Measuring and Managing CttCll tCost to Collect · 11/06/2010 3 The Cost to Collect Calculation...

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Measuring and Managing C t t C ll tCost to Collect

Scott HawigVP Finance Shands HealthCareVP Finance, Shands HealthCare

Cecelia MooreCOO, Duke University Health System-PRMO

AgendaThe Cost to Collect Calculation- Considerations for Calculation & Comparison- Benchmark Guidance

Case Studies- Duke University Health System- Shands HealthCare

Driving Down Costs using Labor Study Principles

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The Cost to Collect CalculationConsiderations for Calculation & Comparison

Functions In or O t?Out?

SchedulingCharge Capture

HIMUtilization Review

EnrollmentContractingContracting

CDMPhysician/Home Health

Etc.


O h d IOverhead In or Out?

HRIT

ComplianceTrainingFinance

Administration

Source: http://masscare.org/health-care-costs/overhead-costs-of-health-care/

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Technology In or Out?

System DepreciationBolt-on System CostsPCs, Scanners, Kiosks


Facilities In or Out?

Rent/DepreciationNetwork, Servers

Phones

Source: http://ahier.blogspot.com/2010/03/health-it-broadband-connectivity-gap.html

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Transcription Done Onshore, Offshore, or Both? - Overall Trend


Outsourcing In or Out?

Agency FeesBanking Fees

EligibilityCoding, AppealsCoding, Appeals

Transcription

Source: http://www.klasresearch.com/news/newsletters/2008-07/mtso2008.aspx

The Cost to Collect CalculationBenchmark Guidance

The VA Model

Includes: Registration, UR, HIM including pro fees, billing & collections including banking fees, agency fees and overhead costs (presumed to include technology and facility costs)

Excludes: Scheduling, Charge Capture, Enrollment, Contracting and CDM

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The HFMA ModelCost to Collect Map Key

HFMA's Map Keys

Includes: Scheduling, Registration, HIM, billing & collections, technology costs and outsourcing costs (presumed to include overhead and facility costs)

E l d Ch C t

Metric Description Measure: Cost to Collect Purpose: Trending indicator of operational performance Value: Indicates the efficiency and productivity of revenue cycle process Metric Calculation Equation:

Total Revenue Cycle (RC) Cost1 _________________________

Total Cash Collected2

Benchmark2-3%

Excludes: Charge Capture, UR, Enrollment, Contracting and CDM

Variable Notes: 1Total RC cost includes: software expense, subscription fees, fringe benefits, collection agency fees, outsourced arrangements, patient access expense, patient accounting expense, and HIM expense. Patient access includes: eligibility, insurance verification, central scheduling, pre-registration, admissions/registration, and financial counseling.

2Cash collected must match the same time frame as cost in the numerator. Data Source: For Numerator: Income Statement For Denominator: Balance Sheet Sources: http://www. hfma.org/HFMA-Initiatives/HFMA-Map/Cost-to-Collect-Map-Key/

HFMA, “Understanding Your True Cost to Collect”, January 2006


The HARA’s Model

Includes: Registration and billing & collections (presumed to include overhead, technology and facility costs)

Excludes: Presumed to

Source: HARA Report on First Quarter 2009

exclude Scheduling, Charge Capture, UR, HIM, Enrollment, Contracting and CDM

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AdditionalHARA

BenchmarkCuts

Source: HARA Report on First Quarter 2009

Case StudiesDuke University Health System

The Duke Patient Revenue Management Organization (PRMO) provides revenue cycle functions ranging from scheduling andprovides revenue cycle functions ranging from scheduling and O/P coding to payer relations for the 3 hospitals and approx.

