Where Does the Money Go?

Innovative Hospital Stars in “Raiders of the Lost Charge”

Physician charge capture and coding. It is a simple enough activity; after all, your physicians engage in the practice daily. What could go wrong? The truth is: a lot. Accurate physician charge capture and coding are directly tied to hundreds of thousands of dollars in collections, efficient clinical and administrative staffing (and hospital overhead), practice sustainability, physician satisfaction and retention, and quality of patient care. In a financial environment where hospitals and medical groups are desperately grasping for every dollar they can find, timely, accurate and complete billing can literally make or break a facility.

In 2002, one of the nation’s top hospital systems, which we will call Innovative Hospital, found itself with a mystery on its hands, an expensive mystery. The Innovative Hospital’s hospitalist group, which employed 10 physicians at three locations, suffered from lost charges, high charge denial rates, undercoding, and a 60- to 90-day charge lag. Despite a physician-to-biller ratio of nearly 3:1, Innovative Hospital continually lost charges and was unable to contest denied bills. Management was dumbfounded, and not happy. Why was this happening, and how could they fix the problem? Hundreds of thousands of dollars of professional revenues were disappearing annually, with little hope of recovery.

Improved and innovative technology proved to be the answer. While Innovative Hospital had already employed various hospital information systems (HIS) and were leaders in innovative healthcare technology initiatives, they had no way to facilitate, track or manage physician coding and charge capture. Innovative Hospital’s hospitalist group was drowning in paper charts, handwritten notes and charges, and questions from every stage of the billing cycle. One physician recalled a particularly painful incident where a colleague lost more than 50 index cards containing patient billing information. This resulted in a loss of more than $100,000! To solve these problems, Innovative Hospital’s management implemented Ingenious Med’s IM Practice Manager solution for its physicians, billers, and administrators.

IM Practice Manager is an Internet-based practice management application that enables inpatient physicians to capture charges, improve quality of care, and communicate digitally with peers and administrators. IM Practice Manager enabled Innovative Hospital administrators to identify and address a variety of specific problems at the root of the lost charges and unearth more subtle clinical and billing challenges. Only a few years after implementing IM Practice Manager, the hospitalist group became one of the most profitable departments at Innovative Hospital.

Fixing the specifics

How exactly does a practice management application fix obvious common billing problems? While most health information systems serve as a repository of patient information, practice management applications address the active billing and clinical cycle from start to finish.

With an application like Ingenious Med’s (IM), physicians begin the billing cycle by coding as they make their rounds, in real-time, using laptops, tablets or PDAs. Immediate capture of clinical information and coding reduces the potential for mistakes that arise from “doing the bills” at the end of a long, tiring day of rounds. The information is also captured electronically, eliminating paper charts and the complications involved in filing, managing, storing and sharing the information on those charts.

When physicians enter their codes, they use an automated coding system which prompts them with the correct ICD-9 code, and manages any updates to the codes automatically, whether or not the physician is aware of the changes. This helps assure that codes are correct at entry and eliminates any questions over handwritten codes or faulty memories. It also enables physicians to enter all of their appropriate codes as they engage a patient. Too often, end-of-day billing procedures result in lost charges simply because physicians can’t recall everything they did when rounding. Point-of-care capture removes that burden from the physician and ensures complete, accurate coding and charges.

And here’s where it gets exciting: Billers can immediately start billing for the charges. There is no waiting till the next day or several days for physicians to turn in their charges, no struggling to read handwriting, no multiple phone calls and e-mails to physicians asking for their charges or clarification of charges because they have all been entered, clearly, correctly, electronically, at the point of care. Billing can instantly access the information a physician has entered, double-check compliance with Medicare, Medicaid, commercial insurers, and other payers via built-in code validation systems and quickly send out cleaner, more accurate bills within hours of capture. And because all patient information, charges and coding is captured electronically and safely stored in one place, it is easy for a biller to locate the correct information to pursue and reverse a denial if a charge is challenged.

Shedding light on the subtleties of clinical and billing challenges

A practice management system basically automates a process that has traditionally required human interaction at virtually every stage of the billing cycle. This of course, allowed for natural human error at every stage of the cycle. But in addition to minimizing human error, there are other benefits to automating billing and clinical activity:

• Hours of human labor are eliminated as is cost of that labor;
• The billing hours eliminated allow for physicians to spend more time with patients versus paper;
• The pressure of making mistakes is greatly reduced allowing for happier physicians and administration; and
• The frustration of clinical and billing communication is eased with a reduced frequency of missing charts and billing errors.

By the numbers

A lack of billing automation explains where Innovative Hospital ’s money went. The next question is: Did practice management technology bring it back?

The clear answer is an emphatic yes.

By 2005, Innovative Hospital’s program had turned around – it employed 60 hospitalists (a 600% increase), had increased charges captured, decreased denials, reduced charge lag to two days, and increased the physician to biller ratio to 10:1.

Innovative Hospital’s decision to purchase and implement practice management technology generated impressive quantitative improvements. It:

• Increased revenue per encounter by 20 to 50%.

• Increased charges captured by 8 to 17%.

• Decreased denial rates by 4 to 7%.

• Decreased denied charge write-off rate by 12 to 1%.

In addition to providing substantial revenue benefits, the technology also enabled Innovative Hospital to optimize their staffing support for physicians, and right sized the reimbursement team to only six FTEs for an organization with about $10 million net revenue.

