June, 2016:

HIStalk Practice-Snipes and Revenue Cycle Key Performance Indicators

From the Consultant’s Corner 6/14/16

June 14, 2016 News No Comments

Snipes and Revenue Cycle Key Performance Indicators – Don’t Take the Bait

[A snipe hunt is a type of practical joke that involves experienced people making fun of credulous newcomers by giving them an impossible or imaginary task.]

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With summer now upon us, I think of those lazy summer camp days in Texas as a kid and the ritual of the snipe hunt. In the simplest of terms, a snipe hunt is a hazing tradition where older campers initiate younger campers to “hunt” that illusive small bird, the snipe, shortly after dark on a moonless night with flashlights and burlap bags. The funny thing is that snipes actually exist – just not in central Texas.

What does this have to do with revenue cycle key performance indicators (KPIs)? A lot, these days. We are now in the era of big data, with a virtual endless supply of structured and unstructured data related to the performance of our hospitals and physician practices. Large healthcare organizations have implemented enterprise-wide EHRs and related administrative support systems for patient registration and scheduling, billing, population health, quality reporting, and other specialized functions. These systems come with countless “canned” reports and hundreds of data points. But finding what is important is like finding that illusive snipe. As we all know, data does not always equal actionable information. That’s where business analytics come into play. Healthcare organizations often “bolt-on” companion software applications to their enterprise system so they can find what’s important and actionable in all of that data – in short, making it easier to find a snipe.

(Full disclosure: I’m a data junky. I love business analytics and the focus it can bring to organizations who use it well, but it is really easy to lose sight of the forest for the trees.)

Now, one of the great thing about being a consultant are the great organizations and executives I have the opportunity to work with on a variety of engagements. Over the last couple of months, several colleagues and I have had a chance to work with a great healthcare organization that serves millions of patients across multiple states. The focus of our work was a high-level assessment of professional billing operations for a medical group with a nine-digit annual revenue stream – a big and complex operation. Like most big organizations and medical groups, they have an enterprise-wide EHR with associated administrative support systems, centralized billing with hundreds of employees, a companion business analytics software application, and a passionate and engaged leadership team. Top-level KPIs are good, but they wanted to get better and lower costs – a common 21st century healthcare goal.

As we started our work, it became obvious to us (as the outsiders) that data governance and discipline were needed. Staff members were working really hard preparing weekly dashboards for operating units, supplying data for monthly financial statements and corporate scorecards, and managing the canned system reports. The problem was that too much information was available. Our feedback on business office operations from the clinical executives was good, but a general theme was, “We don’t have time to deal with all of those reports – it’s not actionable.” The corporate scorecard tracked 18 separate KPIs. The weekly divisional dashboard had 10 KPIs. Their impressive analytics software had 27 KPI “views” with a staggering 103,702 discrete filter view options. To help professional workflows, they had set up nearly 10,000 “to do lists” within their billing system. Big data is alive, well, and flourishing. And, who knows, there might be a snipe somewhere in those millions of data points.

The challenge we faced was getting our arms around all of the data to benchmark the client to national norms for professional billing. We chose the KISS principle (a termed coined by the Navy in the early 1960s) and focused on outcomes.

Besides cash (because making payroll is important to most organizations), the most important professional billing KPI is the Days in Accounts Receivable (AR Days) that remain uncollected for a practice. Jim Denny in his 2013 publication and Mark Coronella in his 2014 publication also agree AR Days should be a major focus of medical practices. In addition, several national organizations, such as MGMA, AMGA, and the Faculty Practice Solution Center benchmark AR Days in their survey data. Collectively, these organizations reported AR Days on more than 250 medical groups representing thousands of healthcare providers. AR Days makes benchmarking to other groups more manageable than other revenue cycle metrics such gross collection rates, which can vary widely because differences in where professional charges are set, payer mix, and confidential managed care contract rates.

In the KPI world, AR Days should be viewed as a lagging indicator for a practice’s professional billing process – in short, an outcome to what is going well or not going very well. Other KPIs, such as denial rates, charge entry lag days, or point of service collections should be viewed as leading indicator for professional billing. Each of these leading indicators -along with others – are important to revenue cycle performance, but they all impact AR Days in a positive or negative way.

We suggested to our data-rich client that they become more disciplined and simplified around data governance and focus on actionable, top-of-mind issues that impact AR Days. As they evaluate business initiatives to improve their revenue cycle performance, they should evaluate each of these programmatic endeavors with the simple question, what will it do for my AR Days?

