Financial ApproachFinancial Approach

Maximizing Revenue Maximizing Revenue

whilewhile

Containing CostsContaining Costs

Hospital PayorsHospital Payors

Rob’s RulesRob’s Rules We must know the We must know the

pros and cons of pros and cons of each each reimbursement reimbursement system in order to system in order to direct time, money, direct time, money, and resources for and resources for profitabilityprofitability

Traditional hospitals Traditional hospitals rely on the rely on the profitability of profitability of private insurance to private insurance to sustain losses in sustain losses in other payor groupsother payor groups

Excess profitability Excess profitability has caused has caused operational operational inefficiency, inflated inefficiency, inflated salaries, and poor salaries, and poor FTE position controlFTE position control

Hospital A PayorsHospital A Payors

Rob’s RulesRob’s Rules We must depend on We must depend on

Medicare and Medicare and Medicaid to fund Medicaid to fund basic operations basic operations and develop deeper and develop deeper physician physician relationships to relationships to acquire more acquire more profitable businessprofitable business

Physician and Physician and Managed Care Managed Care relationships can be relationships can be deepened by deepened by producing positive producing positive patient outcomespatient outcomes

While expenses While expenses must be tightly must be tightly controlled, we controlled, we cannot undercut cannot undercut resources which resources which have revenue have revenue generating potential, generating potential, ie “we will not save ie “we will not save our way to success”our way to success”

Impacts on RevenueImpacts on Revenue

Rob’s RulesRob’s Rules Hospital A is in a Hospital A is in a

position the generate position the generate substantial revenue substantial revenue through non traditional through non traditional and traditional streamsand traditional streams

Given the excess Given the excess space and limited space and limited need for inpatient need for inpatient operations in the first operations in the first 1-2, we can build 1-2, we can build rental revenue through rental revenue through downstream and downstream and complimentary complimentary providersproviders

Volume of census will Volume of census will come with time and come with time and performanceperformance

Outpatient and Outpatient and ancillary/nonancillary ancillary/nonancillary revenues will help to revenues will help to sustain operations as sustain operations as we grow to a greater we grow to a greater point of inpatient point of inpatient momentummomentum

Coder

Case Manager

Procedures

Census

Outpatient Revenue

RentalTenants

Food&

Beverage

Physicians

SBMC

Physician DocumentationPhysician Documentation

Rob’s RulesRob’s Rules Great Great

documentation documentation reduces compliance reduces compliance risksrisks

Great coding Great coding happens through happens through great physician great physician documentation documentation which can be driven which can be driven through through documentation documentation specialists, case specialists, case managers, managers, administration, etc.administration, etc.

There are 2 kinds of There are 2 kinds of doctors we want to doctors we want to work with:work with:

– Those who actually Those who actually document welldocument well

– Those who will Those who will document what we document what we teach – legally, teach – legally, morally, and morally, and ethically – to create ethically – to create revenuerevenue

Compliance Procedures

Coding

Revenue

Case ManagementCase Management

Rob’s RulesRob’s Rules Financial Case Financial Case

Management is the Management is the only model to followonly model to follow

Discharge plans must Discharge plans must be safe, timely, and be safe, timely, and in accordance with in accordance with best clinical and best clinical and financial practicesfinancial practices

Case management Case management must carry UR must carry UR functions and must functions and must watch every dollar watch every dollar spent and question spent and question overutilization, timely overutilization, timely delivery of services, delivery of services, and direct care and direct care accordinglyaccordingly

Outliers must be Outliers must be managed in managed in collaboration with collaboration with specific downstream specific downstream providersproviders

Outliers

Care Planning

UR

Discharge Planning

Revenue

Other RevenueOther Revenue

Rob’s RulesRob’s Rules Rental tenants must Rental tenants must

share risk of self pay share risk of self pay patients. All rental patients. All rental agreements must agreements must include a provision include a provision for self pay for self pay admissions as a admissions as a percentage of total percentage of total admissions from us admissions from us as the host hospitalas the host hospital

We must seek SNF, We must seek SNF, IRF, LTACH, and IRF, LTACH, and other downstream other downstream providers to solve providers to solve discharge problems discharge problems before they happen. before they happen. In doing so, we In doing so, we insulate ourselves insulate ourselves against the risk of against the risk of non payment and non payment and outlier managementoutlier management

F&B and misc. F&B and misc. revenues are needed revenues are needed as every penny as every penny counts toward counts toward survivalsurvival

RentalTenants

F&B

InPatientVolume

Outpatient Services

Revenue

Expense ManagementExpense Management

Rob’s RulesRob’s Rules You cannot save your You cannot save your

way to successway to success Most CEO’s, in an Most CEO’s, in an

effort to control effort to control expenses, will expenses, will undercut critical undercut critical resources which are resources which are needed to generate needed to generate revenuerevenue

Additionally most Additionally most HCO’s have grown HCO’s have grown lazy and padded lazy and padded salaries and added salaries and added positions under the positions under the auspices of “quality auspices of “quality and patient outcomes.” and patient outcomes.” Too few are willing to Too few are willing to put forth the effort and put forth the effort and drive a culture of drive a culture of quality through quality through accountabilityaccountability

