building an analytics-driven laboratory outreach business · source: chi solutions, 16th annual...
TRANSCRIPT
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Building an Analytics-Driven Laboratory Outreach BusinessSession 108, March 7, 2018
Charles Wilson, MHA, Vice President of Operations, Robert Wood Johnson University Hospital
Kyle Fetter, MBA, Vice President and General Manager Diagnostic Services, XIFIN
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Conflict of Interest
Charles Wilson, MHA
Kyle Fetter, MBA
Has no real or apparent conflicts of interest to report.
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Agenda• Learning objectives
• Trends, opportunities, and challenges for outreach programs
• Understanding outreach program profitability
• Robert Wood Johnson University Hospital’s move to an analytics-driven outreach business
• New models for lab outreach success
• Building a foundation for success
• Building a culture for success
• Questions
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Learning Objectives
• Evaluate the challenges and opportunities facing hospital lab outreach programs in the face of declining reimbursements and changing payment models
• Learn how Robert Wood Johnson University Hospital implemented a revenue performance management and analytics platform to achieve visibility into operational performance
• Understand the financial analytics and indicators needed to evaluate laboratory reimbursement and financial viability
• Identify strategies for positioning the outreach lab as a profit center and value to the community
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Trends• Outreach programs are gaining or holding their own compared to national
labs on a market share basis
• Average operating margins remain at or above historical levels (25% - 30%)
Source: Chi Solutions, 16th Annual National Hospital/Health System Laboratory and Outreach Survey Findings
• Strengths of healthcare systems-based
outreach programs remain: Rapid turn-around
time, quality, customer service
• 14% of respondents report contracting with an
outside billing service (up from 12% last year)
• 73% report the healthcare system as handling
billing and collection
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Opportunities
• Most labs reported having capacity to take on additional testing
• Fewer than 1/3 of labs reported participating in a benchmarking program
• There is much potential for healthcare systems to grow their outreach labs to deliver new revenue and margin
• Top opportunities reported for improvement in outreach programs:
Source: Chi Solutions, 16th Annual National Hospital/Health System Laboratory and Outreach Survey Findings
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Challenges
Claims
• 40% have missing or incorrect information
• 50% of denied claims never corrected & resubmitted*
3rd Party Payor
• Proliferation of rules
• Shifting $$ to patient responsibility
• Coding changes
• Increase in prior authorizations for lab work
Labor Costs
• 200% increase in past 10 years
• High volume/low return
• Systems not created for labs increase labor requirements
Compliance
• High fines for violations
• PAMA
• FASB
*Source: Graham, T., “Medical Group Management Association [MGMA],"You
Might be Losing Thousands of Dollars Per Month in ‘Unclean' Claims," MGMA
Connection February 2014
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Percentage of Diagnostic Claims Denied for Prior Authorization
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
6.0%
7.0%1
/1/2
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2/1
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3/1
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Source: XIFIN Revenue Performance Management Database
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Understanding Outreach Profitability
• Too few outreach programs have access to the data and metrics to measure their profitability
• And too few have the information, management reports, and key performance indicators (KPIs) to manage the business
Source: Chi Solutions, 16th Annual National Hospital/Health System Laboratory and Outreach Survey Findings
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Key Performance Indicators (KPIs)• Designed to help demonstrate and improve contribution
to patient management and financial performance
• Example KPIs for outreach labs include:
– Percentage of unbilled claims
– Percentage of error/denial by client
– Time it takes from requisition to payment
– Average and median price per accession/encounter
– Average and median payment/cash per accession/encounter
– Net revenue vs. cash collected
– Month-over-month revenue and profitability by client, sales rep, procedure and payor
One of the most
important analytics
for demonstrating
operational
performance is the
lab’s operating
margin
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Billing Dept.
Payors
External Resources
External Databases
Billing Databases
Report & Analysis
Statement Printers
Eligibility
Collection
Bank
Scanning OCR
Skip TraceOCE
Compliance Guide
Submit Reg.
RVS
HIPAA
UPIN ExclRemit Codes
Pricing/Discount
CCI
Zip Code
CPTNPI
NCD
ICDLCD
Forms
Test
Order Entry
Final Report
PACS
Results Codes
Client
Care Plans
Results
Authenti-cationCredit
Card
Capario
Clear Connect
Post-N-Track
UHC
Availity
Healthnet
Carefirst
PacifiCare
MediCal
Medicaid
Cigna
Blue Shield
Aetna
Humana
MPMC
TriCare
CMS
United Healthcare
HIP
Oxford
Blue Cross
Wellcare
Highmark
Health Partners
Pricing Accession Process
Promise Pay
Contact Manager
Workflow Config
Adjust
Error Process
Payment
Submit
Write Offs
Modifier Logic
Backup
Process Config
Clearing-house edit
Client
Standing OrderDiscountPOS
Payor Edits
Consol. Logic
Price
Test
Dialysis
Patient Dem
PurchaseData
Ware-house
CRM
General Ledger
EMRACO
CPOE
HIE
System manager
Report Writer
Compliance
Acct/ EOM
Price Model
Ad Hoc Query
Report Library
Transact. History
Other Systems
Clearing-houses
PatientsPhysicians
LIS
Laboratory
RCM
Connectivity is Key
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Optimized RCM
• Automate billing workflow and manage medical claim filing
• Securely interoperate with internal & external systems
• Provide physician and patient communication portals to engage and improve satisfaction and retention
• Keep up to date with latest regulatory and policy changes through cloud-based delivery
• Outsource billing services to get set up quickly; migrate in-house, if you choose
• Deliver measurable results: Improved cash collections, efficiency gains, and sustainably grows profitability
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Mobility
Real-Time Information Needed for Effective Lab Management: At the
Office or On-the-Go
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Robert Wood Johnson University Hospital (RWJUH) At-a-Glance
• 965 beds
• Two Campuses: New Brunswick and Somerville, NJ
• 3,079 medical staff
• 8,107 employees
• 48,674 inpatient admissions
• 269,182 outpatient visits
• 152,440 emergency department visits
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RWJUH Laboratory Outreach Goals
• Aligning institutional and corporate goals
• Promote economies, synergies and transparencies
• Focus on growth
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Focus on Growth
Current Book of Business: 212 POL’s, 34 RWJPE, 35 Medical School Practices, 11 Hospitals, 9 Surgi Centers, 8 Nursing Facilities, 299 Clients
2015
24 POL’s
9 RWJPE
3 Surgi Centers
1 Nursing Facility
2016
22 POL’s
1 RWJPE
2 Nursing Facilities
2017
23 POL’s
5 RWJPE
1 Nursing Facility
2 Hospitals
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0
20,000
40,000
60,000
80,000
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120,000
140,000
160,000
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RWJ New Brunswick Lab Outreach Test Volumes
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Org Chart: The Machine That Drives Success
Lab Outreach
Services
Director
XIFIN
Relay Health
Life Point
New Bruns.