1,500 primary care and specialist physicians affiliated with Duke

Duke PRMO Structure

Includes: Scheduling, Registration, Charge Capture, CDM, Enrollment, Payor Relations, billing & collections and , gtechnology, facility and most overhead costs for Hospital and Professional services

Excludes: UR, HIM, Contracting, Agency Fees

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5 00%

5.78% 5.58%

4 85%

5.54% 5.39% 5.07% 4 93%6.00%

5.00% 4.85%4.39%

4.93%

2.00%

3.00%

4.00%

5.00%

0.00%

1.00%

2007 2008 2009

Duke Structure VA Model HFMA Model


Duke Structure2009

2.96%

Duke Structure Total 4.39%

2009

0.03%

0.03%

0.03%

0.03%

0.12%

Agency Fees 0.11%UR 0.24%HIM 0.52%

1.21%0.10%

Registration Scheduling PFS Charge Capture Payer Relations Enrollment CDM

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Duke StructureContract Work

6.4%

Outsourcing3.9%

Cost by Resource Type% of Total Cost

Technology15.5%

Other7.3%

Labor66.9%


Computer Room Costs5.4%

Office Equipment3.8%

Duke StructureTechnology Costs

Hospital PA system29.9%

Corporate IT Allocation

12.6%

PC Purchases & Repairs12.1%

% of Total Technology Costs

Ancillary Systems & IT Consulting

15.7%

Professional PA system20.6%

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Translation Services1.8%

Statements P i

Revenue Mngmt & Coding3.8% Duke Structure

Medicaid Eligibility45.0%

Eligibility & Claims Submission

Self Pay Collections8.7%

Processing7.9% Outsourcing Costs

% of Total Outsourcing Costs

Reviewed for opportunity and subsequently brought inhouse at significant savings (and improved performance)Document

Mngmt/Storage17.1%

15.7%


Duke StructureContract Work

Training5.7%

Other1.6%

Contract Work% of Total Contract Work

Collections Management

49.1%

Banking/Cash Mngmt18.6%

Corporate Srvcs Allocation

25.0%

Related to a system runout project outsourced during staff transition to new system

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Case StudiesDuke University Health SystemOther8.1%

Interview & Recruiting3.5%

Facilities43.6%

Office Supplies & Materials

9.7%

Forms8.7%

Duke StructureOther Costs

% of Total Other CostsFreight & Postage

15.0%

Telephone11.3%

Case StudiesShands HealthCare at the University of Florida

Shands HealthCare provides revenue cycle functions ranging from inpatient & outpatient registration to CDM management for the 5 acute care and 2 specialty hospitals and employed

physicians of Shands

Shands Structure

Includes: Registration, CDM, billing & collections, facility and overhead costs including Agency Fees for Hospital and

t i P f i l icertain Professional services

Excludes: Most Scheduling, Charge Capture, Enrollment, UR, HIM, Contracting, most Technology costs

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3.56%3.30%

3.79%3.52%

3.78%3.48%

3 50%

4.00%

2.56%2.78% 2.74%

1.00%

1.50%

2.00%

2.50%

3.00%

3.50%

0.00%

0.50%

2007 2008 2009

Shands Structure VA Model HFMA Model


Shands Structure Total 2.74%

IT 0 32%Shands Structure

2009 IT 0.32%UR 0.30%HIM 0.46%

2009

1.09%

1.61%

0.05%

Registration CDM PFS

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Driving Down CostsUsing Labor Study Principles

What is a Labor Analysis Study?Development of engineered labor standardsIdentification of process improvement opportunities (reduction of non-value added tasks)Recommendations for labor efficiency improvement (staffing patterns, technology solutions, etc)

What are Labor Standards?Source: http://www.fao.org/docrep/w9380e/w9380e08.htm

Detailed “normal” times to perform necessary tasks Used to budget the required FTEs based on a projected volume (i.e. how many FTEs do you need to process 15,000 visits per year?)

Source: http://www.dcemploymentlawupdate.com/articles/employment-wage-and-hour-law/


Step 1: Identify and process map tasks

Value Added AssessmentV - Value Added Process StepT - Transportation/TravelD - DelayI - Inspection/Quality Reviewsp Q yS - Storage/FileR - Rework

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Step 2: Identify a volume t ti ti th t d i ff t

Function Volume Statistic

Scheduling Calls Received

Pre-Registration Appointments

statistic that drives effortClinic/OP Registration Arrived Visits

Admissions Admissions

ED Front Desk ED Visits

Enrollment Accounts Worked

Charge Capture Edits Worked

Billing Edits Worked

3rd Party Collections Accounts Worked

Self-Pay Collections Accounts Worked

Cash Management # of Checks

Payment Process Transactions

Document Imaging Pages Scanned

Credit Balance Accounts Worked

Customer Service Calls Received


Step 3: Estimate Personal, Fatigue and Delay (PF&D Allowance)

