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  • Aligning Hospital Strategy and Finance for Success with New Business Initiatives
    action plans that are tied to key business transformation activities related to growth strategies cost reduction and process improvement efforts The four essential capabilities described here allow organizations to drive success with interdependent strategic business initiatives Jay Spence is vice president of solutions marketing Kaufman Hall Associates LLC Skokie Ill Publication Date Monday November 16 2015 BACK TO PAGINATION Today s healthcare environment requires an increasing volume of complex financial and operational data to accomplish strategic initiatives Due to rapid change in healthcare delivery hospitals and health systems must implement complex strategic plans aimed at serving patient populations in their communities Use of advanced techniques and tools with the right capabilities can help executives track and balance interdependent priorities all while managing costs and optimizing care quality Current priorities often include enhancing primary care access to offer consumers greater convenience developing relationships with post acute and other care continuum partners acquiring physician practices and investing in virtual and IT infrastructure Strategic business decisions should be data driven and finance professionals must continue to play an integral role from the earliest stages of strategy formulation To truly be value added analyses supported by finance should go beyond projecting financial outcomes of various scenarios and combinations of scenarios They must identify trends and analytics that provide context to business decisions support implementation of selected decisions and provide a basis to monitor operating and financial performance as initiatives advance An increasing volume of complex financial and operational data is required to support such analyses In addition plans often must be reevaluated on an ongoing basis to ensure they align with marketplace dynamics shifting competitive forces and a changing regulatory environment Capabilities for Change To effectively convert strategy to actionable and sustainable operational initiatives organizations need systems that enable them to Communicate strategy in the form of quantifiable business goals Promote ownership and accountability of initiatives at the operational level Define key measurable milestones that define achievement of those goals Provide monitoring functions and visibility into progress To define articulate and execute a strategic plan the following four capabilities are essential Multi year financial planning The current healthcare environment requires that financial planning be agile and responsive to industry and operational changes Projection tools and techniques must have dynamic scenario and initiatives based planning capabilities For example organizations should be able to model the future impact of business initiatives including evaluation of each as a stand alone initiative or various combinations of initiatives i e portfolios Dynamic reporting to inform decision making Access to the right metrics to guide strategic decisions is more important than ever before Organizations need the ability to assess performance in a timely manner using a range of measures such as quality indicators patient satisfaction scores and patient and population level cost and profitability analyses Initiative planning and tracking As organizations move past strategy formulation into implementation software tools should help turn high level strategy into actionable operational tactics and plans This capability allows healthcare leaders to establish the owners milestones budgets and achievement goals for reaching specific strategic objectives Access to tools of this kind also serves as a mechanism for automating progress reporting across all stakeholders Key performance indicator monitoring and scorecards Organizations should have both short and long term monitoring capabilities that allow them to gauge performance against defined business objectives For example scorecards can help organizations understand performance across multiple measures at a given point in time while tools appropriate for longer term monitoring can help assess performance trends over months or years These monitoring capabilities help healthcare leaders identify critical factors such as those that may be contributing to underperformance in a particular program or business initiative Tracking performance also allows for greater accountability and transparency and more informed decision making in terms of how to make mid course adjustments or whether to expand or discontinue an effort A Formula for Success For example a four hospital health system considered expanding its telehealth services The goals were to target diabetes patients who were identified as being at high risk for developing complications and to help those patients better manage their disease Using its multi year financial planning capabilities the health system projected that after five years the program would generate an estimated 30 000 in annual savings from reduced emergency department ED visits and inpatient admissions and as much as 50 000 annually after seven years When combined with other initiatives projections also showed that initial losses from implementing the telehealth program would be offset with revenue from an expansion of orthopedic services at two of its facilities The expansion initiative now in its fourth year is generating better than projected revenues and resulting net impact To properly gauge performance of the diabetes management telehealth program the organization established key performance indicators such as hospital readmission rates and patient participation and compliance measures Armed with a system providing dynamic reporting capabilities leaders were able to assess performance over time along a broad range of metrics As the organization moved to implement the program its planning and tracking tools provided a means to define associated initiatives For example one initiative aimed to engage ED and primary care physicians throughout the region to help identify diabetic patients who qualify for the program and encourage them to participate A second initiative focused on recruiting two physicians and five nurses to provide direct care management services for the telehealth program Each effort had unique owners milestones and established targets linked to the broader business objective Once the program was operational the organization was able to monitor progress using key performance indicators and scorecards The ability to drill down into the details of initiative operations provided a context for commentary and action plans This framework promoted accountability and ownership and helped guide proper executive attention and resource allocation for the program Tools help to ensure that strategies are aligned at the operating level yielding achievable and sustainable initiatives The effective use of initiative based planning and tracking tools enables executives

    Original URL path: http://www.hfma.org/Content.aspx?id=43472 (2016-02-10)
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  • New-Era Planning Analytics: Assessing Population Health Management Market Opportunity
    track and quantify changes occurring in their markets New era planning analytics allow organizations to develop a range of potential outcomes related to those changes and assess the optimal timing for moving to value based arrangements Pursuit of opportunities should be based on the organization s data informed point of view on where the market is headed and its role in that future market Daniel Majka is a managing director Kaufman Hall Associates Skokie Ill J Patrick Smyth is a senior vice president Kaufman Hall Associates Skokie Ill Nora Kelly a vice president Kaufman Hall Associates Skokie Ill and is a member of HFMA s Southern California Chapter Publication Date Wednesday January 06 2016 BACK TO PAGINATION Insights from Forum sponsor Kaufman Hall Associates In preparing to play a role in population health management organizations should apply an expanded set of planning and projection analytics Hospitals and health systems nationwide are working to determine how best to quantify their value position in a transforming healthcare industry Beyond traditional analytics organizations now also need to use more complex analytics to assess their position and performance in a broader context for population health management New era planning analytics are internally and externally focused and provide insights into two key dimensions market evolution and organizational readiness for value based care Both the pace of change and the available metrics will vary by market and analytics will continue to evolve Examples of new era analytics that organizations may use to augment traditional planning analytics include Population health market opportunity Use rate trends and opportunity Network integrity Referral risk Value position Total cost of care contribution Expanded view of profitability drivers We explore the first analytic here Evaluating population health management opportunities is critical The process answers important questions that clarify a market s advancement toward value based care Questions include How do healthcare costs in the market compare to state and or national averages Does current and expected Medicare Advantage penetration indicate a growing opportunity Does the organization have a critical mass of influenced lives with a payer that might be interested in partnering to share risk Evaluation of related data indicates how compelling the market