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Measuring and Managing C t t C ll tCost to Collect
Scott HawigVP Finance Shands HealthCareVP Finance, Shands HealthCare
Cecelia MooreCOO, Duke University Health System-PRMO
AgendaThe Cost to Collect Calculation- Considerations for Calculation & Comparison- Benchmark Guidance
Case Studies- Duke University Health System- Shands HealthCare
Driving Down Costs using Labor Study Principles
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The Cost to Collect CalculationConsiderations for Calculation & Comparison
Functions In or O t?Out?
SchedulingCharge Capture
HIMUtilization Review
EnrollmentContractingContracting
CDMPhysician/Home Health
Etc.
The Cost to Collect CalculationConsiderations for Calculation & Comparison
O h d IOverhead In or Out?
HRIT
ComplianceTrainingFinance
Administration
Source: http://masscare.org/health-care-costs/overhead-costs-of-health-care/
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The Cost to Collect CalculationConsiderations for Calculation & Comparison
Technology In or Out?
System DepreciationBolt-on System CostsPCs, Scanners, Kiosks
The Cost to Collect CalculationConsiderations for Calculation & Comparison
Facilities In or Out?
Rent/DepreciationNetwork, Servers
Phones
Source: http://ahier.blogspot.com/2010/03/health-it-broadband-connectivity-gap.html
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Transcription Done Onshore, Offshore, or Both? - Overall Trend
The Cost to Collect CalculationConsiderations for Calculation & Comparison
Outsourcing In or Out?
Agency FeesBanking Fees
EligibilityCoding, AppealsCoding, Appeals
Transcription
Source: http://www.klasresearch.com/news/newsletters/2008-07/mtso2008.aspx
The Cost to Collect CalculationBenchmark Guidance
The VA Model
Includes: Registration, UR, HIM including pro fees, billing & collections including banking fees, agency fees and overhead costs (presumed to include technology and facility costs)
Excludes: Scheduling, Charge Capture, Enrollment, Contracting and CDM
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The Cost to Collect CalculationBenchmark Guidance
The HFMA ModelCost to Collect Map Key
HFMA's Map Keys
Includes: Scheduling, Registration, HIM, billing & collections, technology costs and outsourcing costs (presumed to include overhead and facility costs)
E l d Ch C t
Metric Description Measure: Cost to Collect Purpose: Trending indicator of operational performance Value: Indicates the efficiency and productivity of revenue cycle process Metric Calculation Equation:
Total Revenue Cycle (RC) Cost1 _________________________
Total Cash Collected2
Benchmark2-3%
Excludes: Charge Capture, UR, Enrollment, Contracting and CDM
Variable Notes: 1Total RC cost includes: software expense, subscription fees, fringe benefits, collection agency fees, outsourced arrangements, patient access expense, patient accounting expense, and HIM expense. Patient access includes: eligibility, insurance verification, central scheduling, pre-registration, admissions/registration, and financial counseling.
2Cash collected must match the same time frame as cost in the numerator. Data Source: For Numerator: Income Statement For Denominator: Balance Sheet Sources: http://www. hfma.org/HFMA-Initiatives/HFMA-Map/Cost-to-Collect-Map-Key/
HFMA, “Understanding Your True Cost to Collect”, January 2006
The Cost to Collect CalculationBenchmark Guidance
The HARA’s Model
Includes: Registration and billing & collections (presumed to include overhead, technology and facility costs)
Excludes: Presumed to
Source: HARA Report on First Quarter 2009
exclude Scheduling, Charge Capture, UR, HIM, Enrollment, Contracting and CDM
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The Cost to Collect CalculationBenchmark Guidance
AdditionalHARA
BenchmarkCuts
Source: HARA Report on First Quarter 2009
Case StudiesDuke University Health System
The Duke Patient Revenue Management Organization (PRMO) provides revenue cycle functions ranging from scheduling andprovides revenue cycle functions ranging from scheduling and O/P coding to payer relations for the 3 hospitals and approx.
