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Sinaiko was engaged to provide a mid-sized
acute care hospital in the Northeast with recommendations
for improved operations in its compliance, business office,
and admitting departments.
From a revenue standpoint, the hospital was concerned about the performance of
the business office, which had a history of high A/R, poor cash collections and
a lengthy and inefficient self-pay process.
At the time of Sinaiko's engagement, the hospital's A/R under 90 days was 30 percent in terms of total A/R and 46 percent based on number of bills. Annual revenue was $102 million, with patient revenue at $47.7 million, gross A/R at $15.9 million, and the annual number of outpatient and emergency room visits at 33,900 and 25,000 respectively.
Sinaiko's assessment revealed that the department staffing was appropriate. More
importantly, the staff's skill set was good and they truly cared about doing
the best job possible. However, the assessment also uncovered a number of areas
that needed attention, including residual operational issues from a period during
which the department was short - staffed and a backlog caused by a lack of focus.
Further, staff did not know what to do or when to do it due to lack of adequate
prioritization and poor management workflow. Because staff members were frequently
working on special projects, they had no daily schedule and management was always "putting
out fires." Staff members were not able to concentrate on tasks or accounts that
would make a significant impact, resulting in low cash collections and an unpredictable
level of month-to-month cash due to inconsistent collections. These issues
were undermining staff morale as employees felt overwhelmed and upset about the
ongoing lack of progress.
Once the assessment was completed, Sinaiko identified overall goals and areas
of focus for implementation. Goals included: 1) Implement a multi-pronged attack,
since many of the issues could not be addressed in isolation; 2) Implement solutions
that focus on prioritization and scheduling of tasks; 3) Eliminate special projects
where possible; 4) Eliminate crisis management; and 5) Break the backlog process.
This included keeping the staff focused on the most important tasks and highest
priority accounts.
Areas to address were the following:
1) Desk Review/Staff Schedules;
2) Aged Accounts/Stratification;
3) Productivity;
4) Account Reviews;
5) Extraneous/Clerical Tasks;
6) Denial Management;
7) Self - Pay Process;
8) Vendor Performance; and
9) Revenue Cycle Subcommittee.
Sinaiko worked with the client to implement significant changes to existing processes. Some of the major changes were as follows:
Prioritization of accounts
Staff was not organized in their daily work; many employees had correspondence that was more than a year old and were unable to prioritize accounts that needed to be worked because there were so many piles of paper. Sinaiko worked with the staff to sort and categorize every piece of paper on every desk. These were prioritized into to - do lists and daily schedules were created based on each job classification.
Because uncollectible accounts (past timely filing limits, etc.) were being worked
at the expense of more collectible accounts and 90 day+ agings were 37 percent
to 40 percent of all agings, Sinaiko determined an appropriate aging level beyond
which accounts would be written off. This was based on the type of account, dollar
amount and other specific criteria. In addition, all accounts greater than one
year old were outsourced and an "early-out" program was created for accounts
under $1,500. All remaining accounts were stratified by dollar amount and status,
allowing staff to work from prioritized worklists instead of special reports
as they had previously done. Sinaiko also rebuilt reminder work queues for follow
- up, and grouped and prioritized accounts based upon the highest return. For
instance, accounts higher than $10,000 were 2 percent of the total number of
accounts, but 36 percent of the dollars, while accounts $5,000+ were 5 percent
of the total number of accounts, but 51 percent of the dollars.
Setting productivity targets
Another major issue Sinaiko addressed was productivity. Productivity
expectations had been loosely defined, but could not be met due to lack of prioritization
and focus. Working with the client, Sinaiko redefined productivity expectations
from 35 accounts to 75 to 80 accounts per day, per collector. To help the staff
achieve these new levels, a ramp-up period with training and education was implemented
along with account reviews (including guidelines and criteria, as well as scoring
and a review schedule for the director) while extraneous and clerical tasks were
eliminated.
Managing denials
Denial management was also a significant problem for the client. Denials were being worked reactively rather than proactively, and there was no formalized system for tracking and trending denials. Thus, the client did not know their top denials or the types of denials from each payor. In addition, there was no consistent communication to other departments regarding their denials. In order to target these issues, Sinaiko instituted several process changes, including revenue cycle education for all staff, electronic remits to track denials and volume, and stratification of denials. Reports to track, trend and monitor denials were also created along with action plans for the top denials.
One year after implementation of the above and additional recommendations, Sinaiko was asked to return to the client for an additional assessment. At that time, cash collections had increased by $2.4 million while A/R days had decreased by 12. The increase in cash collections directly tied to the decreased in A/R days was $1.6M.
This project was so successful because Sinaiko worked with the client as a partner. Because we involve every client in each step of our work process - rather than being part of the transition only as we are preparing to leave - we are able to create and maintain permanence and sustainability, which is one of the hallmarks of our success.
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