opportunity is and how best to position the organization to pursue the opportunity Assessing Market Cost Position and Medicare Advantage Opportunity Healthcare costs are one indicator of a market s position relative to population health management using metrics such as risk adjusted standardized per capita cost for Medicare beneficiaries Relevant data can be found from sources such as the Centers for Medicare Medicaid Services and the Dartmouth Atlas Project Providers and payers typically have evolved toward value based care to a greater extent in low cost markets than in higher cost markets For example states such as California Oregon and New Mexico have some of the nation s lowest healthcare costs given historically strong integration of payers and care delivery systems With high cost regions likely feeling more pressure to transition to value based care first movers toward lowering care costs in these areas will have an advantage Higher Medicare Advantage penetration is another indicator that market participants are more evolved relative to population health management because plans and or providers are paid a per member per month PMPM fee to cover all care provided to program participants Enrollees also are more accepting of the management of their care Markets with lower Medicare Advantage penetration may offer attractive opportunities for program participation under a range of revenue and risk models Assessing payer provider positioning can help organizations determine payers willingness to partner with them based on whether a particular organization touches a critical mass of the health plan s enrollees Hospitals and health systems should be able to quantify the lives they influence For example an organization that has 5 000 discharges annually from a particular health plan would have 77 000 influenced lives at the assumed rate of 65 discharges per 1 000 person population Given a typical premium and an 85 percent medical loss ratio the organization could estimate that those 77 000 lives generate about 185 million in costs for the health plan If the organization can offer high value by reducing those costs such figures might present a compelling case for the health plan to partner with the organization on a shared savings or risk based model Shifting the Organization s View of Patients Organizations should shift their analytical focus from patient volumes to influenced lives and ultimately to managed lives Influenced lives refers to patients who come to a hospital or health system for specific episodes of care via the emergency department referrals or self selection The costs and revenues relative to that care are generated within the organization but the entity bears no responsibility for costs of care provided beyond its walls In contrast lives in managed care arrangements are fully attributed Providers typically receive PMPM payments meaning revenue is fixed based on the population Organizations are responsible for all costs of care provided within their systems and beyond or a portion of total costs depending on how financial responsibility is contractually distributed When done successfully making the transition from volume to influenced lives and then to managed lives will significantly affect patient care volumes At one end of the spectrum greater numbers of patients and care episodes generate more revenue At the other end as those lives become managed organizations are incentivized to improve care quality provide more services to bolster patients health status and reduce non value added resource consumption This approach ultimately generates savings for the health system Developing a Point of View for the New Era Hospitals and health systems should continuously track and quantify changes occurring in their markets New era planning analytics allow organizations to develop a range of potential outcomes related to those changes and assess the optimal timing for moving to value based arrangements Pursuit of opportunities should be based on the organization s data informed point of view on where the market is

    Original URL path: http://www.hfma.org/Content.aspx?id=45681 (2016-02-10)
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  • Building a Sustainable Telehealth Program
    Hawk says About one third of respondents in the eHealth Initiative survey are operating telehealth programs with investments of less than 1 million The cost of a new telehealth program can be tempered by being clear on objectives and understanding how existing platforms can work with new technology Hawk says Core technology requirements especially in areas such as psychiatry and behavioral health are basic voice and video equipment You don t necessarily have to invest in every technology especially in the beginning Hawk says It s just a matter of having that core technology As healthcare organizations expand their programs with eICU services or physician consults for example they require more complex equipment such as high resolution cameras to view imaging Franklin says the technology used in AGH s eICU is relatively complex compared with other applications As with most telemedicine applications on the patient side there is a video screen a high definition camera and peripheral items In this setting though all equipment is interfaced into the ICU medical equipment meaning all data generated from equipment such as ventilators and all medical record data are uploaded to a platform monitored by remote intensivists Consider Revenue Sources Defining a revenue model for telehealth programs is challenging As a new care delivery system telehealth is subject to varying payment rules based on state laws and payer contracts For academic medical centers and leading health systems one of the largest payment sources is the provision of contracted telehealth services to other organizations Hawk says That s one way given the reimbursement challenges with Medicare and Medicaid that they re finding to generate almost new sources of revenue through actually functioning as a provider to other systems in the their region Hawk says Telehealth also can be a source of referrals Hawk says which is a top line revenue generator BCH receives a fee for its formal second opinion services for which it contracts with several third party vendors that administer second opinion services on behalf of large employers Vanderslice says the consults also are a source of referrals of patients with complicated conditions for which BCH physicians have unique and specific expertise Use Traditional Performance Metrics The same throughput utilization and patient satisfaction metrics used to measure traditional care delivery can also be used to assess the performance of a telehealth program The quality metrics that you would track from an in person visit perspective are equally as important in a telehealth program Hawk says Some of these include Return on investments in technology Cost avoidance Reduced avoidable readmissions Referrals Revenue generated through additional throughput Hawks says some of these metrics are a little softer in terms of financial value but it s still important to have an understanding of how these services will impact your organization financially The eICU program at AGH actually costs the hospital money but Franklin says it also has a bottom line benefit The virtual coverage has led to fewer complications and shorter lengths of stay resulting in annual savings of 300 000 and ICU patients likelihood of survival has increased by 26 percent since the program was implemented The remote monitoring allows the hospital to avoid salaries for two additional intensivists at a total estimated cost of 700 000 It instead pays 228 000 annually for the virtual coverage for annual savings of nearly 500 000 So the savings I have on one side outweigh the cost on the other side Franklin says I think there are tradeoffs within the system that create the adequate support for the technology costs AGH also has a telehealth program in area nursing homes This application is primarily for residents at an elevated risk of preventable readmission The application is less complex compared with the eICU program requiring a portable telemedicine unit with high resolution cameras and a few peripheral devices on the nursing home side and only a notebook computer and access to patients electronic records on the remote physician side In AGH s program the hospitalists provide patient consultations to the nursing home clinical staff In the six months prior to November 2014 when the program was initiated AGH had 53 readmissions from nursing homes In the first six months of 2015 the hospital had 31 readmissions So you can see there s been a significant reduction in readmissions throughout our health system Franklin says See related tool Telehealth Pilot Atlantic General Hospital Monthly Clinical Goal Report Keep It Sustainable Setting up a sustainable program requires more than just improved outcomes and an appropriate level of payment says Randy Moore MD MBA president of Mercy Virtual the industry s largest telehealth program The program is operated by Mercy a four state 35 hospital system based in St Louis The Mercy Virtual Health Center is housed in a new 125 000 square foot facility and operates an eICU virtual care for stroke care pediatric telecardiology teleradiology telepathology nurse on call care and home monitoring for Mercy facilities and for other healthcare organizations and employers through partnerships Moore says a potentially overlooked element of financial sustainability is understanding how a telehealth program will affect cash flow You need to understand your contract mix how you re being paid which patients are being targeted your operational capabilities