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Randy Jones is senior vice president of Culbert Healthcare Solutions.


The CIO of the Future- Long Live the CIO

There are many articles out there that focus on the death of the CIO as a strategic position in the executive management landscape. Many pundits have suggested that today’s CIO (especially in healthcare) is mired in the technical underpinnings and has lost his/her position as a true business leader. Healthcare especially in its fast-growth, heavily regulated world has caused its CIO’s to be focused on implementation and support of costly, poorly integrated systems that don’t scale well or play well with others.

So, what does the CIO of 2020 need to be thinking about today in order to improve the impression of what the CIO is these days? What do CIO’s need to do to move healthcare to a higher state of technological maturity?

We all know the big Healthcare vendors need to come together and establish a standard framework, but while we are waiting for that to begin to take shape, we as CIO’s can drive a more flexible, scalable and cost-effective technological infrastructure and prepare for that future. Today’s infrastructure for running a modern hospital or clinic is really 5 key platforms: Voice, Data, End-user compute, your application stack, and mobile platforms.

There has been a lot of talk around cloud computing and things like IAAS, and SAAS and PAAS, but how does these play in Healthcare? Many CIO’s are apprehensive and rightfully so – there is risk. But, forward-thinking CIO’s should be looking out to 2020 and thinking more about how their patients and clinicians can interact with their organization electronically. In order to do this there will have to be a massive build-up of back-end infrastructure to support those mobile-enabled apps. With that said, the CIOs of 2020 should be thinking they need to partner with hosting and managed services providers that can bring infrastructure that is highly scalable and highly flexible to the table now.

So, why not move to the cloud? Blue sky here, think about this… Healthcare IT could be run by 3-4 key leaders who are responsible to organize 20-25 managed services contracts into a truly flexible technology framework for the organization. So let’s take a look at the 5 key technology platforms and what you can do to virtualize and commoditize these platforms and ready your organization for 2020+. Oh, and by the way, all of this is available today.

The voice and data networks are vital to any business, especially healthcare. Now that voice and data have converged, our lives have gotten easier. Gone are the days when a PBX the size of a small garage or an army of network engineers is needed to run voice and data. There are new businesses that allow you to run your voice service in the cloud, and many network VAR’s have very mature managed services organizations that can design, build, and manage your network infrastructure without having a small army of engineers on your payroll. BYOD has also changed this landscape as well, but we’ll touch on that below in the mobile platforms section.

End-User Compute (PC’s, Laptops, Printers) – In 2020, traditional PC’s and laptops may be a thing of the past (or at least on their way out). Thinking about the BYOD mentality, your employees may just bring their own tablets and smartphones to work and they join the domain and off they go. But even if you still have traditional end-user computing in 2020, there are vendors today who will design, provision to your spec, deliver to your desk, and support your end-user computing in your building.

The application stack – all of the big players offer a hosted option including Epic. Cerner has been offering this service since their days of the mainframe and Epic has just recently completed a massive Tier 3 data center to offer hosted solutions. Even if you decide not to use the app vendor as your hosting partner, you can still go to Amazon, Google, or many regional players to run your apps on their infrastructure. Even if you find an app that has to be run on your own infrastructure, your hosting partner(s) can offer up an IAAS platform that is highly scalable and flexible.

Mobile platforms are here, let’s deal with them. As everybody knows, the smartphone has become so powerful and flexible that it has completely changed the technology landscape. Everybody has one and wants to use it, but is Healthcare ready to support it – I would say a resounding “NO”. Again, the application vendors have a lot to do with it as they haven’t really embraced the small screen, but again we need to prepare for the inevitability. Other industries have come to grips with the small screen revolution and we should also for our employees and our customers.

The bottom line – there is no longer a need for massive data centers and armies of technical engineers. Remote hosting, managed services and virtualization are here now. So what does this mean for the CIO of the future? We CIO’s should be positioning healthcare IT for that future now. Remember, we are behind and it’s not just the end-user community, but the vendors in the healthcare space who haven’t moved the ball. CIO’s of the future need to be solely focused on the business. Remember those 3-4 key leaders I was talking about earlier? We are managing our services contracts with our vendors and offering highly flexible and scalable technology to our ever-changing and fast growing businesses. The CIO of the future now can focus on how technology interacts with the business and position IT for the future.