stage 2? What about Stage 3?

The incentive is for hospitals and physicians to implement an EHR. So let me emphasize this – Electronic Health Record. But the big clinical piece, CPOE, does not an EHR make. Nor does it even qualify if you want to call it an EMR. Show me the big piece of the puzzle. The next stages – hopefully Stage 2 – will call for clinical documentation. Electronic charting by all practitioners will give some real meaning to the electronic chart. And complete the picture with resulting. Not sure what good it is to have an electronic order go to the lab or radiology if clinicians have to chase down a paper chart so they can see a result.

Granted, these things are usually implemented hand in hand, but if organizations and physicians look for the easy way (aka, the cheap way) out we will never see the intent of President Bush’s and President Obama’s call to digitize medical records. Are there other modules to be implemented? Of course there are. Think ahead. Don’t wait for Stage 2 and Stage 3. Do the right thing. Get a strategic plan that will guide your organization through all the components that will make up an Electronic Health Record.

Jeff Kerber
Director, General Consulting
http://www.inteck-inc.com/arraservices.html

I often ask my clients “Are you in Denial about your Denials” whereby the following questions are asked:

* Are you maximizing your commercial and managed care recovery?
* Do you track Denials by payor and the Reasons for Denials?
* Do you know what your Denial Rate is?
* Do you know what your Denial Recovery Rate is?
* Have you established a Remittance Management process?
* How quickly do you turn your denials back into cash?

In the January 25th issue of Health Leader Media Finance their is an article titled “Denials Bleed You: Four Ideas to Fix It” by Karen Minich-Pourshadi. In her article she states that claims and denials and underpayments are one area that few CFO’s would dispute they could always use improvement and that 90% of denials may be preventable through improved execution of verification, authorization and documentation. She also offers four ideas to fix it which I believe are worth reading because they are the exact same ideas that I have been telling CFO’s and Managed Care Directors for years. They are not that difficult to implement and there are several consultants like myself that will help with implementation and methods to stop the bleeding. But then again I wonder if CFO’s are now believing that the current Health Care Reform Bill will stop the bleeding.

Bruce Jacobs
Director, Financial Management Services
http://www.inteck-inc.com/fms.htm

I read more and more about patient customer service, patient satisfaction to maintain and attract patients and try and create loyalty to their particular hospital. In reading these varied articles I think about what the cost associated with doing this might be and I don’t think to many organizations have been able to assign a cost associated with customer service and patient satisfaction and loyalty.

Why? Because the tools to do this are in my opinion not available or intangible at best. Also I am not sure how wonderful the hospital is to patients in the area of customer service and satisfaction, isn’t the real determining factor a patients physician who directs their patients to a particular facility. I have seen many doctors admit their patients to many different hospitals because I believe there are certain perks, needs or relationships that they prefer at one hospital over another. Of course this costs money and I don’t know of any hospital that has tracked what it takes to get a Physician to admit patients exclusively to their hospital. I believe this cost can be tracked but CEO’s and CFO’s need to think about this and see if they or some vendor can achieve the cost of customer service, patient loyalty and satisfaction.

Bruce Jacobs CPA
Director, Financial Management Services