1,500 primary care and specialist physicians affiliated with Duke
Duke PRMO Structure
Includes: Scheduling, Registration, Charge Capture, CDM, Enrollment, Payor Relations, billing & collections and , gtechnology, facility and most overhead costs for Hospital and Professional services
Excludes: UR, HIM, Contracting, Agency Fees
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Case StudiesDuke University Health System
5 00%
5.78% 5.58%
4 85%
5.54% 5.39% 5.07% 4 93%6.00%
5.00% 4.85%4.39%
4.93%
2.00%
3.00%
4.00%
5.00%
0.00%
1.00%
2007 2008 2009
Duke Structure VA Model HFMA Model
Case StudiesDuke University Health System
Duke Structure2009
2.96%
Duke Structure Total 4.39%
2009
0.03%
0.03%
0.03%
0.03%
0.12%
Agency Fees 0.11%UR 0.24%HIM 0.52%
1.21%0.10%
Registration Scheduling PFS Charge Capture Payer Relations Enrollment CDM
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Case StudiesDuke University Health System
Duke StructureContract Work
6.4%
Outsourcing3.9%
Cost by Resource Type% of Total Cost
Technology15.5%
Other7.3%
Labor66.9%
Case StudiesDuke University Health System
Computer Room Costs5.4%
Office Equipment3.8%
Duke StructureTechnology Costs
Hospital PA system29.9%
Corporate IT Allocation
12.6%
PC Purchases & Repairs12.1%
% of Total Technology Costs
Ancillary Systems & IT Consulting
15.7%
Professional PA system20.6%
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Case StudiesDuke University Health System
Translation Services1.8%
Statements P i
Revenue Mngmt & Coding3.8% Duke Structure
Medicaid Eligibility45.0%
Eligibility & Claims Submission
Self Pay Collections8.7%
Processing7.9% Outsourcing Costs
% of Total Outsourcing Costs
Reviewed for opportunity and subsequently brought inhouse at significant savings (and improved performance)Document
Mngmt/Storage17.1%
15.7%
Case StudiesDuke University Health System
Duke StructureContract Work
Training5.7%
Other1.6%
Contract Work% of Total Contract Work
Collections Management
49.1%
Banking/Cash Mngmt18.6%
Corporate Srvcs Allocation
25.0%
Related to a system runout project outsourced during staff transition to new system
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Case StudiesDuke University Health SystemOther8.1%
Interview & Recruiting3.5%
Facilities43.6%
Office Supplies & Materials
9.7%
Forms8.7%
Duke StructureOther Costs
% of Total Other CostsFreight & Postage
15.0%
Telephone11.3%
Case StudiesShands HealthCare at the University of Florida
Shands HealthCare provides revenue cycle functions ranging from inpatient & outpatient registration to CDM management for the 5 acute care and 2 specialty hospitals and employed
physicians of Shands
Shands Structure
Includes: Registration, CDM, billing & collections, facility and overhead costs including Agency Fees for Hospital and
t i P f i l icertain Professional services
Excludes: Most Scheduling, Charge Capture, Enrollment, UR, HIM, Contracting, most Technology costs
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Case StudiesShands HealthCare at the University of Florida
3.56%3.30%
3.79%3.52%
3.78%3.48%
3 50%
4.00%
2.56%2.78% 2.74%
1.00%
1.50%
2.00%
2.50%
3.00%
3.50%
0.00%
0.50%
2007 2008 2009
Shands Structure VA Model HFMA Model
Case StudiesShands HealthCare at the University of Florida
Shands Structure Total 2.74%
IT 0 32%Shands Structure
2009 IT 0.32%UR 0.30%HIM 0.46%
2009
1.09%
1.61%
0.05%
Registration CDM PFS
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Driving Down CostsUsing Labor Study Principles
What is a Labor Analysis Study?Development of engineered labor standardsIdentification of process improvement opportunities (reduction of non-value added tasks)Recommendations for labor efficiency improvement (staffing patterns, technology solutions, etc)
What are Labor Standards?Source: http://www.fao.org/docrep/w9380e/w9380e08.htm
Detailed “normal” times to perform necessary tasks Used to budget the required FTEs based on a projected volume (i.e. how many FTEs do you need to process 15,000 visits per year?)
