Oregon Hospital Takes Action to Navigate Turbulent Financial Waters By Andrew Molatore, Director of Patient Financial Services
Sky Lakes Medical Center,
Klamath Falls, Oregon
As healthcare reform drives all of us toward improving outcomes, avoiding readmissions and reducing costs, reimbursement is at greater risk than ever. Our department realized we needed to tighten up our revenue cycle to do our part in maintaining our business health.
With the economy in the throes of a recession and reimbursement dwindling, the bottom line at .our 176-bed regional healthcare center was an unrelenting concern. To exacerbate the situation, Sky Lakes Medical Center had been operating without a Director of Patient Financial Services for quite some time. So, when I became director of the department four years ago, there were some pressing challenges.
Bottom-Line Challenges
Revenue was down, and the days in accounts receivable had crept up to more than 90 days. Not only was the bottom line suffering, but our reputation was also on the line. Patients were complaining of slow billing processes. They sometimes received patient statements five or six months after services were performed.
Simply put, we needed to do whatever it took to increase our revenue and reduce our costs — all while improving the service delivered to our patients. That meant taking a high-level look at everything related to “money in, money out” and then adopting a variety of strategies that would tip the financial equation in our favor.
To start, we analyzed all of our patient service offerings. Some non-essential service lines simply were not financially feasible. For example, even though we don’t offer cardiac surgery, we offered a cardiac rehab service as a convenience to patients in our community. Because we never had enough patients to make the service line profitable, we decided to discontinue the service.
Reassessing Popular Trends
We jumped on the provider-based billing bandwagon, a popular trend that enables hospitals to bill for physician services and collect a facility fee in addition to the professional fee. The new billing process helped us bring additional revenue into the system. The change also has streamlined billing operations overall. One office now handles both hospital and physician office billing.
However, we aren’t afraid of bucking some trends as well. For example, we have brought all self-pay collection activities back in-house instead of using an outsourced vendor to handle this duty. Because our community is relatively small and isolated geographically, our patients expect personal service. Our in-house collectors, who all live in the community and are much more in tune with the local culture, can establish the connections needed to effectively communicate with patients and improve collections.
Banishing Paper Processes
In an effort to bring much needed efficiency to our manual and paper-intensive billing processes, we decided to fully tap into technology. By leveraging a claims management solution from McKesson’s RelayHealth, we now process claims electronically to the majority of our payers, including Medicare. The system provides electronic processes that help to reconcile claims automatically with payer responses, check eligibility before billing, and automatically bill secondary payers.
In addition, the electronic solution helps us stay on top of emerging requirements. For instance, the Oregon Medicaid system and other major payers recently made the inclusion of National Drug Codes a requirement for reimbursement. To deal with this new requirement, we populated our hospital information system with the billing codes and then pushed these codes into the claims processing system, which sent the information to each payer. As a result, we qualified for reimbursement as soon as the change took effect. If we didn’t have the system in place, we likely would have missed out on reimbursement during the struggle to make the changes to our paper processes.
Another solution from RelayHealth provides an online self-pay Web solution that enables patients to conveniently take care of their financial obligations. Online access enables patients to pay balances even when we’re closed, providing convenience that promotes timely payments. Our software checks patients’ insurance eligibility and provides estimates of financial obligations to increase our point-of-service collections. Payments received during registration are integrated into the online self-pay module.
By making these changes, we’ve coped better with the challenges of a struggling economy and have done our part to keep our organization’s bottom line healthy. In just 18 months, we reduced AR days by about 25. And for two consecutive years, we have beaten our net revenue estimates by 4% each year. These efforts have paid off in financial stability, ensuring we are better able to provide care to the residents of south-central Oregon and northern California.
Sky Lakes Medical Center’s Director of Patient Financial Services since 2007, Andrew Molatore holds an MBA with double concentrations in finance and management from the University of Oregon, and a BS in business administration with double emphases in accounting and finance from the University of Montana.
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