From the August 2006 Issue

Building a Safety Net

A Final Farewell to Paper: What Works

What Is Application-Attached Storage Costing Your Facility?

Revving Up the Revenue Cycle: Case History

Weapon of Choice

The Cure for the Fatally Flawed EMR Software Model

Revving Up the Revenue Cycle

A Wisconsin health system implements revenue cycle management software for enterprise performance improvement.

By Sandy Kiehnau

Sandy Kiehnau is the manager, revenue cycle, at Aurora Health Care, Milwaukee, Wis. Contact her at sandy.kiehnau@aurora.org

Hospitals and healthcare systems across the nation continually evaluate strategies for improving financial performance. With razor-thin margins and growth in the number of uninsured impacting the bottom line, efficient revenue cycle management has come into sharp focus.

Since the revenue cycle is complex and the potential for error is significant, Aurora Health Care took a comprehensive look at our own revenue cycle process. After realizing that we needed more robust information and tools to adequately assess and improve performance, we implemented a Web-based revenue cycle analytics application across our enterprise, reducing days in A/R (accounts receivable) by 36 percent for the entire system and realizing quantifiable savings of nearly $18 million over 18 months.

Aurora Health Care is a not-for-profit Wisconsin healthcare organization, with sites in more than 90 communities throughout eastern Wisconsin, including 13 hospitals, more than 100 clinics and 120 community pharmacies. We employ 20,804 employees and more than 3,400 physicians, including 680 who make up Aurora Medical Group. The health system generated $2.6 billion in gross revenue for fiscal year 2005.

Challenges
Like many healthcare facilities, Aurora Health Care faced a number of pressures that impacted its cash acceleration and revenue enhancement objectives. We weren’t approaching revenue cycle management with an enterprise view, and our legacy system’s reporting capabilities were limited, resulting in inefficient month-end data gathering efforts. To accelerate the revenue cycle, we needed to put our healthcare organization’s vision into action.

Our health system was created around a single idea: “There is a better way to provide healthcare.” Our governing board continually strives to give people better access, service and results than they can get anywhere else. Because of this vision, in late 1999 we went through a period of rapid growth, continually building hospitals and buying clinics and nursing homes to provide services in the most convenient manner possible. To support the initiatives, we focused on increasing cash on hand, reducing days in A/R and ensuring patient satisfaction.

During winter 1999 and into 2000, Aurora Health Care launched a revenue cycle improvement project to migrate all 13 hospitals onto one central patient accounting system. By mid-year 2001, we had completed our migration plans, and by December 2001, we were looking at days in A/R of 56 and a quality measure of 91 percent.

We were disappointed that our A/R days appeared to be climbing instead of declining, as we thought they would once we had a central patient accounting system. We knew, in part, what contributed to the creep: During the migration, we had implemented inconsistent processes across the enterprise as we learned the new system.

With the resulting slowdown in A/R and increased pressure to expedite payments, the ability to access and analyze key financial data and revenue cycle performance across the health system was a high priority.

Pilots to Pinpoint Improvements
We decided to concentrate our efforts on major lags across the entire revenue cycle process, and tackled the timeliness of several key processes including medical record completion, bill submission to primary insurance payment, and insurance payment to patient payment. We also focused on how well we performed the processes by measuring 39 quality and 42 timeliness measures. For example, if we did an account follow-up, did it result in timely and accurate payment? If a patient called with a concern, was it resolved in one call?

Once Aurora Health Care had the results of its 39 quality points and 42 timeliness points, we developed pilots throughout the organization to determine where we could make improvements the fastest. We gave specific operational areas throughout our health system a problem to resolve within three to six months that could then be considered for roll-out to Aurora Health Care as a whole. We had 13 different hospital pilots and 12 different Aurora Medical Group pilots going at one time. Our major pilots included increasing quantity and quality of preregistration data, increasing insurance verification and improving timeliness of documentation receipt in medical records.

The pilot groups presented their results to a revenue cycle steering committee, and the committee recommended which pilots to implement systemwide. We benefited greatly just from the education and awareness that was generated throughout the organization regarding revenue cycle processes. It was hard to believe when we started that people still thought that the revenue cycle involved only the business office. We developed 10 hospital strategic initiatives and six clinic initiatives to improve the overall performance of our revenue cycle, and continued to work with our staff on implementing more efficient methods for its revenue cycle processes.

