More Revenue, Less Waste: Tips for Optimizing Financial Performance
Baltimore, MD—Belt tightening is the order of the day. To succeed, you are going to need a stern resolve, a sturdy belt, and a steady pull—not just by the bean counters in the back office, but by everyone: administrators, doctors, and mid-level employees alike. At the 2012 Association of Community Cancer Centers meeting, several presenters offered practical tips to help in the new climate of healthcare reform.
“As economic pressures mount, physicians have migrated to the safer harbors of integrated delivery systems,” said Malita Scott, MHA, Senior Manager at ECG Management Consultants, Arlington, VA. “Our focus today is on hospitals that have, over recent years, gotten into the business of employing physicians.” To make this new financial relationship work, these institutions need to develop different skill sets to ensure that every employee is on board and actively supporting the effort to minimize operating losses and maximize delivery revenue.
Data capture. “What’s important here is to understand that it’s garbage in, garbage out,” Ms Scott said, further explaining that to support claims on the back end when it’s time for reimbursement, accurate data have to be captured on the front end at the time of service delivery. “And this is all about communication. We need real-time communication with our physicians so that, for instance, they understand the changes that necessarily must be made to a treatment plan in the event that a payer has certain requirements,” she added.
Communication networks within the organization must be streamlined so that physicians are able to touch base in real time with the business office, the financial counselors, and even the person greeting the patient at check in.
Once systems and individuals are talking, it is likely that organizational deficits become obvious. “There is a lot of low-hanging fruit available in the revenue cycle,” said Ms Scott, “and again, much of it is a matter of communication.”
Consider the 8 critical components of the front end (the clinic) and the back end (the business office) of the revenue cycle, as identified by Ms Scott, and how each can be optimized. On the front end, these components include:
- Appointment screening (reduce noshows with patient reminders)
- Patient sign-in (get complete insurance information)
- Time of service collections (get copays or self pays or firmly establish financial agreements)
- Coding charge captures (physician hires need to pitch).
On the back end, the components include:
- Charge entry (adjust capitated charges)
- Claims submissions (submit primary and secondary claims)
- Payment posting (deposit the money today)
- Account follow-up (follow up on denials and resubmit).
Productivity. “We’re not just looking at work RVUs [relative value units] here,” Ms Scott noted. “We’re looking in total at the practice.” These analyses (performed by a consultant, such as ECG Management) help to inform practices about operational inefficiencies, as well as to give insight to potential discussions about a given clinical care model and how that is being carried out (or not) within the organization. “Most hospital-employed oncology groups have developed incentivedriven compensation plans with a focus on productivity. Often, however, these groups do not have robust tools for evaluating group and individual performance,” Ms Scott pointed out.
She identified the components of physician productivity as work rate, work hours, visit/procedure combination, and coding. Key productivity indicators that are captured from this include gross charges, net collections, RVUs, and overall visits. As for coding practices, evaluation and management coding analysis is advised. Having oncologists evaluate Current Procedural Terminology codes helps to identify the variations in coding and documentation patterns that ultimately drive inconsistencies in productivity. “We tend to downcode because it’s safe,” Ms Scott acknowledged, but with the advent of electronic health records, coding practices are more easily revealed. “It allows you to then measure a physician’s performance against [his or her] peers.”
Commercial contracts. “You want to make sure that you’re at the table, [and] that there is a representative from the practice that understands the implications of the contract on the practice,” Ms Scott suggested. Commercial contracts are key levers for improving the bottom line. Negotiating small changes in financial and administrative terms can translate into significant margin gains. “This can be especially true for medical oncology practices,” she added.
Overhead expenses. “In general, when you think about expenses, there are 3 key considerations to take into account,” Ms Scott explained. First, there is the rate of consumption— how much of a given expense is being consumed; one example is the dollar amount of drugs purchased. Second, there is the type of expense, such as with the staff. Consider what type of support the physician is utilizing, be it consultative, mid-level, or other. “Each job title has different financial implications for the practice,” Ms Scott said. The third consideration is the rate of compensation. “Even within the same job title, like nurses, there can be a fairly wide range of salary,” she pointed out. In this regard, Scott strongly recommends “right-sizing,” meaning you do not want to find yourself paying a PhD to empty bedpans; compensate according to the duty performed. Optimize individual training to the task at hand.
Part-time providers. “We’re seeing a significant uptick in this,” said Ms Scott. “So, it’s increasingly important that your organization has clearly defined policies addressing this issue.” For example, if you have a physician working at a full-time equivalent (FTE) of 0.75, it may be reasonable to prorate that individual’s benefits.
Drug inventory. Closely tracking drug inventory in real time is critical. “Maximizing rebates and minimizing drug expenses are vital for sustained performance,” Ms Scott maintained. For many oncology practices, pharmaceutical supplies will account for 80% of the clinic’s expenses.
340B Drug Pricing Program. Hospitals can increase their participation in 340B through partnerships with community oncologists. These arrangements generally yield incremental value to the hospital and physicians. “We’re seeing between 20% and 40% cost-savings for your pharmaceuticals with this program,” Ms Scott pointed out. “You might be looking at up to $500,000 in savings per physician FTE, assuming reasonable levels of production.”
This is about having everyone on the same page. “It’s really important to understand that once you put these procedures in place, you have to have standardization across your practice sites. The staff needs to know what SOPs [standard operating procedures] are and have them documented and disseminated,” Ms Scott said.
Performance monitoring and reporting. Implement reporting mechanisms that communicate practice performance to your physicians. “A dashboard of key metrics should be created to monitor the performance of employed oncology practices and to get the information out there,” Ms Scott advised. Let everybody know that the work stream is profitably flowing or that it’s been log-jammed. Efforts in this regard usually require information technology systems compatibility across the board. “Beyond that, the key is to get physicians engaged and provide them with a practice overview that clearly illustrates where problems lie,” she concluded.
Physician compensation. “Oncology care really starts with the physician,” said Brendan M. Fitzpatrick, MBA, Executive Director of the Alamance Regional Cancer Center, Burlington, NC. “You have to have the physicians engaged. And to get them engaged, quite honestly, you must make sure that they are compensated appropriately. You want to make sure they know they are highly valued and that they are the pinnacle of the program.”
So, how much should a pinnacle be paid? “Fair market value is actually very well established and publicized at this point, so it’s not too much of a wild card. I think we’ve achieved a nice correlation between production, our reimbursement, and their compensation,” Mr Fitzpatrick said.
A Work in Progress
Going forward, Mr Fitzpatrick would like to incorporate quality measures. “This needs to be a component of physician contracts—making sure there is an adherence to clinical pathways,” he said. “US Oncology was really ahead of the curve on this, but it’s not being mainstreamed in community cancer centers just yet.”
Another adjustment to be made is to get his institution to grab more of the dollars being left on the table. “It has to do with drug cost-savings. I think in the past, programs have allowed physicians to order whatever they want, whenever they so choose,” Mr Fitzpatrick remarked. “But we need to be much more structured in our purchases, so that physicians know what the program is going to be reimbursed. Many of our drugs are under water, and, quite honestly, I don’t think administrators have done a great job articulating which drugs and which chemotherapy regimens are under water. We need to provide more information so that our physicians can make good value decisions for their patients.”