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Overcoming Productivity Pitfalls to Generate Real Revenue

Real Revenue is achieved by Real Productivity.

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Belinda DanielSenior Service Access ManagerDuke University Health SystemPatient Revenue Management Organization (PRMO)

• Duke University Health System is located in Durham, NC and has 3 affiliate hospitals, Duke Hospital, Duke Regional and Duke Raleigh for a total of 1493 beds.

• It is consistently ranked among the top ten health care organizations in the U.S.

• Annual operating revenues, Duke University Health System: $3.05 billion

• Medical Center campus size: 95 buildings located on 201 acres

• Duke is the largest employer in Durham County and the second-largest private employer in North Carolina. Duke University Health System has approximately 16,641 full-time employees.

• The Duke Vision: To discover, develop and deliver a healthier tomorrow. We put the person who needs our care at the center of everything

we do by living our values:Caring for our patients, their loved ones and each other Excellence * Safety*Integrity* Diversity* Teamwork

Melanie HamiltonPrincipal Attorney and ConsultantOtt Cone & Redpath, P.A.

• Ott Cone & Redpath provides innovative, cost-efficient, and effective legal, business, and consulting solutions to leading healthcare providers seeking to preserve and increase revenue.

• Melanie represents healthcare systems and hospitals in efforts to increase revenues. She works closely with healthcare systems in areas related to Medicaid eligibility as well as identifying other potential payment sources.

• She also focuses extensively on payment audits, billing issues, and compliance matters. She has represented hospitals and healthcare systems in connection with Medicare billing and other compliance matters before the U.S. Department of Justice.

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Presentation Overview• Productivity pitfalls Theoretical framework Examples of issues

• Solutions to add and measure value Quality Control Audits Examples of Results Produced Through Audits

Productivity Pitfalls• Productivity Defined (Wikipedia) Productivity is an average measure of the efficiency of

production. It can be expressed as the ratio of output to inputs used in

the production process, i.e. output per unit of input. When all outputs and inputs are included in the productivity

measure it is called total productivity.

• Pitfall Failure to define the metrics based on all of the outputs and

inputs.

• Real Productivity Using all the inputs and outputs to design a Real

Productivity standard.

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Productivity Pitfalls• Healthcare providers increasingly rely on measurements of

“productivity” to determine the value and effectiveness of operations and individual employees.

• Unfortunately, “productivity” is often only measured by many providers as time spent on certain tasks without regard to the value added.

• Pitfall Creating productivity metrics that are not tied to the profit

equation of the company. Do you want to measure how many flowers a bee visits, or the

volume of honey produced?

Productivity Pitfalls• Why is time emphasized by healthcare providers when

measuring productivity? Easily measured – it is concrete and static Financial impact

• Pitfall Time used as only one measurement.

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Productivity Pitfalls• Reality: Less time ≠ greater productivity Less time + value added = greater productivity Ideas from non-healthcare providers (such as manufacturers of

products) have crept into healthcare setting despite differences in industries

• Scientific Studies and Research Robert J. Gordon, an economist at Northwestern University: “The

Rise and Fall of American Growth” Uniqueness of healthcare services Shortcomings of relying exclusively on technology

• Pitfall Measuring a non-widget process by a widget measure.

Productivity Pitfalls• How do hospitals and

healthcare providers measure value? Revenue (financial impact) Patient outcomes Patient satisfaction Clinical outcomes

Physician satisfaction Employee satisfaction

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Productivity Pitfalls• Problem areas within revenue cycle departments Pre-Services Registration Insurance Verification Prior authorizations

Medicaid eligibility and insurance assistance Interviewing/Evaluation Follow-up/Monitoring Denials and Appeals

Billing Claims Follow-up (delayed payments, under payments) Denials and Appeals

Productivity Pitfalls• Measuring an employee’s productivity simply by the

amount of accounts “worked” in a given timeframe is not a value-added metric.

• Every account does not have the same financial value.

• Assigning equal value to all accounts results in employees “gaming” the system.

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Productivity Pitfalls• Measuring productivity by number of widgets produced over time

focuses on the production of widgets and staff learn to produce to the job standard – thus gaming the system and robbing the provider.

Example: The first data entry system was manual key punch. They conducted a test to see how many cards could be punched in an hour. On the first day, the group was told that they could produce 55 per hour.

They produced 55 per hour.

The next day, a new group was told to produce as many as they could.

They produced 155 per hour.

Productivity Pitfalls• Value = Higher Revenue + Greater Chance of Return

• Difficulty in using other measurements, such as: Total revenue generated by an employee Can fluctuate depending on how accounts are assigned/worked Can fluctuate based on factors outside of employees’ control such

as large caseload of accounts with little chance of obtaining Medicaid or other insurance benefits

Multi-factored inputs/ outputs are hard to quantify Many variables that are not easy to measure

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Solutions to Measuring Value

“People don’t do what you expect but what you inspect.”

