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http://standarderrors.org/Presentations/STTI2006WalshDeBariCox-ACaseStudyAnalysisOfTheImpactOfRevenueUncertaintyOnHospitalAndNursingOperations.ppt
A CASE STUDY ANALYSIS OF THE IMPACT OF REVENUE UNCERTAINTY ON HOSPITAL
AND NURSING OPERATIONS
17th International Nursing Research CongressFocusing on Evidence-Based Practice
Margaret DeBari RN, C, MALinda Walsh RN, BSN, CEN
MSN Students Seton Hall University
Thomas Cox, PhD, RNVisiting Professor
Seton Hall University College of Nursing
http://standarderrors.org/Presentations/STTI2006WalshDeBariCox-ACaseStudyAnalysisOfTheImpactOfRevenueUncertaintyOnHospitalAndNursingOperations.ppt
The AssignmentMany HC finance mechanisms shift the management of
insurance risk from 'insurers' to HC providers – Professional Caregiver Insurance Risk
How are insurance risk portfolios created and transferred?
Capitation agreements
Managed Care
Prospective Payment Systems
Nursing Unit/Department/Division budgets
Managing insurance risks adds to problems managing clinical risks
Explore how an organization is affected by PCIR for “Managed Care and Reimbursement” course
http://standarderrors.org/Presentations/STTI2006WalshDeBariCox-ACaseStudyAnalysisOfTheImpactOfRevenueUncertaintyOnHospitalAndNursingOperations.ppt
PURPOSETo describe how a hospital responds to uncertainty
State ChallengesMedicaid
Losing $14 million in 2005Continues to pay 62% of cost
Medicaid HMO mandateProposed changes to No Fault reimbursement (potential impact of $15 million to the organization)In 2005 provided $62 million in uncompensated care with only $14 million of compensation
http://standarderrors.org/Presentations/STTI2006WalshDeBariCox-ACaseStudyAnalysisOfTheImpactOfRevenueUncertaintyOnHospitalAndNursingOperations.ppt
PURPOSE
To gain an understanding of financial operations in order to influence organizational responses affecting nursing services
http://standarderrors.org/Presentations/STTI2006WalshDeBariCox-ACaseStudyAnalysisOfTheImpactOfRevenueUncertaintyOnHospitalAndNursingOperations.ppt
HOST SITE
Jersey Shore University Medical CenterAn acute care regional teaching hospital with 502 beds within Meridian Health System in Neptune, New JerseyConsists of 172 departments and 2,457.83 FTE’s A university hospital affiliate of UMDNJ — Robert Wood Johnson Medical School Part of a 3 hospital system known as Meridian Health
http://standarderrors.org/Presentations/STTI2006WalshDeBariCox-ACaseStudyAnalysisOfTheImpactOfRevenueUncertaintyOnHospitalAndNursingOperations.ppt
Since the 1980’s and 1990’s hospital reimbursement has declined causing a greater focus on the bottom line
http://standarderrors.org/Presentations/STTI2006WalshDeBariCox-ACaseStudyAnalysisOfTheImpactOfRevenueUncertaintyOnHospitalAndNursingOperations.ppt
CHALLENGES
Managed Care TrendsConsolidation of payersHorizon Blue Cross may pursue for-profit status
Payer ProfitabilityPayer ProfitabilityMedicare represents 43% of net patient revenueLosses are close to 50% of revenue basePayers that pay full charges are dwindlingRisk of changes to No Fault reimbursement
http://standarderrors.org/Presentations/STTI2006WalshDeBariCox-ACaseStudyAnalysisOfTheImpactOfRevenueUncertaintyOnHospitalAndNursingOperations.ppt
MEDICAREChallenges to Host Site
Losing $32 million in 2005Net rate decrease of approximately $4 million over the past 5 yearsProposed “pay for performance”
Proposed cuts to Medicaid matching dollars of $5 to $12 billion over 5 yearsDeficits will mandate program cuts
http://standarderrors.org/Presentations/STTI2006WalshDeBariCox-ACaseStudyAnalysisOfTheImpactOfRevenueUncertaintyOnHospitalAndNursingOperations.ppt
THE REVENUE CYCLE
Key component of the health care delivery system
It is the complex and evolving mechanism by which providers perpetuate their existence via reimbursement for services rendered, an existence, which is in perpetual crisis and is affected by the work of many departments (Crowley, 1998).