While IM Practice Manager improved Innovative Hospital’s profitability and operations, it also improved Innovative Hospital’s quality of care by enabling rounding hospitalists to focus more on patient care.

Fast Forward to Today

Six years after implementation, Innovative Hospital is still reaping the benefits of practice management technology. Over the years, enhancements to their unique system have allowed Innovative Hospital’s managers to do much more than maintain the high level of coding reimbursement they have now become accustomed to. In addition, they are now maximizing and leveraging the additional benefits of an automated inpatient practice management solution to help the Innovative Hospital’s hospitalist group to grow.

One of those expanded benefits is the ability to quickly and easily prove the value of your inpatient physicians. The Innovative Hospital hospitalist group, for example, proved the value of its program and increased that value with the addition of 20 new practicing hospitalists – up to 80 in 2008 from 10 in 2002. Proving that value is easy with built-in business intelligence reporting that enables physicians and administrators to track bills by service/physician, review actual/average LOS, detail total encounters per physician, total charges billed and daily census – and provide reports on procedure logs, physician productivity, patient demographics, CPT reports, referring physicians and more. The transparency of this reporting and tracking also allows for clear communication regarding goals and productivity for physicians. Some systems even aggregate billing and performance data across multiple sites and enable practices to prove their value to their hospitals, as well as optimize physician and practice performance.

With their explosive growth, the Innovative Hospital hospitalist group found the flexibility of their practice management technology helpful as they grew from three to seven sites. Says the Operations Administrator of the Innovative Hospital hospitalist group : “IM Practice Manager allows us the flexibility to expand multiple sites while maintaining the same integrated billing infrastructure with little or no additional overhead.” Not exactly the same scenario one might experience with an electronic medical record (EMR) roll-out or other HIS products.

Did you just involuntarily cringe at the memory of your own EMR implementation? Rest easy knowing that some practice management solutions can be up and running in as little as a week or two, without the involvement of your IT staff. Today’s modern applications go far beyond what they were initially created to do, with increased benefits passed on to you. For example, did you know that an application created to capture charges and correct coding could also serve as a physician recruitment and retention tool?

That’s right. When you employ innovative technologies at your facility, you have made the commitment to run an inpatient practice that attracts and retains quality physicians. Tech-savvy young physicians are drawn to practices that utilize current technology; practice management technology ensures a simpler, transparent, efficient and more intuitive way of rounding and working – very attractive to physicians in high demand.

Because practice management technology not only automates everything physicians do, but also generates reports that detail productivity measurements, both executives and physicians are instantly provided with a means of physician and practice comparison and benchmarking. Reward and Bonus programs now have a natural and transparent way to incentivize physicians through unbiased reporting.

In addition to simplifying the coding and rounding experience of your physicians and involving them in transparent productivity measurement, some practice management tools are constantly evolving as the healthcare environment changes. Top-of-mind issues, such as compliance with current pay-for-performance initiatives like PQRI, become a snap with automated protocol reminders that appear during rounding, prompted by internal cues. Physician stress over documentation challenges goes away, and management is inevitably pleased by increased reimbursement rates.

Ultimately, these tools attract new physicians and allow existing physicians to increase productivity and satisfaction in their work. Happier, more productive physicians generate more revenue. Retention of quality physicians and shorter hiring cycles lead to lower recruiting costs.

The title of this article is “Where does the money go?” and the phenomenon of the lost charge is one that is familiar to most healthcare management, but what is most interesting is how the solution to the lost charge, practice management technology, becomes a generator of additional revenue and an eliminator of wasteful expenditures throughout a hospital organization. Executives must now ask themselves if the ROI of practice management technology implementation is worth it to their individual facility.

Choosing the RIGHT Inpatient Practice Management Technology

Everywhere you turn, more and more technology solutions are being thrust upon the healthcare industry, and it can be difficult to decide which technology is valid and not just a fad. If you are interested in implementing practice management technology and realizing the benefits of it, as the Innovative Hospital has, take a moment to consider the following as you research your choices. There are many options out there, and some products and services are better suited to your particular facility needs.

Look for inpatient practice management solutions that are:

Easy to use by physicians. If the physicians won’t use it, what’s the point? Introduction of new technology can sometimes be overwhelming for a staff accustomed to conducting business in a particular way. Involve your physicians in the purchasing decision-making process. Invite them to product demos and engage them from the beginning to get their buy-in.

Proven to have a Return on Investment. Ask for results. Speak to the providers’ clients. Ask for references. If you have particular goals in mind, ask the provider for related case studies or client references that directly address your individual departmental goals.

Easy to roll-out. You should be able to start realizing benefits and ROI quickly. A few weeks, not a few months, is all it should take to implement a mobile Web-based solution. In most cases, you should not need to involve your IT department with implementation.

Tailored to your needs. A one-size-fits-all approach does not necessarily work. Every healthcare facility and its inpatient program have different factors that effect how the organization runs day-to-day. Be sure to ask about portability, scalability, customization for your physician groups and available integration options.

Created by active industry professionals. Who designed your technology? What was the driving force behind the development? Is the solution created with your goals, your physician needs, and your billing department challenges in mind? Be sure that you choose a company that is involved in and engaged with the industry, and that is continually enhancing its product in response to changing industry and facility-specific needs.