Access Management Quarterly: Committee seeks ways to enhance hospital revenue

Grass-roots effort leaves no stone unturned

When Donna Madlener agreed to lead the revenue enhancement committee for the James Cancer Hospital, which is part of The Ohio State University Health System (OSUHS) in Columbus, she signed on for "a unique experience" that went to the heart of such issues as financial responsibility and internal customer service.

"We interviewed the managers of every cost center in the James Hospital and brought back the information they provided to us," says Madlener, who is manager of the hospital’s apheresis unit. "There were suggestions for revenue enhancement and the problems they saw in any processes we had in place. The underlying purpose was to evaluate all processes and systems to identify opportunities for revenue enhancement and recommend strategies for improvement."

The James committee began work in May 2001 and presented its recommendations in January 2002, sometimes meeting as often as twice a week, she says. "It was a long, involved process."

The nine-member committee also included OSUHS director of revenue manager Joe Denney, who spearheaded the effort for the entire health system, and representatives from administration, nursing, outpatient services, and pharmacy, among other hospital areas, Madlener notes. "A multitude of backgrounds were represented."

The committee developed a questionnaire and embarked upon the interviewing process, dividing up the cost centers according to the expertise of individual members, Madlener says. "Through the grass-roots effort of interviewing each manager, we looked at the information we had and defined the purpose and goals we wanted to focus on."

When it came to registration, "a process with huge financial ramifications," the committee looked at, among other things, "different people’s roles and job descriptions," she explains. "Did we have people responsible for doing certain things, or were there holes in the system? Were there people in the same role [at different centers] but doing things differently?"

In addressing its task, Madlener adds, the committee used an existing model that looks at how patients go through the continuum of services in a hospital. The first phase, for example, is pre-encounter, which includes inpatient precertification, outpatient precertification and authorization, and scheduling, she says. "We divided the issues into the different phases and from there made recommendations."

Looking at inpatient precert, for instance, the committee found that there was no real policy development, Madlener says. "Everyone was doing their own thing," she notes. "[Employees at physician offices and clinics] were not really part of our hospital, but were responsible for precert. There was no fallout if they didn’t do it."

Regarding the registration software program, Madlener points out, the committee’s recommendation was that the flow and storage of information be enhanced so the hospital could monitor processes for compliance and determine how many accounts were getting through without precerts being obtained.

When it came to centralized scheduling, she adds, the need was for more information systems resources. "There was no one to call to help you."

Another recommendation had to do with the need for registration personnel — who perform a critical function — to be trained and paid accordingly, Madlener says. "They’re doing probably the most important job. When the bill is not correct, [the hospital] spends lots of money correcting it, paying people to figure out what was going on. We thought that was crucial."

Cost center accountability probably was the biggest issue confronted by the committee during the "encounter phase — what happens when the patient is already here," she points out. This had to do with "things like reconciling billing. After you put the charge in, did someone check to see if it was put in correctly? Did you pick the right procedure to charge for? Is the fee schedule updated? Are the CPT [current procedural terminology] codes current? Is the cost of the procedure more than what you’re charging? Do the managers know how to read performance and productivity reports?"

Much of the problem, Madlener adds, had to do with the attitude that "it’s somebody else’s job. As a state institution, [the hospital] didn’t really have a culture of financial responsibility and internal customer service."

As a sideline of the committee, members sat down with each of the hospital’s nurse managers and went over the fee schedule item by item, she notes. "It was very laborious. On some of the fee schedules there were, for example, 10 different catheters to charge for, and two were identical. A lot of cleaning up and updating of CPT codes was done."

One cost center was charging for drawing blood from a central line, and another wasn’t charging for the same procedure, Madlener points out. "They didn’t know they could."

Staff turnover was identified as a huge expense with a tremendous impact on the hospital’s bottom line, she notes. The negative effects ranged from the cost of formal training and education of new hires to the problems caused by new employees’ lack of knowledge, Madlener adds. "A lot of money was spent on staff turnover."

Although the committee’s role was to look at the situation and make recommendations, she adds, in many cases it took a more proactive role. "When we would identify things — fee schedules, charge entry — that were huge issues, we would correct the problem right on the spot. In the case of some drugs that were not being billed correctly, we went right to the source and fixed it."