Limited Reporting Capabilities
Although we had done a very good job in streamlining revenue cycle processes, measuring our financial performance at an enterprise level was still difficult with the limited reporting capabilities of our existing legacy system.

Aggregating and realizing the value of the information contained within the data had become a manual and time-consuming process, requiring 2.0 FTEs at month’s end to take financial information and metrics from each individual hospital and enter them into spreadsheets to get an aggregated, enterprise view of financial performance. It took two employees nearly a week to pull month-end data together.

By 2003, we had made all the improvements that we could without additional technology. We knew we couldn’t achieve any more improvements without seeing a total picture of A/R for Aurora Health Care as a whole enterprise, all 13 hospitals as well as each individual hospital. We needed better reporting and analysis tools so we could focus on data analysis instead of data gathering.

Coincidentally, that spring, our vice president of finance had dinner with a college friend who was a vice president at MedeFinance Inc., a provider of financial and revenue cycle analytics. Our VP discussed our need for a revenue cycle management solution, and MedeFinance indicated they marketed a Web-based application. They soon contacted us, and we formed an evaluation committee comprised of representatives from the finance department, as well as managers and select users from patient financial services. We agreed that our goals for selecting a revenue cycle management technology solution were simple:

• Ensure prompt payment;
• Improve patient satisfaction;
• Simplify revenue cycle processes;
• Provide timely information when and where we need it, and;
• Track progress toward quality initiatives.

One of the key determinants for selecting MedeFinance was its ease of use at multiple staff levels. The ability of both our managers and departmental level employees to utilize Web-based technology was an essential selection criterion. Other vendor solutions we evaluated were either cost-prohibitive or cumbersome, requiring users to drag and drop boxes. There was no way this was going to work with our users. We especially liked MedeFinance’s point and click capability.

Phased-in Training
Training was provided in a phased approach, starting with four business office managers who received comprehensive training for three full days before we went live just weeks later. Next, MedeFinance trained 13 supervisors at four locations so they could help test the system following go live. The supervisors received hands-on training and were responsible for training their staff, rolling it out to approximately half of the business office employees.

Because Revenue Cycle Analytics is a hosted application model available for a monthly fee, implementation was fast and easy. We didn’t have to purchase hardware, maintain software or impact Aurora Health Care’s internal IT resources. However, it did take some time for I/S to develop the data extract files that are sent to MedeFinance weekly.

Throughout training and implementation, we were pleasantly surprised by the broad expertise of MedeFinance training staff. They had healthcare backgrounds, and most were former directors of large healthcare organizations. We didn’t have to explain our industry to them, which made implementation much simpler. Another valuable aspect of the services component was that MedeFinance continually alerted us to best practices in the industry, and we benefit from the successes of the vendor’s extended users group.

Real Benefits, Real Savings
Early in the implementation, we experienced significant improvements and cost savings. Immediately after going live, we identified $1 million in unbilled revenue from accounts where a patient’s insurance had changed, and a new bill had to be generated. This was a significant achievement, because our hospitals would likely never have identified these missed billing opportunities under our earlier system.

Broader visibility has improved the responsiveness of Aurora Health’s management team. We use the ATB (Aged Trial Balance) function every day to track A/R performance for large balance claims. With the click of a mouse, we can drill down to view data by any category, such as payer or financial class, against the age of the account, and then prioritize our biggest problem areas.

The expanded financial analysis functionality also has resulted in greater operational efficiency and decision-making across the health system. We built a centralized denial database, which is a consolidated repository of all our enterprise denial data, optimized for reporting and analysis. Revenue cycle staff rolled out the capability a month after go-live to the patient access area, so they could access denial data specific to their area, identify root causes for the denials and take corrective action. Having the information organized in this manner provides us with critical intelligence for averting future denials and has helped minimize our revenue exposure. The revenue cycle analytics technology also has completely automated our month-end reporting process, and we have been able to redeploy 2.0 FTEs to patient accounting-related activities that more directly affect the bottom line.

Most notably, we have reduced A/R days to previously unattainable levels, and today accounts receivable days in the acute care sector of Aurora Health Care are at 36.4 days, a 36 percent reduction from 56 days when we implemented the system in 2003—a resulting impact of approximately $18 million in an 18 month period. The cumulative benefits have translated into real savings through an increase in revenue, turnover of denials, process efficiencies and A/R days well below industry averages.

We are currently developing a new point-of-service cash collection and centralized insurance verification and are evaluating use of MedeFinance’s Self-Pay Analytics module to help move us further down the road in revenue cycle improvement.