http://standarderrors.org/Presentations/STTI2006WalshDeBariCox-ACaseStudyAnalysisOfTheImpactOfRevenueUncertaintyOnHospitalAndNursingOperations.ppt
THE REVENUE CYCLE
CHALLENGESPayers often reduce costs for healthcare programs at the expense of providersConsumer expectations often outweigh provider/business capabilitiesGovernment intervention and controls are unpredictable, inefficient, and intrusiveAmbiguity exists about who is really financially responsible
http://standarderrors.org/Presentations/STTI2006WalshDeBariCox-ACaseStudyAnalysisOfTheImpactOfRevenueUncertaintyOnHospitalAndNursingOperations.ppt
THE REVENUE CYCLEBegins with patient intake
Continues to service delivery and documentation
Ends finally with revenue collectionAccess ServicesCase ManagementManaged Care ContractingUnfunded service mandatesClinical EffectivenessHealth Information management (Coding)
http://standarderrors.org/Presentations/STTI2006WalshDeBariCox-ACaseStudyAnalysisOfTheImpactOfRevenueUncertaintyOnHospitalAndNursingOperations.ppt
CHARGESIn the current climate of significant growth and margin pressure, problems in failing to capture earned revenue take on great urgency
Charges are driven by codes and include costs plus a markup
http://standarderrors.org/Presentations/STTI2006WalshDeBariCox-ACaseStudyAnalysisOfTheImpactOfRevenueUncertaintyOnHospitalAndNursingOperations.ppt
MANAGED CARE
Contracts do not always come back with the terms that were agreed upon
In order to survive in a managed care environment business must be continually monitoring contract compliance
Having a financially informed, clinical representative involved in negotiations and monitoring is an asset because it will give the hospital an edge in negotiating the contract, monitoring adherence to expected service patterns, and in effecting appeals of denied payments
http://standarderrors.org/Presentations/STTI2006WalshDeBariCox-ACaseStudyAnalysisOfTheImpactOfRevenueUncertaintyOnHospitalAndNursingOperations.ppt
MANAGED CARE
The managed care process is dependent upon each party knowing the strengths and weaknesses of each other and capitalizing on the situation
Reasonable rates are considered as somewhere between direct cost and usual and customary charges
Reasonable rates may not adequately reimburse hospitals for the risks involved
http://standarderrors.org/Presentations/STTI2006WalshDeBariCox-ACaseStudyAnalysisOfTheImpactOfRevenueUncertaintyOnHospitalAndNursingOperations.ppt
CLINICAL EFFECTIVENESS
Developed in response to mounting pressure on health care professionals to ensure that their practice is based on evidence (EBP) from high quality research
Evidence based clinical practice can increase services to clients previously underserved
Evidence based clinical practice may be used to arbitrarily limit reimbursements for services to ‘medical outliers’
http://standarderrors.org/Presentations/STTI2006WalshDeBariCox-ACaseStudyAnalysisOfTheImpactOfRevenueUncertaintyOnHospitalAndNursingOperations.ppt
CODINGThe benchmark for completing the coding process and producing a final bill is 7 days with a maximum of 4 days and a threshold of 12 days
The first source for coding is the history and physical and then the daily progress notes
http://standarderrors.org/Presentations/STTI2006WalshDeBariCox-ACaseStudyAnalysisOfTheImpactOfRevenueUncertaintyOnHospitalAndNursingOperations.ppt
CODINGIs done strictly from attending physician or resident physician notesCharts are coded on a priority basis (ie: those generating the most reimbursement are coded firstWhile billing is time limited and subject to inaccuracy – retrospective audits take place over many years
http://standarderrors.org/Presentations/STTI2006WalshDeBariCox-ACaseStudyAnalysisOfTheImpactOfRevenueUncertaintyOnHospitalAndNursingOperations.ppt
PATIENT ACCESS/FINANCIAL SERVICEPayment approaches are based on negotiated rates
Access Services primary role is financial
Payment denial can be either administrative or clinical
No outsourcing of billing and revenue collection
http://standarderrors.org/Presentations/STTI2006WalshDeBariCox-ACaseStudyAnalysisOfTheImpactOfRevenueUncertaintyOnHospitalAndNursingOperations.ppt
Cost Containment Non Labor
Supply Chain InitiativesContinued implementation of supply chain initiativeTargeted savings for 2006 of approximately $6.9 millionAreas of focus include contracting initiatives and non clinical product utilization/standardization
http://standarderrors.org/Presentations/STTI2006WalshDeBariCox-ACaseStudyAnalysisOfTheImpactOfRevenueUncertaintyOnHospitalAndNursingOperations.ppt
?
