HFMA Utah ChapterHFMA Utah Chapter

Fall Meeting

“Benchmark Comparisons”

September 2007

PreviewPreview

• Definitions

• Characteristics of participants

• Comparative Graphs

• Successes

• Conclusions

• Next Steps

IntroductionsIntroductions• re|solution

– Revenue cycle • AR clean up, management training, interim staffing,

chargemaster reviews, revenue cycle assessments, payment reviews, APC performance improvement plans and self-pay management plans

• Mike Ronning

– Vice President, Client Services of re|solution

– Over 20 years of administrative, revenue cycle, managed care contracting, and operations experience

Quiz #1Quiz #1The Acid-Test Ratio is:

1. The amount of hydrochloric acid needed to burn through to the “real” numbers in your financial statements

2. The amount of LSD that must be ingested by Finance Committee members before your financial reports start looking good

3. A stringent test that indicates if your facility has enough short-term assets to cover current liabilities

Definitions, Process, and Definitions, Process, and BenchmarksBenchmarks

• Submission of data

• Best Practices

• HARA and Zimmerman

• Peer Groups

Reporting Package Reporting Package ElementsElements• Benchmark Indicator Analysis

– Input data sheet – who, what and when

– Graph comparing peer group and best practice for six indicators

– Opportunity analysis

– APC analysis

• Group Analysis– Blinded report

– Confidentiality

– Scrambled A-?

ParticipantsParticipants

High Low Avg

Bed Size 520 25 187

Census 349 9 116

AR 179,000,000 4,200,000 51,000,000

Cash 52,000,000 1,000,000 14,000,000

Revenue 81,000,000 1,400,000 25,000,000

AR over 90 days 41,000,000 1,400,000 12,000,000

Registration Cost 198,000 0 46,000

Bus Office Cost 100,000 131 47,000

Write Offs – Total 6,300,000 67,000 1,900,000

% in Self Pay 61% 7% 32%

Discharged Not Final Billed 11,000,000 31,000 3,300,000

Gross Days in ARGross Days in AR• Measures the general effectiveness of the

Business Office in liquidating A/R

• Days in DNFB vs. Days in Billed A/R

• Gross vs. net

• Days in A/R by financial class

• Easily manipulated by write-offs

• Must be reviewed with other benchmarks

• Trend internally and externally

• Standard—varies by bed size, geographic region, hospital type, payer mix, etc.

• Success stories?

Cost to CollectCost to Collect

• Bottom line impact

• Opportunity to invest in front end technology

• Factors that affect this number in reporting

– Admissions, billing and collecting costs

– Outside vendors

– Cost of technology

• Key indicator of business office effectiveness

• Standard—$.03 per dollar or less

Bad Debt and Charity Bad Debt and Charity Write OffsWrite Offs• Must be considered in light of hospital mission and

community expectations

• Policies can dictate this number

• Patient responsibility impact

• Reasons for high number– Local/regional economics– Credit/collections and charity policy– Payer mix– Experience of staff– Technology in the B.O.– Effectiveness of early out and primary bad debt collection

agencies– Timely filing issues, lack of pre-registration program, lack of

self pay management program.

• Standard—will vary from hospital to hospital and geographic region. HARA—5% or less

• Successes?

Days in A/R are up, cash is Days in A/R are up, cash is down, and your capital budget down, and your capital budget was just slashed by 30%, but was just slashed by 30%, but it it couldcould be worse… be worse…

AR over 90 daysAR over 90 days• Key indicator for effective follow up

• Is DNFB included in current or 0-30 aging bucket? If so, the percentage of billed A/R greater than 90 days will be understated

• Look at makeup

– Over 365

– Any Medicare or Medicaid

– How much in self pay

• Greatest cash acceleration opportunity

• Focus on largest dollars per collector (80/20 rule) and quick wins

• Standard—no more than 20% of total billed A/R over 90 days. Best practice—15% to 18%

• Successes?

DNFBDNFB• Another opportunity for cash acceleration

• Components—inhouse, suspense, accounts requiring coding beyond suspense days, billing processing

• Find the root cause

• Potential solutions– Fix the system

– Periodic super coders

– Monitor top ten

– Regular meetings between admissions, medical records and business office

• Standard—Six (6) days or less including suspense days

• Successs?

Quiz #2Quiz #2

APC stands for:

A. Another Payment Catastrophe

B. Almost Paid Correctly

C. Annual Payment Cut

D. Ambulatory Payment Classification

Are you getting paid for Are you getting paid for the services you provide?the services you provide?

• APC Medpar analysis

• Chargemaster review

• ER acuity level and E/M review

• Outpatient charge capture review

• Reimbursement review

• All can improve your bottom line

Next StepsNext Steps

• Review the data at facility

• Determine action plan to improve numbers – set goals

• Comparison to another facility will be brokered by re|solution

• Consider whether you want to attack the opportunities

• Individual BIA discussions will be set up as needed

QuestionsQuestions

Mike Ronning

800-355-0410

mike@ereso.com