This month, I offer you a guest post, written by Lisa Shock, who works with physicians who are tired of treadmill medicine, i.e. working harder each year and making less money. If you are interested in transitioning, why not transition from a place of strength?
If you want to learn how this practice was able to optimize its operations and earn more money without working more hours, please read on.
Case Presentation
A physician who dreamed of delivering care to a rural NC community started his urgent-care business in 2006. He was open 7 days a week and with the help of one midlevel provider, delivered compassionate care to his local community. It was such a struggle to make payroll, he ultimately took on an external part time job when his own resources were spent. He contacted us in January 2009 uncertain of the future of his business.
He was desperate for ways to increase overall collections. Their payor mix had a large number of self-paying patients due to their urgent care hours. However, located in a rural small town of less than 15,000 residents, Medicare, Medicaid and third party payor reimbursement financed a majority of claims. Upon review of their collections and billing process, we found that they were losing money from denied claims, unpaid patient balances, and increasing accounts receivable. They had no experience with analysis of reports or internal research. They were relying on one staff member who preferred to work from home and they used a clearinghouse that did not send regular statements for collection of patient balances. In addition, their biller was not generating any monthly report data for review.
We focused on three basic areas: report generation, reconciliation of third party payor claims and collections, and patient collections. The intention was to improve overall collections through more efficient processes.
Methodology
The Model for Improvement Method was employed, using fundamental analysis and the Plan-Do-Study-Act (PDSA) cycle to make incremental changes within his practice.
The PDSA cycle tests change in the workplace. First a change is planned, then initiated and tried, then the results are observed. Permanent changes are implemented after learning what was successful. By testing small changes and evaluating the success of each test, results can be refined and broader changes may be implemented across a larger spectrum.
We designed several PDSA cycles to initiate change. First, we established a routine of running reports at defined times. We needed clearer information regarding patient balances and posted payments from third party payors, and we needed a system to view this information to accomplish an improved rate of collection within 60 days.
Next, we selected three items to track monthly within the report system:
1. CLAIMS POSTING – Many claims took an excess of 14 days to post to patient accounts. We decreased this delay time to no more than 3 business days.
2. DENIED CLAIMS – New procedures and updated clearinghouse software ensured that denied claims would be followed up within one workweek.
3. PATIENT BALANCES – Old patient balances lingered from 2007. We employed a collection agency and changed the front desk process such that patient balances are satisfied in full or a payment plan implemented before further services are rendered.
Results
Within one 30 day cycle, we improved total collections by 76.4% and over the 60-day target we improved collections by 47% overall. We achieved significant gains initially by collecting on patient accounts receivable within the last 30 days and refilling all denied claims within the last 60 days. The average collection ratio rose from 48 to 65.7% within that timeframe. The physician saw an average increase of $3000 per month and over the course of six months collected 16% more than the previous year. Average daily patient volume increased from 12-15 daily to 18-22.
For the first time, the physician understood payor mix, bad debt, and claims processing.
The physician initiated the transition from urgent to primary care and with this transition, negotiated improved reimbursement rates from third party payors. His staff met with state Medicaid officials to clarify billing processes, resubmitted Medicaid claims, and recovered nearly $2000 in claims outstanding.
The practice now utilizes a running calendar to follow with ongoing data report generation and claims analysis and a collection agency to settle bad debts. Unpaid claims from third party payors are reworked and refiled in a more timely fashion. Patient balances are reconciled and balances due are collected at the point of service. Now, if there is an issue with declining reimbursement, the practice can act more quickly to minimize impact on monthly cash flow.
Further review of their collections revealed that their overall collection rate was between 60% and 70% most months. This is significantly higher than average family practice rates of 50% and further reinforced that when they followed proper procedures, they achieved a measurable, sustainable improvement in cash flow.
The physician now has a framework that he applies to future data measurement to ensure improved collections. He is steadfast in his dream to deliver quality healthcare and now feels that he has a better chance of success as a result of improved measurement and more efficient processes.
Reference: http://www.ihi.org/IHI/Topics/Improvement/ImprovementMethods/HowToImprove/
Lisa P. Shock is the President/CEO of Utilization Solutions in Healthcare, Inc., a consulting firm specializing in teaching physicians how to get paid for the services that they provide and how to utilize PAs to their fullest potential. Please visit her website at www.pushpa.biz or contact her directly at lisa@pushpa.biz.
Kenneth H. Cohn, MD, MBA, FACS
© 2011, all rights reserved
Disclosure:
I have not received any compensation for writing this content. I have no material connection to the brands, topics and/or products that are mentioned herein.