how you re going to manage the overall investment and make it work he says Moore says finance leaders should focus on setting up risk based models with payers that will provide the cash flow through shared savings on reduced hospitalizations for example to sustain a telehealth program Moore says Mercy s telehealth services were designed to align with that sort of risk based revenue model The problem is the fee for service payment model remains predominant so setting up virtual care can be costly in the beginning Moore says partnering in telehealth programs with other organizations can help to offset costs and add capacity Otherwise you wake up with a surprise three years into the program with a system that is doing more poorly Moore says And you have to start looking for where to cut costs which may be telemedicine Karen Wagner is a freelance healthcare writer based in Forest Lake Ill and a member of HFMA s First Illinois chapter Interviewed for this article Kelly Hawk senior manager Healthcare Advisory Practice Ernst Young LLP New York Doug Vanderslice senior vice president and CFO Boston Children s Hospital Michael Franklin president and CEO Atlantic General Hospital Berlin Md Randy Moore MD MBA president Mercy Virtual St Louis Discussion Starters Forum members What do you think Please share your thoughts in the comments section below Publication Date Monday October 12 2015 BACK TO PAGINATION To ensure their telehealth program is financially sustainable healthcare organizations must establish appropriate objectives be strategic about technology understand the financial risk and use suitable performance metrics After starting out primarily as a way for rural providers to obtain medical expertise virtually telehealth has moved into the mainstream as healthcare leaders continue striving to balance better quality and access with lower costs Although providing high quality care is paramount a telehealth program also must be financially sustainable Meeting organizational objectives purchasing the appropriate technology and understanding the financial risk involved all play a role in establishing a solid foundation for a telehealth program This is a sample article from HFMA s CFO Forum Learn more and become a member Set Organizational Objectives Healthcare organizations implement telehealth programs for a number of reasons including better care access and quality Really one of the objectives we see most often on the provider s side is the improvement of access to care says Kelly Hawk a senior manager with the Healthcare Advisory Practice for consulting firm Ernst Young LLP In a 2014 survey of 48 academic medical centers health systems hospitals and other healthcare organizations administered by the Washington D C based eHealth Initiative for Ernst Young nearly 96 percent of respondents named improved access to care their main objective in implementing a telemedicine program nearly 85 percent named improved patient outcomes According to the survey telemedicine is most often used in psychiatry behavioral health stroke care radiology neurology and maternal fetal health Boston Children s Hospital BCH provides expertise remotely to other physicians nationally and internationally Practically speaking the most effective use of telehealth thus far has been easier access to some of our high end specialists for things like second opinions and consults on very complex issues says Doug Vanderslice senior vice president and CFO Population health management is another objective Whether the goal is readmission reduction or just finding cost effective ways to manage patients outside of the hospital that s also what s generating significant interest in telehealth technology Hawk says Utilizing telemedicine technology Atlantic General Hospital AGH Berlin Md implemented an electronic intensive care unit eICU about five years ago as a way to obtain clinical expertise during overnight and weekend shifts according to president and CEO Michael Franklin Franklin says he hopes to expand the use of telemedicine as part of a community care strategy to provide services to patients where they are Franklin says Part of our longer term view is integrating telemedicine with what we do from a population health management perspective and in dealing with the higher risk chronically ill patients in the community he says Be Strategic About Technology Developing a telehealth program does not necessarily involve a lot of equipment and technology but does require formulating strategic objectives and aligning those objectives with investments Hawk says Investing in technologies that end up being underutilized is a risk in a technology driven program Hawk says About one third of respondents in the eHealth Initiative survey are operating telehealth programs with investments of less than 1 million The cost of a new telehealth program can be tempered by being clear on objectives and understanding how existing platforms can work with new technology Hawk says Core technology requirements especially in areas such as psychiatry and behavioral health are basic voice and video equipment You don t necessarily have to invest in every technology especially in the beginning Hawk says It s just a matter of having that core technology As healthcare organizations expand their programs with eICU services or physician consults for example they require more complex equipment such as high resolution cameras to view imaging Franklin says the technology used in AGH s eICU is relatively complex compared with other applications As with most telemedicine applications on the patient side there is a video screen a high definition camera and peripheral items In this setting though all equipment is interfaced into the ICU medical equipment meaning all data generated from equipment such as ventilators and all medical record data are uploaded to a platform monitored by remote intensivists Consider Revenue Sources Defining a revenue model for telehealth programs is challenging As a new care delivery system telehealth is subject to varying payment rules based on state laws and payer contracts For academic medical centers and leading health systems one of the largest payment sources is the provision of contracted telehealth services to other organizations Hawk says That s one way given the reimbursement challenges with Medicare and Medicaid that they re finding to generate almost new sources of revenue through actually functioning as a provider to other systems in the their region Hawk says Telehealth also can be a source of referrals Hawk says which is a top line revenue generator BCH receives a fee for its formal second opinion services for which it contracts with several third party vendors that administer second opinion services on behalf of large employers Vanderslice says the consults also are a source of referrals of patients with complicated conditions for which BCH physicians have unique and specific expertise Use Traditional Performance Metrics The same throughput utilization and patient satisfaction metrics used to measure traditional care delivery can also be used to assess the performance of a telehealth program The quality metrics that you would track from an in person visit perspective are equally as important in a telehealth program Hawk says Some of these include Return on investments in technology Cost avoidance Reduced avoidable readmissions Referrals Revenue generated through additional throughput Hawks says some of these metrics are a little softer in terms of financial value but it s still important to have an understanding of how these services will impact your organization financially The eICU program at AGH actually costs the hospital money but Franklin says it also has a bottom line benefit The virtual coverage has led to fewer complications and shorter lengths of stay resulting in annual savings of 300 000 and ICU patients likelihood of survival has increased by 26 percent since the program was implemented The remote monitoring allows the hospital to avoid salaries for two additional intensivists at a total estimated cost of 700 000 It instead pays 228 000 annually for the virtual coverage for annual savings of nearly 500 000 So the savings I have on one side outweigh the cost on the other side Franklin says I think there are tradeoffs within the system that create the adequate support for the technology costs AGH also has a telehealth program in area nursing homes This application is primarily for residents at an elevated risk of preventable readmission The application is less complex compared with the eICU program requiring a portable telemedicine unit with high resolution cameras and a few peripheral devices on the nursing home side and only a notebook computer and access to patients electronic records on the remote physician side In AGH s program the hospitalists provide patient consultations to the nursing home clinical staff In the six months prior to November 2014 when the program was initiated AGH had 53 readmissions from nursing homes In the first six months of 2015 the hospital had 31 readmissions So you can see there s been a significant reduction in readmissions throughout our health system Franklin says See related tool Telehealth Pilot Atlantic General Hospital Monthly Clinical Goal Report Keep It Sustainable Setting up a sustainable program requires more than just improved outcomes and an appropriate level of payment says Randy Moore MD MBA president of Mercy Virtual the industry s largest telehealth program The program is operated by Mercy a four state 35 hospital system based in St Louis The Mercy Virtual Health Center is housed in a new 125 000 square foot facility and operates an eICU virtual care for stroke care pediatric telecardiology