Source: http://www.dcemploymentlawupdate.com/articles/employment-wage-and-hour-law/
Driving Down CostsUsing Labor Study Principles
Step 1: Identify and process map tasks
Value Added AssessmentV - Value Added Process StepT - Transportation/TravelD - DelayI - Inspection/Quality Reviewsp Q yS - Storage/FileR - Rework
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Driving Down CostsUsing Labor Study Principles
Step 2: Identify a volume t ti ti th t d i ff t
Function Volume Statistic
Scheduling Calls Received
Pre-Registration Appointments
statistic that drives effortClinic/OP Registration Arrived Visits
Admissions Admissions
ED Front Desk ED Visits
Enrollment Accounts Worked
Charge Capture Edits Worked
Billing Edits Worked
3rd Party Collections Accounts Worked
Self-Pay Collections Accounts Worked
Cash Management # of Checks
Payment Process Transactions
Document Imaging Pages Scanned
Credit Balance Accounts Worked
Customer Service Calls Received
Driving Down CostsUsing Labor Study Principles
Step 3: Estimate Personal, Fatigue and Delay (PF&D Allowance)
Personal Time 6.25% Breaks
Additive Allowance 0.0% Normal Office Conditions
2.08% 10 min startup/shutdown per day
Fatigue 2.0% Concentration
1.0% Glare
0.0% Monotony0.0% Monotony
Delay 2.0% System downtime, interruptions
Total Allowance 13.33% (Approximates 8 minutes/hour)
Allowance Factor 1.1538
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Driving Down CostsUsing Labor Study Principles
Step 4: Perform a Time Study & Calculate the Variable Standard
Clinic Front Desk Normal Time Unit of Measure
Mean of Data (Normal Time) 16.3783 Min/Arrived Visit
PF&D Allowance 1.1538
Total Standard 18.8973 Min/Arrived Visit
25 Visits/FTE/Day
Driving Down CostsUsing Labor Study Principles
Step 5: Determine the Fixed TimeMeetings
Frequency Hours/ Avg. # Staff Req'dActivity Description Annual Monthly Weekly Occurrence Attending Hrs
Staff Meetings 12 1 3 36Evaluations 1 0.5 3 1.5Mid Year Evaluation 1 0.5 3 1.5Q lit R i 12 0 5 3 18Quality Reviews 12 0.5 3 18Misc. Committees 26 1 3 78
Total Annual Hrs 135Education and TrainingFrequency Hours/ Avg. # Staff Req'd
Activity Description Annual Monthly Weekly Occurrence Attending Hrs
Inservices 8 1 3 24
HEICS 1 0.5 3 1.5
Ergonomics Overview 1 0.5 3 1.5
Fire/Life Safety 1 0.5 3 1.5
Compliance 1 0.5 3 1.5
Rep Sessions 4 1 3 12
Core Training 1 40 1 40
JCAHO 4 0.5 3 6
Other Fixed ActivitiesFrequency Hours/ Avg. # Staff Req'd
Activity Description Annual Monthly Weekly Occurance Attending Hrs
Supply Ordering 2 30 0 0Supply Check -Clerical 1 15 1 15
0Total Annual Hrs 15
Total Annual Hrs 88
Total fixed time = 238 hours or 79.3 hours per employee or .11 FTE
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Driving Down CostsUsing Labor Study Principles
Step 6: Apply the Standard to Actual & Projected Volumes
PositionVariable
Std UOM Volume
Rqr'd Variable
Wrkd FTEs
Rqr'd Wrkd Fixed FTEs (Meetings,
Ed, Training)
Other Paid Fixed FTEs
Total Paid FTEs Rqr'd
(12.02% PTO)Budgeted
FTEsFront Desk 18.8973 Min/Arrived Visit 16,547 2.51 0.11 2.98 3.00
Supervisor (1) 0.25 0.25 0.25TOTAL 2.51 0.11 0.25 3.23 3.25
0 02-0.02(1) Shared fixed position consisting of Daily Productivity Monitoring; Report Generation; Worklist Distribution;
General Rep Assistance; Payroll; Staff Schedule
Total Paid FTEs Rqr’d = Variable + Fixed FTEs / 1 – PTO %
Driving Down CostsUsing Labor Study Principles
Step 7: Monitor Performance to Flex Monthly
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Driving Down CostsUsing Labor Study Principles
Step 8: Compare Performance to Flex to Metric Performance
Avg # of Calls/Month Speed To Answer Abandoned Calls Flex VarianceInternal Medicine 4,672 :87 10% -2.177Oncology 3,204 :36 8% -1.447Neurosciences 6,126 :92 18% -1.398Orthopaedics 6,264 :54 7% -0.950ENT 2,329 :30 9% -0.566Urology 4,254 :39 6% -0.554Dermatology 5,871 :33 10% -0.494Eye Center 6,664 :47 13% -0.281Coagulation 701 :20 11% -0 137Coagulation 701 :20 11% -0.137OBGYN 6,903 :20 3% 0.119Cardiology 8,106 :39 10% 0.198
Q & ASPEAKER CONTACT INFORMATION
Scott HawigShands HealthCare at the University of FloridaVP FinanceEmail: [email protected]: (352) 265-8304
Cecelia MooreDuke University Health SystemDuke University Health SystemPatient Revenue Management OrganizationChief Operating OfficerEmail: [email protected]: (919) 620-1270
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