http://standarderrors.org/Presentations/STTI2006WalshDeBariCox-ACaseStudyAnalysisOfTheImpactOfRevenueUncertaintyOnHospitalAndNursingOperations.ppt
BUDGET CHALLLENGES
Hospital Physician Collaboration
Volume
Admission Growth Trend
Cost Containment Personnel
Supply Chain Initiatives
http://standarderrors.org/Presentations/STTI2006WalshDeBariCox-ACaseStudyAnalysisOfTheImpactOfRevenueUncertaintyOnHospitalAndNursingOperations.ppt
2006 Critical Success Factors
Medical Management & Physician Recruitment effortsInpatient Volumes at the two community hospitalsExpansion of Outpatient ServicesSupply Chain initiativesImplementation of a long range strategy to control utility costsReinforcement of budget discipline
http://standarderrors.org/Presentations/STTI2006WalshDeBariCox-ACaseStudyAnalysisOfTheImpactOfRevenueUncertaintyOnHospitalAndNursingOperations.ppt
There seems to be no end in sight as healthcare organizations continue to weather the storm
http://standarderrors.org/Presentations/STTI2006WalshDeBariCox-ACaseStudyAnalysisOfTheImpactOfRevenueUncertaintyOnHospitalAndNursingOperations.ppt
PAYER PROFITABILITYRevenue (In Millions)
32
114
32
191
0 0
273
0
50
100
150
200
250
300
Medicare Medicaid HorizonBlue Cross
No Fault O therInsurance &
Self Pay
Charity EmployeeSelf
Insurance
http://standarderrors.org/Presentations/STTI2006WalshDeBariCox-ACaseStudyAnalysisOfTheImpactOfRevenueUncertaintyOnHospitalAndNursingOperations.ppt
PAYER PROFITABILITY
Payer Margin (In Millions)
-32-14
16 21
36
-21-13
-40
-30
-20
-10
0
10
20
30
40
Medicare Medicaid Horizon Blue
Cross
No Fault Other
Insurance &
Self Pay
Charity Employee Self
Insurance
http://standarderrors.org/Presentations/STTI2006WalshDeBariCox-ACaseStudyAnalysisOfTheImpactOfRevenueUncertaintyOnHospitalAndNursingOperations.ppt
Hospital/Physician CollaborationMedical Management
•LOS Reduction
•169% of Medicare losses occur on cases exceeding Geometric LOS
•Focus on clinical areas of respiratory disease, cardiac medical, surgery, oncology, orthopedics and digestive system disorders
•Target of $2.9 million in expense savings & incremental revenue
http://standarderrors.org/Presentations/STTI2006WalshDeBariCox-ACaseStudyAnalysisOfTheImpactOfRevenueUncertaintyOnHospitalAndNursingOperations.ppt
Hospital/Physician CollaborationMedical Management
•Resource Consumption
•Appropriate utilization of ancillary testing
•Development of EBM protocols
•Standardization of clinical products
•Target of $2.3 million in expense savings
•DRG Assurance
•Target of $900,000 through improved documentation and charge capture initiatives
http://standarderrors.org/Presentations/STTI2006WalshDeBariCox-ACaseStudyAnalysisOfTheImpactOfRevenueUncertaintyOnHospitalAndNursingOperations.ppt
Hospital/Physician Collaboration
Physician On CallRefocus on operating principles Investment of $4.3 in the program for 2006Additional investments made for physician service agreements
http://standarderrors.org/Presentations/STTI2006WalshDeBariCox-ACaseStudyAnalysisOfTheImpactOfRevenueUncertaintyOnHospitalAndNursingOperations.ppt
Hospital/Physician Collaboration
Physician Recruitment55 New Physicians (JSUMC – 19; OMC – 19; RMC – 17)Investment of $3.3 million for recruitment expenses & practice support$330,000 partner company investment for recruitment infrastructure
http://standarderrors.org/Presentations/STTI2006WalshDeBariCox-ACaseStudyAnalysisOfTheImpactOfRevenueUncertaintyOnHospitalAndNursingOperations.ppt
VolumeInpatient Volume
Inpatient volume is budgeted to grow 3.1%