teleradiology telepathology nurse on call care and home monitoring for Mercy facilities and for other healthcare organizations and employers through partnerships Moore says a potentially overlooked element of financial sustainability is understanding how a telehealth program will affect cash flow You need to understand your contract mix how you re being paid which patients are being targeted your operational capabilities how you re going to manage the overall investment and make it work he says Moore says finance leaders should focus on setting up risk based models with payers that will provide the cash flow through shared savings on reduced hospitalizations for example to sustain a telehealth program Moore says Mercy s telehealth services were designed to align with that sort of risk based revenue model The problem is the fee for service payment model remains predominant so setting up virtual care can be costly in the beginning Moore says partnering in telehealth programs with other organizations can help to offset costs and add capacity Otherwise you wake up with a surprise three years into the program with a system that is doing more poorly Moore says And you have to start looking for where to cut costs which may be telemedicine Karen Wagner is a freelance healthcare writer based in Forest Lake Ill and a member of HFMA s First Illinois chapter Interviewed for this article Kelly Hawk senior manager Healthcare Advisory Practice Ernst Young LLP New York Doug Vanderslice senior vice president and CFO Boston Children s Hospital Michael Franklin president and CEO Atlantic General Hospital Berlin Md Randy Moore MD MBA president Mercy Virtual St Louis Discussion Starters Forum members What do you think Please share your thoughts in the comments section below Publication Date Monday October 12 2015 Comments Please login to add your comments Add Comment Text Only 2000 character limit Advertisements HFMA Business Profiles McKesson Leveraging Predictive Analytics to Rein in Operating Costs A leader from McKesson discusses how healthcare reform is forcing hospitals and health systems to take a different approach to capacity management and patient flow HFMA RESOURCE LIBRARY 6 Patient Revenue Cycle Metrics You Should Be Tracking and How to Improve Your Results Patient financial engagement is more challenging than ever and more critical With patient responsibility as a percentage of revenue on the rise providers have seen their billing related costs and accounts receivable levels increase If increasing collection yield and reducing costs are a priority for your organization the metrics outlined in this presentation will provide the framework you need to understand what s working and what s not in order to guide your overall patient financial engagement initiatives and optimize results HFMA Business Profiles Accretive Health Partners with Providers to Excel in a Rapidly Transforming Revenue Cycle Environment Emad Rizk MD president and CEO of Accretive Health discusses the uncertainty facing hospitals and the transitions affecting revenue cycle management HFMA RESOURCE LIBRARY 10 Ways to Reduce Patient Statement Volume and Reduce Costs No two patients are the same Each has a very personal healthcare experience and each has distinct financial needs and preferences that have an impact on how when and if they chose to pay their healthcare bill It s no longer effective to apply static billing techniques to solve the complex challenge of collecting balances from patients The need to tailor financial conversations and payment options to individual needs and preferences is critical This presentation provides 10 recommendations that will not only help you improve payment performance through a

    Original URL path: http://www.hfma.org/Content.aspx?id=42573 (2016-02-10)
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  • One CFO’s Role in a Joint ACO
    entities The local vendor realized we were serious about taking the business to another vendor and gave us a large price reduction which amounts to a combined savings of 7 million over a five year period We followed the same process for inpatient dialysis which Methodist and the Medical Center outsourced to different vendors We selected a single vendor and saved a total of 1 1 million in one year across both organizations We recently completed an RFP for reference lab tests and should make a joint decision on that soon We will likely conduct the same process on certain surgical implants and glucose meters Publication Date Wednesday January 22 2014 BACK TO PAGINATION A CFO discusses how two competing health systems collaborated to form the first ACO of its kind In 2010 Methodist Health System and Nebraska Medical Center both of Omaha Neb created the first accountable care organization ACO forged by competitive health systems On Jan 1 the ACO called the Accountable Care Alliance began managing the employee populations of both health systems Lessons from that experience will help the ACO prepare for payment contracts with insurers and payers Linda Burt CFO and vice president of finance at Methodist talks about the challenges and opportunities of partnering with another health system This is a sample article from HFMA s CFO Forum Learn more and subscribe On the biggest challenge with the joint ACO Initially we believed information technology would be our biggest challenge because Methodist and the Nebraska Medical Center are not on the same clinical platform But our IT subcommittee talked to other health systems that had found ways to work together on different platforms and learned about new technologies starting to emerge that aid in communicating from different systems The subcommittee concluded that we could work together and build on the systems we have to create a more robust care management platform along with physician portals In reality communication particularly with physicians has been our biggest challenge so far We need to help physicians understand where we are in the evolution of the ACO In many cases the doctors want answers to questions that we are still formulating such as how any gainsharing pool would work Also some physicians do not understand what we are trying to accomplish and have a limited understanding of what an ACO is To that end we recently developed a communication plan and assigned an individual to work on communication with our physicians full time Multiple evening meetings are being scheduled with primary care physicians over the next several weeks to provide them with additional information on the role and expectations of primary care providers in the ACO On physician membership in the ACO The attitude we are taking in this first year is to be inclusive We currently have a physician committee working on membership criteria for the ACO Access related tool Physician Membership Criteria for Nebraska s Accountable Care Alliance We originally called this credentialing but decided to move away from that label because membership is not just based on clinical competencies Physicians also need to have financial competencies and a willingness to follow evidence based protocols which are being developed by our medical management committee On the Methodist side we have more than 1 000 providers including 637 physicians in our PHO who are eligible to join the ACO The Medical Center has 990 physicians in its PHO who are eligible to join the ACO The PHOs at both organizations include employed and independent providers At Methodist we currently have approximately 200 employed physicians mostly primary care in the PHO and the other 400 plus are independent On managing their first ACO patient population We started managing our first population on Jan 1 2014 The population is comprised of our two employee groups which includes 16 000 individuals combined We recently purchased a population health management tool that will help us analyze claims data for our employee population On her role in the ACO About five years ago we started a collaborative purchasing initiative with the Nebraska Medical Center to purchase items that we do not buy through our separate group purchasing organizations see the sidebar Based on our success with the collaborative we were interested in other ways we could work together I had listened to a webinar on ACOs and thought that the model fit what we were trying to do I passed the concept on to others and the consensus was that an accountable care structure would help us manage our populations better and reduce costs while reducing variation Since then I have been setting up the ACO financial infrastructure and preparing the financial forecasts for the business plan The initial business plan focused on the IT systems and resources required to manage a population We worked with an outside consulting firm early on that helped quantify the potential reduction in utilization our combined health systems may experience if we did nothing Although the initial push may have been to avoid deterioration in our financial health we are looking forward to taking on risk in the future and developing the infrastructure and protocols to operate with a positive margin and share those gains with the physicians who contribute to the ACO s success I sit on the ACO s governing board which includes 12 people six from each organization Five of the six are physicians and the sixth is the CFO from each health system Advice for other CFOs collaborating with other health systems CFOs at competing organizations may have more opportunities to collaborate as health systems form alliances to deliver value based care in their regions When collaborating with peers it helps to keep an open mind Burt says Recognize that you do the same thing and share the same goals even if your styles are different Laura Ramos Hegwer is a freelance writer and editor based in Lake Bluff Ill Interviewed for this article Linda Burt is vice president and CFO Methodist Health