Personal Time 6.25% Breaks

Additive Allowance 0.0% Normal Office Conditions

2.08% 10 min startup/shutdown per day

Fatigue 2.0% Concentration

1.0% Glare

0.0% Monotony0.0% Monotony

Delay 2.0% System downtime, interruptions

Total Allowance 13.33% (Approximates 8 minutes/hour)

Allowance Factor 1.1538

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Step 4: Perform a Time Study & Calculate the Variable Standard

Clinic Front Desk Normal Time Unit of Measure

Mean of Data (Normal Time) 16.3783 Min/Arrived Visit

PF&D Allowance 1.1538

Total Standard 18.8973 Min/Arrived Visit

25 Visits/FTE/Day


Step 5: Determine the Fixed TimeMeetings

Frequency Hours/ Avg. # Staff Req'dActivity Description Annual Monthly Weekly Occurrence Attending Hrs

Staff Meetings 12 1 3 36Evaluations 1 0.5 3 1.5Mid Year Evaluation 1 0.5 3 1.5Q lit R i 12 0 5 3 18Quality Reviews 12 0.5 3 18Misc. Committees 26 1 3 78

Total Annual Hrs 135Education and TrainingFrequency Hours/ Avg. # Staff Req'd

Activity Description Annual Monthly Weekly Occurrence Attending Hrs

Inservices 8 1 3 24

HEICS 1 0.5 3 1.5

Ergonomics Overview 1 0.5 3 1.5

Fire/Life Safety 1 0.5 3 1.5

Compliance 1 0.5 3 1.5

Rep Sessions 4 1 3 12

Core Training 1 40 1 40

JCAHO 4 0.5 3 6

Other Fixed ActivitiesFrequency Hours/ Avg. # Staff Req'd

Activity Description Annual Monthly Weekly Occurance Attending Hrs

Supply Ordering 2 30 0 0Supply Check -Clerical 1 15 1 15

0Total Annual Hrs 15

Total Annual Hrs 88

Total fixed time = 238 hours or 79.3 hours per employee or .11 FTE

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Step 6: Apply the Standard to Actual & Projected Volumes

PositionVariable

Std UOM Volume

Rqr'd Variable

Wrkd FTEs

Rqr'd Wrkd Fixed FTEs (Meetings,

Ed, Training)

Other Paid Fixed FTEs

Total Paid FTEs Rqr'd

(12.02% PTO)Budgeted

FTEsFront Desk 18.8973 Min/Arrived Visit 16,547 2.51 0.11 2.98 3.00

Supervisor (1) 0.25 0.25 0.25TOTAL 2.51 0.11 0.25 3.23 3.25

0 02-0.02(1) Shared fixed position consisting of Daily Productivity Monitoring; Report Generation; Worklist Distribution;

General Rep Assistance; Payroll; Staff Schedule

Total Paid FTEs Rqr’d = Variable + Fixed FTEs / 1 – PTO %


Step 7: Monitor Performance to Flex Monthly

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Step 8: Compare Performance to Flex to Metric Performance

Avg # of Calls/Month Speed To Answer Abandoned Calls Flex VarianceInternal Medicine 4,672 :87 10% -2.177Oncology 3,204 :36 8% -1.447Neurosciences 6,126 :92 18% -1.398Orthopaedics 6,264 :54 7% -0.950ENT 2,329 :30 9% -0.566Urology 4,254 :39 6% -0.554Dermatology 5,871 :33 10% -0.494Eye Center 6,664 :47 13% -0.281Coagulation 701 :20 11% -0 137Coagulation 701 :20 11% -0.137OBGYN 6,903 :20 3% 0.119Cardiology 8,106 :39 10% 0.198

Q & ASPEAKER CONTACT INFORMATION

Scott HawigShands HealthCare at the University of FloridaVP FinanceEmail: [email protected]: (352) 265-8304

Cecelia MooreDuke University Health SystemDuke University Health SystemPatient Revenue Management OrganizationChief Operating OfficerEmail: [email protected]: (919) 620-1270

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Measuring and Managing CttCll tCost to Collect · 11/06/2010 3 The Cost to Collect Calculation...

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