Jersey Shore growth of 3.7%Ocean growth of 3.5%Riverview growth of 1.6%
Continued impact of observation patients
Outpatient VolumeFocus on outpatient volume growthNew/expanded services
http://standarderrors.org/Presentations/STTI2006WalshDeBariCox-ACaseStudyAnalysisOfTheImpactOfRevenueUncertaintyOnHospitalAndNursingOperations.ppt
Admission Growth Trend
1,3041,364
53,523 55,293 55,828 55,561 57,279
50,000
52,000
54,000
56,000
58,000
60,000
2002 2003 2004 P-2005 B-2006
Admissions Obv Patients
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Cost Containment PersonnelPersonnel Savings - $6.2 million
Reduction of 52 full and part-time positions; 12 displaced managers and employeesScale back of $1.3 million in proposed market adjustments and defer merit increases to May
Personnel InvestmentsAddition of 53 positions to promote strategic initiatives and revenue growth $8.1 million in merit and market adjustments
http://standarderrors.org/Presentations/STTI2006WalshDeBariCox-ACaseStudyAnalysisOfTheImpactOfRevenueUncertaintyOnHospitalAndNursingOperations.ppt
Other Initiatives
$2.3 million incremental investment to support initiatives
Information Technology
Surpluses from Partner Companies invested in ambulatory strategies
“Path of Growth”
$900,000 incremental investment since 2003
Marketing & Communications
$600,000 incremental investment
Clinical Excellence
http://standarderrors.org/Presentations/STTI2006WalshDeBariCox-ACaseStudyAnalysisOfTheImpactOfRevenueUncertaintyOnHospitalAndNursingOperations.ppt
Excess of revenue over expenses for 2005 includes $12.9 million in depreciation recapture settlements.
3.0%2.7%3.0%3.2%Operating Margin
(23.9)%34.245.030.232.8Excess of Revenue over Expenses
(54.9)%11.124.68.310.3Non-operating Revenue
13.6%23.220.421.922.5Operating Gain
5.3%(20.2)(19.2)(23.2)(24.0)Net estimated cost of Charity Care
9.6%43.339.545.146.5Operating Gains before Charity Care
3.6%752.6726.7709.9678.5Total Expenses
3.9%795.9766.2755.0725.0Total Operating Revenue
Inc/(Dec)
2006 Budget/
2005Projected
2006 Budget
2005 Projecte
d
2005 Budget
2004
Actual2006 Operating
Budget
http://standarderrors.org/Presentations/STTI2006WalshDeBariCox-ACaseStudyAnalysisOfTheImpactOfRevenueUncertaintyOnHospitalAndNursingOperations.ppt
Total Revenue Growth Trend
Operating revenue growth of $29 million (3.7%)
Net Patient Service Revenue = $26 millionOther Operating Revenue = $3 million
776747701660622
300
450
600
750
900
2002 2003 2004 P-2005 B-2006
Mil
lio
ns
http://standarderrors.org/Presentations/STTI2006WalshDeBariCox-ACaseStudyAnalysisOfTheImpactOfRevenueUncertaintyOnHospitalAndNursingOperations.ppt
Budgeted Net Patient Service Revenue Growth
28%10%
27%
35%
IP Volume OP Volume Rate Expanded Programs
http://standarderrors.org/Presentations/STTI2006WalshDeBariCox-ACaseStudyAnalysisOfTheImpactOfRevenueUncertaintyOnHospitalAndNursingOperations.ppt
Total Expense Trend
Operating expense growth of $26 million (3.6%)
–Represents a slowdown from our historical increases in expenses of approximately 6%
609 642 678 727 753
300
450
600
750
900
Mil
lio
ns
2002 2003 2004 P-2005 B-2006
http://standarderrors.org/Presentations/STTI2006WalshDeBariCox-ACaseStudyAnalysisOfTheImpactOfRevenueUncertaintyOnHospitalAndNursingOperations.ppt
2006 Operating BudgetJersey Shore University Medical Center
VolumeAdmissions budgeted to grow by 3.7%Surgical volume to grow due to several initiatives
Medical ManagementAverage length-of-stay to drop to 4.85Case mix index to increase to 1.82Initiatives in product standardization