    Original URL path: http://www.hfma.org/Content.aspx?id=21312 (2016-02-10)
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  • ROI Beyond the Dollar: A Strategic Approach to Patient Payment Programs
    care for a healthier population Already one out of every three Americans is skipping essential care because they can t afford it according to a recent Gallup poll This trend represents a genuine threat to population health management value based payments and provider volumes and revenues If hospitals and health systems want to engage patients clinically to improve health outcomes and lower costs they first must engage them financially And patient financial engagement hinges on payment plans that deliver clear value for both patients and providers Brian Brown is vice president of sales CarePayment Lake Oswego Ore and a member of HFMA s Oregon Chapter Publication Date Monday August 17 2015 BACK TO PAGINATION Insights from forum sponsor CarePayment When pre service payment discussions include a payment plan option patient collections can more than double Patients strapped by high deductibles and other out of pocket expenses pose a mounting financial dilemma for hospitals and health systems As they assume greater financial responsibility for their own health care patients represent a growing share of total provider revenue However hospitals collect just 16 cents on average for every 1 in unpaid patient balances according to ACA International To improve patient collections more providers are looking at starting or expanding patient financing programs that allow people to pay their medical bills over time without breaking the family budget In this brave new world of population health management and healthcare consumerism revenue cycle professionals need a fresh approach to evaluating the ROI of payment plans Choosing a patient financing program is no longer just about weighing the potential increase in collections and reduction in operating costs against the fees a provider will be charged A net collections improvement based on hard costs is becoming a must when evaluating a partner even to the point where you can expect a partner to guarantee their results Although this traditional ROI model plays a vital role in the decision making process additional strategic considerations can offer long term value Make the billing process patient friendly Patient financing programs should fit into overall revenue cycle operations and organizational goals Traditionally focused on large commercial and government payers hospital revenue cycles need a major makeover to become more patient centric Offering multiple payment options is key to that goal according to Money Matters Billing and Payment for a New Health Economy a recent report from PwC s Health Research Institute that calls for a structural overhaul of patient billing and payment systems A one size fits all approach doesn t work You need a plan for every patient Present payment plans up front to maximize success Fears of cannibalizing cash collections have often stopped providers from promoting payment programs pre service However when the pre service payment discussion of cash check or charge is supplemented with the option of a payment plan patient collections can more than double even accounting for the fees paid to a third party managing the payment programs Depending on the healthcare finance company providers can receive the amount of the patient s unpaid balance minus the fees paid to the financing partner as soon as the hospital turns over the patient account reducing accounts receivable days and bad debt expense while boosting cash flow With a professional healthcare finance company managing the payment programs providers also save staff time and money spent trying to collect patient payments Give patients budget friendly options Having multiple payment options enables more people to proceed with necessary care while helping ensure providers are paid for their medical services No interest financing means patients don t add to their medical bills even as they pay them off over time Some payment programs offer flexible term lengths so people who might not otherwise qualify for plans with a single payment term either because their balance is too low or too high can be accommodated with a monthly payment they can afford Avoid consumer credit compliance risk Payment plans that extend beyond four payments are subject to a slew of state and federal consumer credit laws and regulations In addition scrutiny of these programs is on the rise from the Consumer Financial Protection Bureau state attorneys general Congress and others Healthcare providers can reduce their risk and compliance costs by working with healthcare finance companies that ensure their programs are compliant with all applicable laws and regulations Remove obstacles to care for a healthier population Already one out of every three Americans is skipping essential care because they can t afford it according to a recent Gallup poll This trend represents a genuine threat to population health management value based payments and provider volumes and revenues If hospitals and health systems want to engage patients clinically to improve health outcomes and lower costs they first must engage them financially And patient financial engagement hinges on payment plans that deliver clear value for both patients and providers Brian Brown is vice president of sales CarePayment Lake Oswego Ore and a member of HFMA s Oregon Chapter Publication Date Monday August 17 2015 Comments Please login to add your comments Add Comment Text Only 2000 character limit Advertisements HFMA Business Profiles McKesson Leveraging Predictive Analytics to Rein in Operating Costs A leader from McKesson discusses how healthcare reform is forcing hospitals and health systems to take a different approach to capacity management and patient flow HFMA RESOURCE LIBRARY 6 Patient Revenue Cycle Metrics You Should Be Tracking and How to Improve Your Results Patient financial engagement is more challenging than ever and more critical With patient responsibility as a percentage of revenue on the rise providers have seen their billing related costs and accounts receivable levels increase If increasing collection yield and reducing costs are a priority for your organization the metrics outlined in this presentation will provide the framework you need to understand what s working and what s not in order to guide your overall patient financial engagement initiatives and optimize results HFMA Business Profiles Accretive Health Partners with Providers to

    Original URL path: http://www.hfma.org/Content.aspx?id=40560 (2016-02-10)
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  • Are Your Baseline Financial Projections on Target?
    assumptions such as lower Medicaid and commercial payment increases on EBIDA Earnings Before Interest Depreciation and Amortization dollars and margin as well as on days cash on hand In today s healthcare environment organizations will likely find that sound baseline projections will indicate diminishing financial performance in the years ahead However healthcare leaders can use this realistic foundation to identify the portfolio of strategic and operational initiatives needed to ensure their organization s long term sustainability and growth Jason Sussman is managing director financial and capital planning and software practices Kaufman Hall Associates Skokie Ill and a member of HFMA s First Illinois Chapter Publication Date Tuesday November 18 2014 BACK TO PAGINATION Insights from Forum Sponsor Kaufman Hall Associates Sound baseline projections are an essential element for healthcare organizations planning for the transition to a value based business model Hospitals and health systems face numerous uncertainties as the healthcare industry transitions from a volume to a value based model Such uncertainties make it critically important to develop objective baseline projections as the foundation for the financial planning process Baseline projections should be used to depict an organization s future financial trajectory absent major management interventions This quantifies the financial and performance gap relative to the necessary capital capacity to support long term strategic investment and fiscal stability Status quo baseline financial projections are no longer appropriate especially as they relate to future inpatient and outpatient volumes Valid projections must incorporate known values and assumptions unknown factors such as challenges to utilization and revenue streams and investment in core competencies such as care coordination infrastructure Financial modeling for the new healthcare era is more about ranges of outcomes and probabilities than it is about absolutes Establishing the Revenue Side of the Equation A conservative approach to revenue projections is essential given the shift to value based payment Hospital revenue growth has slowed nationwide in recent years and is expected to remain modest according to Moody s Investors Service 2014 Outlook U S Not for Profit Hospitals Nov 25 2013 Inpatient utilization is declining and outpatient utilization growth is slowing in some markets as my colleagues explained in a Health Affairs blog article Leaders must understand their organization s current market position market demographics and projected revenue by payer Comparative data on such factors as local state and national patient utilization can be valuable tools in developing more accurate revenue projections Organizations