Maricopa integrated health system

Problem: Siobhan Mee, director of Revenue Cycle Management at Maricopa Integrated Health System in Phoenix, Arizona knew that charges for supplies purchased in their facility were not in synch with the costs for these items.

The disconnect was partially caused by a large number of non-item file purchases and special ordering by the clinical staff which circumvented normal purchasing processes and did not allow proper tracking of costs. Without a linkage of supply information and the chargemaster, verbal updates of cost changes were necessary.

Unfortunately, there was very little communication between the purchasing and revenue cycle departments when changes occurred. When costs for supplies increased or decreased, the charge often remained the same. Additionally, policies and procedures created to address this issue were not followed, and an attempt to manually link the supply information and the chargemaster proved to be too time- and labor-intensive. The end result of this lack of communication was a chargemaster filled with under charges and compliance exposures (items priced well above the set markup.)

In addition, Maricopa faced uncertainty in their pricing strategy. While committed to moving towards an acquisition-based pricing strategy, there was a fear in enforcing the markup formula, because there was no way to determine the net revenue impact of a change.

These issues were brought to the forefront when internal auditors visited Maricopa. The staff often heard that their pricing for supplies was not right, yet the manual evaluation and update performed annually was not sufficient for maintaining defensible pricing of supplies.

Solution

Under Siobhan Mee’s leadership, Maricopa implemented MedAssets Net Revenue Systems’® CrossWalk® product. CrossWalk automatically and continuously links the hospital supply information with the chargemaster, so that charges are based on a reasonable relationship to costs with a defensible markup. CrossWalk’s Markup Simulator offers the ability to fully evaluate multiple supply pricing strategies and model the bottom line impact.

CrossWalk is a revolutionary technology that helps hospitals gain financial visibility into their organization by linking supply cost data with the revenue cycle charge data. CrossWalk automatically and continuously links the two datasets in order to:

• Ensure that charges for supplies cover acquisition costs
• Ensure defensible markups for all supplies
• Monitor utilization and charges of supplies purchased
• Helps identify items that are purchased but not in the supply item file
• Provide pricing benchmarks for similar facilities nationwide
• Provide credible, real time data
• Enables audits of managed care carve-outs administration for costly implants

CrossWalk now allows you to manage your hospital like a true business with an accurate picture of profitability, so cash leakages can be stopped immediately.

Results

Siobhan Mee stated, “CrossWalk pointed out incredible deficiencies on the purchasing and revenue cycle sides of our business. Materials management and the revenue cycle departments were both trying to determine manually what was wrong with their data.”

The mapping process was able to link the majority of Maricopa’s gross revenue and exposed a significant number of non-item file purchases. Discovering non-item file purchases allowed Maricopa to integrate these supplies into the item file and become part of the normal purchasing process.

Additionally, graphs on the CrossWalk dashboard show items that are charged below and above costs and allow Maricopa to drill down for the details on the specific items in question.

This information and new data transparency provided a roadmap for improvement in business processes at the facility.

Siobhan Mee stated, “CrossWalk also allows Maricopa to simulate markup formulas to show net revenue impact which eliminates the uncertainty we experienced previously.”

Maricopa now has one formula for all supplies, except costly medical devices such as implants which have a separate formula. “We can now simply say, ‘here’s the cost, here’s the charge, and here’s the markup,” continued Ms. Mee. Maricopa has calculated a net increase of over $300,000 based on strategic markup alone. “We also can tell auditors that we use CrossWalk to determine our markup strategy, and that our charges are directly related to costs. CrossWalk has increased our level of confidence in our prices tremendously.”

For more information about CrossWalk, call 651-222-7038, visit MedAssets’ website, or request information online.