Hospitalists and mid-Hospitalists and mid-levels create quality of levels create quality of life for referring life for referring physicians and create physicians and create billing opportunities billing opportunities through procedural through procedural work work

Land&

Capital

Hospitalists

Ancillaries

NonAncillaries

Supplies

Outsourcing

Bad Debt

SW&B

Hospital

SW&BSW&B

Rob’s RulesRob’s Rules As our largest As our largest

expense, labor must expense, labor must be managed daily be managed daily consistent with consistent with census and current census and current financial position financial position against planagainst plan

Core staffing gives Core staffing gives us the ability to us the ability to control expense control expense while increasing while increasing business, ie our business, ie our initial staffing initial staffing pattern may be pattern may be based on 30 based on 30 patients and we use patients and we use prn and agency prn and agency staff the staff the consistently grow to consistently grow to 40 before we raise 40 before we raise the core staffing the core staffing patternpattern

Core Staffing

PhaseGrowth

RevenueProducingEmployees

Flat Organizational

Chart

Efficient Redundancy

Lean Workforce

Lean ConceptsLean Concepts

Rob’s RulesRob’s Rules Why hire a CFO Why hire a CFO

when all we need is when all we need is a good controller?a good controller?

Efficient Efficient redundancy allows redundancy allows us to hire a us to hire a controller who also controller who also runs central supply runs central supply and carries a tech and carries a tech for stocking and for stocking and shelvingshelving

HR backs up HR backs up reception and HIM reception and HIM backs up backs up admissions – cross admissions – cross departmental departmental training is essentialtraining is essential

Outsourcing gives Outsourcing gives us the ability to pay us the ability to pay a set cost ppd for a a set cost ppd for a service and demand service and demand performance performance accordinglyaccordingly

• Efficient Redundancy

• Controller vs CFO

• Outsourcing

• Hospitalists & Mid-Levels

ThedaCareThedaCare

Rob’s RulesRob’s Rules ThedaCare is a ThedaCare is a

hospital system in hospital system in Wisconsin who has Wisconsin who has received national received national accolades for quality accolades for quality and patient outcomesand patient outcomes

There are wildly There are wildly profitable not profitable not because of who and because of who and how they are paid, how they are paid, but because they but because they have created a data have created a data driven organization driven organization that scrutinizes that scrutinizes processes multiple processes multiple times dailytimes daily

This continual focus This continual focus on outcomes both on outcomes both clinical and financial clinical and financial are necessary to are necessary to create operational create operational excellence and excellence and profitabilityprofitability

Floyd Medical CenterFloyd Medical Center

Rob’s RulesRob’s Rules Floyd Medical Center Floyd Medical Center

in Rome, GA, is one in Rome, GA, is one of those facilities of those facilities above the Medicare above the Medicare break-even point. break-even point. Part of that is Part of that is because of wide-because of wide-ranging and ranging and aggressive cost-aggressive cost-cutting efforts, from cutting efforts, from early adoption of early adoption of Lean and Six Sigma Lean and Six Sigma improvements to improvements to aggressive aggressive management of management of nursing salaries and nursing salaries and utilization control. utilization control.

University General HospitalUniversity General Hospital

Rob’s RulesRob’s Rules University General University General

Hospital has had a Hospital has had a colorful history and colorful history and much can be said much can be said about where they about where they have come from have come from and where they are and where they are nownow

The brilliance of The brilliance of growth in their growth in their inpatient operations inpatient operations has been a function has been a function of:of:

– Taking care of Taking care of doctorsdoctors

– Good marketingGood marketing

– Growth through Growth through outpatient surgeryoutpatient surgery

SSH - LongviewSSH - Longview

Rob’s RulesRob’s Rules SSH – Longview is SSH – Longview is

currently operating currently operating at just of $1000 ppd at just of $1000 ppd on revenues of on revenues of close to $1500 ppd, close to $1500 ppd, this is over $100 this is over $100 ppd reduction from ppd reduction from last year and an last year and an increase of over increase of over $300 ppd in $300 ppd in revenuerevenue

82% Medicare 82% Medicare BusinessBusiness

We have achieved We have achieved these numbers these numbers through volume of through volume of census which census which diluted expenses diluted expenses and better case and better case management as a management as a product of physician product of physician documentation and documentation and coding coding

The Healthcare SolutionThe Healthcare Solution

Rob’s RulesRob’s Rules We exist, as a We exist, as a

provider, at a point provider, at a point where physicians, where physicians, payors, and patients payors, and patients convergeconverge

We are embarking We are embarking on an era where on an era where some version of some version of healthcare reform healthcare reform will create the will create the following:following:– More PatientsMore Patients– Less Less

ReimbursementReimbursement– Pay For Pay For

PerformancePerformance

The time to prepare The time to prepare has already past, has already past, we must execute we must execute nownow

Payors

Patients

Post-AcuteProviders

Physicians

SBMC