also should incorporate the known and unknown revenue effects of healthcare reform including Payment rate pressures such as the recent decline in Medicare rate increases from about 3 percent per year historically to about 1 percent Expansion of Medicaid in some states and lack of Medicaid expansion in others Changes in payer mix from public and private exchanges and the related impact on bad debt and uncompensated care Many organizations can anticipate payment changes from public and private exchanges and government payers Revenue declines from commercial payers will be especially significant as employers and payers test new plan models designed to lower their costs Utilization of higher cost facilities and services such as emergency departments are expected to decline as more effective population health management is implemented in markets with high managed care penetration Evaluating the Expense Side of the Equation Expense projections provide leaders a means to identify the level of cost management needed to remain financially competitive Organizations must establish appropriate assumptions related to the fixed versus variable components of each expense category and apply conservative inflation assumptions to underlying unit costs For example separate assumptions are warranted for rising benefit costs merit and cost of living salary and wage increases or physician practice losses Specific expense assumptions can clarify the impact of cost pressures on an organization and help leaders quantify suitable cost reduction targets Defining Balance Sheet and Cash Flow Requirements In projecting cash flow requirements assumptions for each of the major components of the balance sheet must be defined For example in developing working capital assumptions historic ratios describing the timing to convert working capital into revenues or expenses should be adjusted for ongoing planned initiatives or external impacts Baseline projections also should include ongoing capital needs exclusive of major strategic investments and cash flow and balance sheet effects of known debt and or lease transactions Other factors that may impact baseline projections include additional pension obligations or pending legal or transaction costs Examining Organizational Risk Lastly baseline projections should include strategic financial and operational risk scenarios related to alternative income statement balance sheet and cash flow metrics This enables organizations to quantify the impact of each risk scenario on capital capacity over time The exhibit below shows one healthcare system s scenario testing results It illustrates the impact of alternative assumptions such as lower Medicaid and commercial payment increases on EBIDA Earnings Before Interest Depreciation and Amortization dollars and margin as well as on days cash on hand In today s healthcare environment organizations will likely find that sound baseline projections will indicate diminishing financial performance in the years ahead However healthcare leaders can use this realistic foundation to identify the portfolio of strategic and operational initiatives needed to ensure their organization s long term sustainability and growth Jason Sussman is managing director financial and capital planning and software practices Kaufman Hall Associates Skokie Ill and a member of HFMA s First Illinois Chapter Publication Date Tuesday November 18 2014 Comments Please login to add your comments Add Comment Text Only 2000 character limit Advertisements HFMA Business Profiles McKesson Leveraging Predictive Analytics to Rein in Operating Costs A leader from McKesson discusses how healthcare reform is forcing hospitals and health systems to take a different approach to capacity management and patient flow HFMA RESOURCE LIBRARY 6 Patient Revenue Cycle Metrics You Should Be Tracking and How to Improve Your Results Patient financial engagement is more challenging than ever and more critical With patient responsibility as a percentage of revenue on the rise providers have seen their billing related costs and accounts receivable levels

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  • Holding Health Spending to GDP+0 or Below Provides Path to Sustainability
    any goals related to learning how to operate with lower rates of annual revenue growth What exactly is your goal What about your cost reduction goals What is your organization s specific goal Or perhaps you have another discussion starter Publication Date Wednesday February 13 2013 BACK TO PAGINATION Insights from Forum Sponsor Kaufman Hall Associates Inc Keeping national health expenditure per capita growth below U S economic growth will require all healthcare participants to do their part Bending the healthcare cost curve requires a proactive approach by stakeholders across the industry including providers payers patients and federal and state governments Even with the recent stabilization of national healthcare spending growth national health expenditures reached 2 7 trillion in 2011 and constituted about 18 percent of the nation s gross domestic product GDP The latest statistics from the Centers for Medicare Medicaid Services show GDP growth rose from a negative 2 2 percent to 4 percent from 2009 to 2011 while national health expenditure growth held steady at 3 9 percent CMS Office of the Actuary National Health Expenditures 1960 2011 Table 1 Hospitals health systems and other healthcare providers can help move the country toward sustainable healthcare and national fiscal health by reining in organizational costs and learning to operate with lower rates of annual revenue growth What s Enough Massachusetts mandated such action with a 2012 law meant to constrain per capita healthcare spending that continued to trend above national averages after the state extended health coverage to nearly all residents in 2006 Last summer s law restricts healthcare spending growth through 2017 to no higher than growth in the potential gross state product For 2018 to 2022 the limit will be tightened to potential gross state product minus 0 5 percent Entities including insurers hospitals and physicians that don t comply are subject to civil penalties Our October 2012 analysis of Congressional Budget Office estimates which we conducted with the not for profit Altarum Institute found that similar restrictions on spending growth would have a profound and positive effect on the federal deficit and solvency of the Medicare Hospital Insurance Trust Fund Kaufman K Roehrig C GDP 0 Prospects And Challenges Of Bending The Health Care Cost Curve Health Affairs Blog October 16 2012 It also found that achieving NHE growth of GDP 0 actually requires per capita cost trends to be held at GDP minus 0 6 percent due to increased demand from a growing Medicare population and expansion of health coverage under the Affordable Care Act In other words just GDP 0 is not enough This Kaufman Hall Altarum Institute analysis suggests that healthcare providers could make a significant contribution to solving the country s financial challenges by limiting revenue growth in their institutions to GDP 0 or lower A January report by The Commonwealth Fund also recommends setting targets for healthcare spending growth at no more than long term GDP growth per capita The report proposes a series of policies to meet those goals and reduce projected health spending by 2 trillion through 2023 including payment reforms empowering patients to make value based care decisions and other improvements Confronting Costs Stabilizing U S Health Spending While Moving Toward a High Performance Health Care System The Commonwealth Fund January 2013 Cost Transformation Proactive providers around the country are working to reduce spending through initiatives such as redesigning care processes to increase efficiency removing service duplication and eliminating inappropriate tests and procedures Normal cost management efforts will not be enough cost transformation will be required The work providers do now to reduce costs is and will continue to be critical for health care and the nation s long term economic health Kenneth Kaufman is chair Kaufman Hall Associates Inc Skokie Ill and a member of HFMA s First Illinois Chapter kkaufman kaufmanhall com Discussion Starters Forum members Please add your insights questions and comments about this article on the CFO Forum s LinkedIn discussion board Does your healthcare organization have any goals related to learning how to operate with lower rates of annual revenue growth What exactly is your goal What about your cost reduction goals What is your organization s specific goal Or perhaps you have another discussion starter Publication Date Wednesday February 13 2013 Please login to add your comments Advertisements HFMA Business Profiles McKesson Leveraging Predictive Analytics to Rein in Operating Costs A leader from McKesson discusses how healthcare reform is forcing hospitals and health systems to take a different approach to capacity management and patient flow HFMA RESOURCE LIBRARY 6 Patient Revenue Cycle Metrics You Should Be Tracking and How to Improve Your Results Patient financial engagement is more challenging than ever and more critical With patient responsibility as a percentage of revenue on the rise providers have seen their billing related costs and accounts receivable levels increase If increasing collection yield and reducing costs are a priority for your organization the metrics outlined in this presentation will provide the framework you need to understand what s working and what s not in order to guide your overall patient financial engagement initiatives and optimize results HFMA Business Profiles Accretive Health Partners with Providers to Excel in a Rapidly Transforming Revenue Cycle Environment Emad Rizk MD president and CEO of Accretive Health discusses the uncertainty facing hospitals and the transitions affecting revenue cycle management HFMA RESOURCE LIBRARY 10 Ways to Reduce Patient Statement Volume and Reduce Costs No two patients are the same Each has a very personal healthcare experience and each has distinct financial needs and preferences that have an impact on how when and if they chose to pay their healthcare bill It s no longer effective to apply static billing techniques to solve the complex challenge of collecting balances from patients The need to tailor financial conversations and payment options to individual needs and preferences is critical This presentation provides 10 recommendations that will not only help you improve payment performance through a more tailored approach but take control of