Lab Director
Somerset Lab
Director LiaisonManager
New Bruns.Phlebotomy Lead Somerset Phlebotomy Lead
Logistics
Supervisor
IT/FinanceDedicated
Customer ServiceField Service
Sales & Mktg
Lab Couriers
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IT Vendor Roles
• XIFIN: Technology platform that integrates revenue cycle
management edits throughout other systems as well as centralizing
critical business analytics
• Relay Health: Connectivity for physician offices, patients, and
hospitals
• Life Point: Web-based alternative for offices without an EMR for
electronic order entry and results
• Liaison: Connects POL EMRs to Cerner and SCM
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Centricity
PointClick
Care
SigmaCare
Single HL7Order Feed
Allscripts
Relay Health
HL7 Order
Results
Orders
EMR-Link
Single HL7Result Feed
Cerner
LIS #1
Lab #2
Lab #1
Cerner
LIS #2
HL7 Result
HL7 Order
HL7 Result
HIS???
Order
Result
Result
Aria Order
Result
Other
EMRs?
Order
Result
Order
Result
PortalOrder
Result
Potential secondary feedfiltered by “age” and result code
Order
Result
Results
Ordering
Rules
HIE
<EMR>
Denotes
EHR that
partners
with EMR-
Link for lab
or rad
connectivity
Original Scope Discussed
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Traditional Role of Lab Administrator
• Improve operational efficiency and productivity (towards industry
gold standards)
• Improve and constantly challenge lab metrics (TATs, error rates,
etc.)
• Test insourcing, consolidation of platforms, and new test
development
• Consistently improve customer and employee satisfaction scores
• Continually drive down costs and operate the department within
budget
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Traditional Role of Lab Administrator
• Is the “traditional” definition for value sufficient in 2018?
• Does it position the laboratory favorably to “effectively” compete for
limited hospital resources?
• Is “excellence” under this model recognized and “fully supported” by
senior administration?
• Does it get the laboratory a “seat at the table” in regards to Sr. level
discussions to move the “organization” forward.
• Brutal reality = not really
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New Models for Laboratory Operational Success
Requires Lab Administrators to:
• “Own” and “understand” all financial aspects of the operation
• Establish the laboratory as a revenue center
• Improve business acumen with understanding of lab’s position in the institution
• Establish the laboratory’s importance to organizational success (the new value equation)
• Excel at all the duties under the “Traditional Lab Administrator Model”
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Building a Foundation for Success
Laboratory Finance (costs, reimbursements & revenue) are the
responsibility of the laboratory:
- The Finance department does “not know” the costs of your tests…it
knows your budget
- Must stay ahead of all factors effecting laboratory reimbursements
- Must incorporate “finance” into laboratory meetings, discussions and
ongoing operational assessments.The financial position of the
laboratory and institutions should be part of regular department staff
meetings
Question: Do you know how much your lab is making…Or
Losing?
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Hospital Lab Outreach Finance Reimbursements
Understand and evaluate the relationship between your test costs
and reimbursements:
• Evaluate all costs against Medicare reimbursement
• Know your average reimbursement per test
• Know your average reimbursements by test classification
• Gain knowledge about reimbursements from all payers
This information is “essential” to price setting for your tests and
procedures. Also essential to managing your business.
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Hospital Lab Outreach Finance Billing Practices
On Average 10-20% of all hospital lab claims never get billed
Effective billing begins with clean claims
Obtain understanding, gain influence and promote discussion regarding:
• Medical necessity (ICD-10/CPT)
• Payer contracting (Lab carve outs)
• Outpatient (TOB 131) vs. outreach (TOB 141) billing
• Patient payment liabilities
• Denials (working of account)
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Building a Culture for Success• Must continually drive down laboratory costs
• Protecting Access to Medicare Act (PAMA)
– Initiated January 2018
– Goal: reduce Medicare reimbursements by 35% over the next 3 years
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Building a Culture for Success• Critically evaluate test necessity and ordering patterns
• Utilize physician leadership and influence
• Laboratory Advisory Panel (LAP)
– Chaired by chief pathologist
– Composed largely of physicians
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Building a Culture for Success
Above All:
“Think Like a Business”
Hospital-centric thinking is the number one cause of laboratory outreach failure
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Questions• Charles Wilson, MHA
• Kyle Fetter, MBA