Expense ManagementReduction of 44 FTEs through elimination of mgmt & vacant positionsClinical and non-clinical supply chain savings in the amount of $4.6M
Physician DevelopmentIncremental investment of $1.4M to support Medical Manpower Plan
Academic VisionBudgeted resources to further advance the Academic Vision
http://standarderrors.org/Presentations/STTI2006WalshDeBariCox-ACaseStudyAnalysisOfTheImpactOfRevenueUncertaintyOnHospitalAndNursingOperations.ppt
2006 Capital Budget
$12.0$1.3$2.0$1.5$7.2Jersey Shore University Medical
Budget2006
NewTechnology
ImagingPlantRoutine
http://standarderrors.org/Presentations/STTI2006WalshDeBariCox-ACaseStudyAnalysisOfTheImpactOfRevenueUncertaintyOnHospitalAndNursingOperations.ppt
Operating Margin Trend
2.10% 2.70% 3.20% 2.70% 3.00%
1.00%
1.50%
2.00%
2.50%
3.00%
3.50%
4.00%
2002 2003 2004 P-2005 B-2006
http://standarderrors.org/Presentations/STTI2006WalshDeBariCox-ACaseStudyAnalysisOfTheImpactOfRevenueUncertaintyOnHospitalAndNursingOperations.ppt
PURPOSE OF PRACTICA
Gain a greater understanding of the revenue cycle and the relationship of various hospital departments/functions to it specifically:
Patient access/financial services MedicareChargesCase ManagementManaged Care,Clinical Effectiveness,Health Information Management (Coding)
http://standarderrors.org/Presentations/STTI2006WalshDeBariCox-ACaseStudyAnalysisOfTheImpactOfRevenueUncertaintyOnHospitalAndNursingOperations.ppt
Medicare Losses 2002-2005
(29) (30) (37) (32)
-40-35
-30-25
-20-15-10
-50
510
Mill
ions
2002 2003 2004 2005
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2006 Medicare Rate Changes
Market basket adjustment (3.5%) $10.0 million
Wage index adjustment (3.0) million
Transfer DRGs (2.6) million
Cardiac DRGs 1.4 million
Other IP & OP adjustments (1.6) million
Total Increase $3.2 million
Rate increase from Medicare 1.2%
http://standarderrors.org/Presentations/STTI2006WalshDeBariCox-ACaseStudyAnalysisOfTheImpactOfRevenueUncertaintyOnHospitalAndNursingOperations.ppt
LEARNING EXPERIENCES
CASE MANAGEMENTCoordination with:
Physicians
Social Workers
Nurses
Ancillary Personnel
Outside Agencies
http://standarderrors.org/Presentations/STTI2006WalshDeBariCox-ACaseStudyAnalysisOfTheImpactOfRevenueUncertaintyOnHospitalAndNursingOperations.ppt
LEARNING EXPERIENCES
CASE MANAGEMENT
Expedites medically appropriate and cost effective care
Applies clinical expertise and medical criteria to insure timely coordination of care and discharge planning
Reimbursement is not influenced by time
http://standarderrors.org/Presentations/STTI2006WalshDeBariCox-ACaseStudyAnalysisOfTheImpactOfRevenueUncertaintyOnHospitalAndNursingOperations.ppt
LEARNING EXPERIENCESCLINICL EFFECTIVENESS
The concentration of the VP of Clinical Effectiveness is on high priority related growth initiatives
Severity adjusted MortalitySatisfaction with pain managementRN staffing consistent against targetMICU days on ventilatorLab turn around time to the EDPatient and other customer focused resultsPhysician satisfactionPhysician growthFinancial and market share results
http://standarderrors.org/Presentations/STTI2006WalshDeBariCox-ACaseStudyAnalysisOfTheImpactOfRevenueUncertaintyOnHospitalAndNursingOperations.ppt
LEARNING EXPERIENCES
CODING“By the year 2010 the vacancy rate for coders is
predicted by Price Waterhouse to be 43%”.
Celeste Thomas
Corporate Manager
Health Information Management Coding
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