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  • Calculating ROI of Clinics Targeting Low-Income Patients
    the following How many PCMH clinics for low income underserved patients should be created Should Baylor partner with others on the PCMH clinics or own the clinics outright How much capital should be allocated for clinics dedicated to low income patients To answer these questions system leaders needed to understand the ROI of clinics that serve low income patients We have a commitment in this space but we also have a commitment to ensure we are being good stewards of our resources says Robert Green senior vice president of strategic finance His staff recently completed the first phase of this financial analysis and embarked on a second phase that will be completed later this year At that point we will be able to more definitively determine our strategy for how we roll this out across the Dallas metroplex he says The Financial Analysis Baylor s primary care clinics only converted to the PCMH model within the past year so the ROI analysis examines the operation of primary care clinics for low income patients not for PCMH clinics The first phase of Baylor s detailed analysis was to examine the cost savings attributable to clinics for low income patients A single primary care clinic was chosen to study Carl MacLachlan MBA Baylor s director of advanced analytics and special projects listed the challenges to this task Identifying the data source that would reveal which clinic patients are truly Baylor customers versus those who are generally served by other providers Overcoming barriers associated with different IT and registration processes at clinics versus those used by Baylor hospitals Analyzing the utilization trends to understand how a patient s clinic use affected ED and hospitalization use Patient identification Step 1 was defining the population of patients to study We decided to look at patients who had presented themselves prior to being seen at the clinic and also had used the health system after being seen at the clinic says Maclachlan We assumed these were patients that were truly Baylor customers With the goal of creating the largest possible sample size and being able to review the data for a consistent timeframe analysts decided to evaluate patients clinic use from July 17 2008 through Jan 25 2011 and their hospital discharges between July 1 2006 and Aug 31 2011 Identifying patients treated at the clinic and the hospital was not always automatic because some clinics did not capture a patient s Baylor identification number and medical record number An analyst created a program that could match patients by name telephone number social security number and address Hospital versus clinic utilization Analysts then compared patients hospital utilization before they were assigned to the clinic with their use after they connected with the clinic for three time periods at six months 12 months and 24 months At first it was hard to identify the trends so we decided to look at the type of services the patient was receiving inpatient outpatient ancillary services and ED use Next the analysts examined whether greater use of clinic services correlated to reduced use of ED and hospital services We wanted to identify patients who were truly engaged at the clinic and not just those who enrolled and then decided it wasn t going to work for them says Maclachlan So we pulled anybody that was seen in the clinic two or more times Condition specificity The final step was eliminating patients whose hospital care was not influenced by care received at the medical clinic This primarily included trauma patients and newborns and their mothers Early Findings In the end the analysts were able to review utilization data for patients who represented more than 9 200 clinic visits and 3 800 hospital or ED visits The analysis revealed the following About 4 800 in reduced inpatient direct variable costs per patient per year for patients served by the medical clinic Net per patient savings of about 2 300 after accounting for the higher outpatient costs associated with the clinic Moderate reduction in ED utilization of about 195 per patient per year Substantial reduction in inpatient utilization in two ways Patients served by the medical clinic had 17 percent fewer inpatient stays and those who were admitted had lower acuity based on total direct cost and an average length of stay that was 2 31 days shorter Savings accrued in all three time periods analyzed within six months of being enrolled at the clinic at 12 months and at 24 months Greater use of the clinic was correlated with reduced demand for hospital services The more times the patient visited the clinic even though it was a small number the savings continued to increase says Maclachlan Next Phase of ROI Analysis The analysis corroborated the health system s assumption that the financial benefits of medical clinics for low income patients is substantial as well as Walton s preliminary estimates of the per patient savings But more information is needed before Baylor leaders can determine their future investment in opening more owned clinics says Green The health system recently embarked on the second phase of this study We need a randomized controlled study with a 95 percent confidence level that allows us to extrapolate across our patient base says Green That will allow us to understand what the savings would be against our investment Lola Butcher is a freelance writer and editor based in Missouri Interviewed for this article Robert T Green is senior vice president strategic finance Baylor Health Care System Dallas and a member of HFMA s Lone Star Chapter robertt green baylor edu Carl R MacLachlan MBA is director of advanced analytics and special projects Baylor Health Care System and a member of HFMA s Lone Star Chapter CarlM BaylorHealth edu James W Walton DO MBA is vice president network performance Baylor Quality Alliance Baylor Health Care System jameswa BaylorHealth edu Discussion Starters Forum members Please add your insights questions and comments about this article on the CFO Forum s LinkedIn discussion board What is your health system s strategy for serving low income patients who have no regular source of medical care How do you calculate ROI on services designed to reduce inappropriate ED and hospital use Publication Date Wednesday April 11 2012 BACK TO PAGINATION By Lola Butcher To determine the smartest business approach for providing primary care to the uninsured and underinsured Baylor is digging into data and developing a detailed financial analysis In addition to its 26 hospitals 174 private practice clinics and myriad other facilities Baylor Health Care System has collaborated with community based not for profit organizations to operate nine medical clinics for low income patients over the past 10 years The Baylor Community Care clinics as they are called currently serve about 12 000 patients who previously had no regular source of medical care Most have at least one chronic condition and the vast majority are uninsured underinsured or covered by Medicaid Creating medical clinics to serve low income and uninsured patients is likely to reduce avoidable hospital utilization Baylor which collaborates in the operation of nine such clinics has documented net per patient savings of about 2 300 a year However to determine the health system s future strategy for serving this patient population Baylor leaders are working to more fully understand the ROI This is a sample article from HFMA s CFO Forum which is an online discussion and networking community for senior finance leaders in hospitals and other healthcare organizations Learn more and subscribe to the CFO Forum More Precision Needed Although Baylor has a system level commitment to serving low income patients there has not been a formalized system level strategy for owning low income clinics Each of the current Community Care clinics is affiliated with a specific Baylor hospital and the decision to invest in the clinic was made by hospital leaders in conjunction with system leadership who wanted to reduce avoidable emergency department ED and hospital use Patients are referred to the clinic by an ED physician hospital social worker or community health worker at the time of hospital discharge In the past creating the clinics has been financially justified by a simple calculation a comparison of Baylor s cost of care for patients during the 24 months before they were assigned to the clinic against the costs in the 24 months after their assignment Depending on the clinic that calculation initially revealed that a Baylor hospital can save between 2 000 and 3 500 in direct care costs per patient per year says James Walton DO MBA vice president network performance Baylor Quality Alliance Now as it transitions to an accountable care organization