-Louis Vincent Gerstner, Jr.(former chairman of the board and chief executive officer of IBM)

• Internal quality control audits

• External quality control audits

Solutions to Measuring Value• Internal Quality Control Audits Multiple layers of audits System-wide audits Departmental audits Can be by supervisors/managers/designated auditors Can be integrated into everyday work flow

Allow for performance comparison among employees Provide an opportunity to review outliers “Root-cause” analysis completed within audit protocols Best when done consistently Identification of training and educational needs

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Solutions to Measuring Value• External Quality Control Audits Outside expertise (e.g., consultants, lawyers, CPAs) to objectively

evaluate whether actions taken by employees maximize the potential for revenue in light of legal and operational rules

Allow for experts to compare operations and substantive outcomes with other similarly sized healthcare providers (benchmark organization metrics)

Lead to identification of operational issues Enhance internal quality control Can lead to results on individual accounts that maximize revenue Best result when audits are routine and consistent

Allows for symbiotic relationship with provider and outside organization Allows for more thorough review of operations and limits tendency of

employees/departments to regress back to previous behaviors after changes implemented

Can be made part of everyday workflow Provide basis for substantive education and training needs

Solutions to Measuring Value• Implementation of audits requires cultural shift Engaged employees perform at higher levels resulting in

better productivity

• All revenue cycle departmental employees and all departments must work together Avoid “that is not my responsibility mentality” within and

between departments Need to create collaboration between employees and

departments while still maintaining accountability

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Solutions to Measuring Value• Example for Medicaid eligibility and insurance assistance Quality Control Audits conducted of self pay and Medicaid accounts by outside support

on routine basis supplements internal audits by management. provide constant oversight of accounts to ensure accounts that

should be followed for Medicaid or other payment sources are not self paid.

create accountability for hospital staff to work accounts thoroughly.

allow for outside expertise to assist with providing guidance on how to work accounts.

Reporting generated from audits to assist hospital staff on individual accounts but also with operational issues.

How to achieve Real Productivity• Create your productivity measurements in alignment with the

revenue goals of your organization What are the full net benefits or tangible outputs of the work. What are the base indicators of success or failure. What are the components to measure that give you a picture of

future success. Example- The tangible outcome of prior authorization work is

accurately authorized accounts that lead to full reimbursement for the provider.

Example- The tangible outcome of Medicaid eligibility work is the number of approved applications that lead to the highest reimbursement for the provider.

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One Solution

Document flowEvaluate tangible outputs related to

revenue goal.

Determine base indicator of the success/ failure.

Determine quality standards and

appropriate methodology.

Job Rate StudiesDesign

Productivity/Quality Process

Quantity Quality

Value Proposition

based Productivity

Process

Results of Auditing Productivity

93

94

95

96

97

98

99

July Aug Sep Oct Nov Dec Jan Feb Mar Apr May June

Pre-Services - Average Scores

Prod. QA OER

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Results of Auditing Productivity• Pre-Services

Increased productivity Increased quality scores Issue Identification Productivity measure becomes the goal Reps tickling accounts. “entering no authorization needed” to satisfy production

numbers. Issue Correction Feedback and additional training provided to staff.

Results of Auditing

Productivity

• Medicaid Eligibility Graph shows denial type as

percentage of denials for each hospital Medicaid counselor

• Steps Taken to Resolve Outlier Review situation with employee Further training with employee Increased audits and oversight of

employee

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Results of Auditing Productivity

• Medicaid Eligibility Patient with inpatient bill with charges over $1 million Community Spouse Resource rules not applied by Medicaid

agency even though they should have been Hospital personnel responsible for working account had to

spend considerable time assisting patient to obtain Medicaid benefits Time spent not productive if measuring only time Revenue return even with increased staff time resulted in

increased productivity

Results• Example of Financial Gains

• Change made from outsourcing Medicaid eligibility to insourcing

• Productivity evaluated with use of external quality control audits

• Resulted in both INCREASED revenue and REDUCED expenses

68%

113%

145%

200%

YEAR 1 YEAR 2 YEAR 3 YEAR 4

% Increase in Actual Net Medicaid Revenue(Excludes Supplemental Payments)

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ResultsSummary of Denials Appealed/Reversed

• Only Partial Indicator

• Only appealed cases Not those where prevented appeal Not those where pushed for application

• Estimated Reimbursement 15%? Not include physician/ancillary services Not include subsequent IP/OP services Not include DSH (based on bed days)

Year No. Charges Bed Days

FY 2016 298 $24,308,000 2,849

FY 2015 250 $16,095,000 2,076

FY 2014 265 $13,735,000 1,778

FY 2013 388 $18,876,000 2,413

FY 2012 382 $21,098,000 2,245

Annual Average 316 $18,822,000 2,272

Results of Auditing Productivity• Billing Facts: High dollar account coded as self-pay at time patient

admitted; no indication of insurance. While Medicaid eligibility staff reviewing account, learn of commercial insurance. Commercial insurance added to account. Billing staff submits claim. Claim denied by insurance company for no prior authorization. Billing staff does not try to obtain retro prior authorization and appeal denial, but simply self pays account.

Internal Audits: Reporting should be generated to routinely monitor accounts that

do not meet the value measures established by department (e.g., self-pay of account with insurance)

External Audits: Accounts that are monitored by outside experts can be “saved”

and assistance provided to help provider resolve issues

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Real Productivity Leads to Real Revenue and Better Results• Increased Revenue Better financial outlook; minimized impact of self-pay accounts and

denied claims

• Higher Patient Satisfaction Patient’s stress (i.e., financial toxicity) over unpaid bills removed

• Higher Employee Satisfaction Employees have vested interest in success, not just of their account

but for the patient and healthcare system Can create better partnership between employees in different

departments

• Higher Physician Satisfaction Physicians are paid and have greater flexibility in clinical options

Summary• Overcoming the tendency to rely too much on measuring

“productivity” of employees and departments by the timeinvolved with certain tasks can lead to increased revenue.

• Real productivity can be complex and can be achieved by alignment of the task with true success metrics.

• Ensuring that metrics are met requires implementation of internal and external accountability methods which result in being able to fully understand the value generated by employees and departments.

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Questions and Discussion