Baylor is aggressively moving to a patient centered medical home PCMH model for all its primary care clinics including those that serve low income patients who do not have a regular source of health care To accomplish this leaders need to determine the following How many PCMH clinics for low income underserved patients should be created Should Baylor partner with others on the PCMH clinics or own the clinics outright How much capital should be allocated for clinics dedicated to low income patients To answer these questions system leaders needed to understand the ROI of clinics that serve low income patients We have a commitment in this space but we also have a commitment to ensure we are being good stewards of our resources says Robert Green senior vice president of strategic finance His staff recently completed the first phase of this financial analysis and embarked on a second phase that will be completed later this year At that point we will be able to more definitively determine our strategy for how we roll this out across the Dallas metroplex he says The Financial Analysis Baylor s primary care clinics only converted to the PCMH model within the past year so the ROI analysis examines the operation of primary care clinics for low income patients not for PCMH clinics The first phase of Baylor s detailed analysis was to examine the cost savings attributable to clinics for low income patients A single primary care clinic was chosen to study Carl MacLachlan MBA Baylor s director of advanced analytics and special projects listed the challenges to this task Identifying the data source that would reveal which clinic patients are truly Baylor customers versus those who are generally served by other providers Overcoming barriers associated with different IT and registration processes at clinics versus those used by Baylor hospitals Analyzing the utilization trends to understand how a patient s clinic use affected ED and hospitalization use Patient identification Step 1 was defining the population of patients to study We decided to look at patients who had presented themselves prior to being seen at the clinic and also had used the health system after being seen at the clinic says Maclachlan We assumed these were patients that were truly Baylor customers With the goal of creating the largest possible sample size and being able to review the data for a consistent timeframe analysts decided to evaluate patients clinic use from July 17 2008 through Jan 25 2011 and their hospital discharges between July 1 2006 and Aug 31 2011 Identifying patients treated at the clinic and the hospital was not always automatic because some clinics did not capture a patient s Baylor identification number and medical record number An analyst created a program that could match patients by name telephone number social security number and address Hospital versus clinic utilization Analysts then compared patients hospital utilization before they were assigned to the clinic with their use after they connected with the clinic for three time periods at six months 12 months and 24 months At first it was hard to identify the trends so we decided to look at the type of services the patient was receiving inpatient outpatient ancillary services and ED use Next the analysts examined whether greater use of clinic services correlated to reduced use of ED and hospital services We wanted to identify patients who were truly engaged at the clinic and not just those who enrolled and then decided it wasn t going to work for them says Maclachlan So we pulled anybody that was seen in the clinic two or more times Condition specificity The final step was eliminating patients whose hospital care was not influenced by care received at the medical clinic This primarily included trauma patients and newborns and their mothers Early Findings In the end the analysts were able to review utilization data for patients who represented more than 9 200 clinic visits and 3 800 hospital or ED visits The analysis revealed the following About 4 800 in reduced inpatient direct variable costs per patient per year for patients served by the medical clinic Net per patient savings of about 2 300 after accounting for the higher outpatient costs associated with the clinic Moderate reduction in ED utilization of about 195 per patient per year Substantial reduction in inpatient utilization in two ways Patients served by the medical clinic had 17 percent fewer inpatient stays and those who were admitted had lower acuity based on total direct cost and an average length of stay that was 2 31 days shorter Savings accrued in all three time periods analyzed within six months of being enrolled at the clinic at 12 months and at 24 months Greater use of the clinic was correlated with reduced demand for hospital services The more times the patient visited the clinic even though it was a small number the savings continued to increase says Maclachlan Next Phase of ROI Analysis The analysis corroborated the health system s assumption that the financial benefits of medical clinics for low income patients is substantial as well as Walton s preliminary estimates of the per patient savings But more information is needed before Baylor leaders can determine their future investment in opening more owned clinics says Green The health system recently embarked on the second phase of this study We need a randomized controlled study with a 95 percent confidence level that allows us to extrapolate across our patient base says Green That will allow us to understand what the savings would be against our investment Lola Butcher is a freelance writer and editor based in Missouri Interviewed for this article Robert T Green is senior vice president strategic finance Baylor Health Care System Dallas and a member of HFMA s Lone Star Chapter robertt green baylor edu Carl R MacLachlan MBA is director of advanced analytics and special projects Baylor Health Care System and a member of HFMA s Lone Star Chapter CarlM BaylorHealth edu James W Walton DO MBA is vice president network performance Baylor Quality Alliance Baylor Health Care System jameswa BaylorHealth edu Discussion Starters Forum members Please add your insights questions and comments about this article on the CFO Forum s LinkedIn discussion board What is your health system s strategy for serving low income patients who have no regular source of medical care How do you calculate ROI on services designed to reduce inappropriate ED and hospital use Publication Date Wednesday April 11 2012 Please login to add your comments Advertisements HFMA Business Profiles McKesson Leveraging Predictive Analytics to Rein in Operating Costs A leader from McKesson discusses how healthcare reform is forcing hospitals and health systems to take a different approach to capacity management and patient flow HFMA RESOURCE LIBRARY 6 Patient Revenue Cycle Metrics You Should Be Tracking and How to Improve Your Results Patient financial engagement is more challenging than ever and more critical With patient responsibility as a percentage of revenue on the rise providers have seen their billing related costs and accounts receivable levels increase If increasing collection yield and reducing costs are a priority for your organization the metrics outlined in this presentation will provide the framework you need to understand what s working and what s not in order to guide your overall patient financial engagement initiatives and optimize results HFMA Business Profiles Accretive Health Partners with Providers to Excel in a Rapidly Transforming Revenue Cycle Environment Emad Rizk MD president and CEO of Accretive Health discusses the uncertainty facing hospitals and the transitions affecting revenue cycle management HFMA RESOURCE LIBRARY 10 Ways to Reduce Patient Statement Volume and Reduce Costs No two patients are the same Each has a very personal healthcare experience and each has distinct financial needs and preferences that have an impact on how when and if they chose to pay their healthcare bill It s no longer effective to apply static billing techniques to solve the complex challenge of collecting balances from patients The need to tailor financial conversations and payment options to individual needs and preferences is critical This presentation provides 10 recommendations that will not only help you improve payment performance through a more tailored approach but take control of rising collection costs HFMA Business Profiles Conifer Health Solutions Helping Providers and Employers Build a Foundation for Better Health Jim Bohnsack vice president solution corporate development for Conifer Health Solutions explains how the company helps healthcare providers leverage data to deliver better outcomes while optimizing reimbursement for all payment arrangements HFMA RESOURCE LIBRARY Reduce Patient Balances Sent to Collection Agencies Approaching New Problems with New Approaches This white paper written by Apex Vice President of Solutions and Services Carrie Romandine discusses the importance of patient segmentation and messaging specifically related to the patient revenue cycle Applying strategic messaging that is tailored to each patient type will not only better educate consumers on payment options specific to their billing needs but it will maximize the amount collected before sending to collections Further targeted messaging should be applied across all points of patient interaction i e point of service customer service patient statements and analyzed regularly for maximized results HFMA Business Profiles Ontario Systems Optimizing Accounts Receivable in a Rapidly Changing Environment Steve Scibetta senior director of channel sales

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