For a well-run CBO, think process, not location
March 1, 1998 6 minutes read
For a well-run CBO, think process, not location
Pick best practices from each facility involved
It’s one of the latest buzz words, or buzz acronyms, to be exact. Talk about CBOs (central business offices), is making the rounds of Internet chat groups and professional networking sessions. In the wake of health care mergers and alliances, as the business operations of multiple hospitals are combined, people are asking how to organize an efficient CBO, what savings can be expected, and how to help staff adjust to the change.
But despite the seeming logic of creating a centralized business office after multiple health care providers merge to form a unified health care system, the attempt at streamlining often is unsuccessful.
The reason most CBOs fail, says Bruce Hallowell, MBA, is that people get hung up on the idea that a CBO is a physical location. "It’s not it’s a mental state," he contends. A true CBO, he adds, is the combining of business functions for several entities, and while having that happen in one place is convenient, it’s not the heart of the issue.
Hallowell has overseen the successful formation of two CBOs, the most recent in his current position as senior director of medical records, patient accounting, and admitting for Grant Riverside Methodist Hospitals in Columbus, OH.
Plan first, then move
"When I got here in May [1997], they had been trying to put together a CBO for over two years as the result of a merger between Grant Medical Center and Riverside Methodist Hospital," he explains. "It was the same issue spending too much time on location."
Rather than "location," Hallowell says, the key word is "process" a single process dealing with multiple entities. "Most people go through all the throes of trying to build a location, getting the cubicle layout and the physical location, and they don’t deal with the processes until they move everybody into the same location. So they stress out the staff by moving, and then they change the process."
Although there are some efficiencies to be gained by having the CBO in one location it’s easier from a management and communication standpoint it’s not necessary, and the lack of a central location is certainly not a reason to delay a CBO, Hallowell emphasizes.
Under his direction, Grant Riverside started its CBO in June and didn’t move the operation to its new physical location until November. So far, Hallowell says, accounts receivable (AR) days at the larger hospital have dropped to 49 (in December) from 53 (in June), and have stayed about even at the smaller facility. That’s a contrast with the industry pattern, he adds, which is for AR days to "skyrocket" when a CBO is formed after a merger.
As of January, six months into the organization’s fiscal year, overall cash collections were up $3 million over the same period a year ago, Hallowell says.
The first CBO formation Hallowell oversaw took place at Morton Plant Mease in Clear-water, FL, a move prompted by the partnership between Morton Plant Health Systems and Mease Healthcare. That CBO which combined operations at two smaller hospitals and one larger facility was formed to save money, he says, and the results speak for themselves.
"We saved $1 million in operations the first year, and AR days went down to a low of 37 days and have stayed in the low 40s," Hallowell says. "Before, at one point, AR days at Morton Plant were at 114."
Most CBOs result from mergers, and one thing Hallowell has always made clear, he says, is that he’ll incorporate the best process in the new model, no matter which hospital it comes from. Usually, the person in charge tends to take the process he or she is most comfortable with, and staff at the other hospital involved feel they’re being "taken over," he says.
"I don’t know of any organization where everything is the best," he adds. "Every organization has some ugly ones. I tell the staff, Let’s get rid of the ugly ones.’"
Those processes include things like how billing is done, Hallowell explains. Before the Grant Riverside merger, one hospital took accounts "from cradle to grave," with one employee performing all the functions involved in processing one account from beginning to end. The other hospital had a functional base. Billing was done in one area, account follow-up in another.
"We went with the functional base, because it works better," he says. "Cradle to grave’ works better in small hospitals, but you can’t do it at 1,000-bed hospitals. If you don’t focus on function, there’s mediocrity in all areas.
"You put people where they have their expertise. If I have somebody who’s the best biller in the world, I don’t want them doing collections."
Set up management groups
In forming the Grant Riverside CBO, Hallowell set up four management groups covering billing and Medicare, self-pay follow-up, customer service, and insurance follow-up. He assigned a manager and a supervisor (called a "lead") to each group and allocated a certain number of FTE positions.
Positions were filled internally from the staffs of the two hospitals, and managers were told not to be biased toward employees at their own facilities, he says. At the same time, managers were given goals to meet, such as reducing Medicare AR days to 21 or having a validation rate (the number of valid claims going out each day) of 80%. All bills are required to go out within 24 hours.
"I said, Here are your goals; go hire your people,’" Hallowell says.
Billing staff hired first
The billing/Medicare manager was allowed to hire first to get the most qualified people, he says, on the theory that if the bills go out correctly, most of the work is done. The insurance follow-up jobs were filled next, then the customer service and self-pay positions.
In a job market where unemployment is less than 2%, keeping a full staff is a continuing challenge, Hallowell says. "We always have an opening. At any one time, we’re down by four to six positions."
ScrippsHealth in San Diego has centralized the business operations of its six acute-care hospitals, but that’s just the logical outcome of completely embracing the concept of access management, says Jack Duffy, FHFMA, corporate director of patient financial services.
What Duffy calls true access management putting the emphasis on the point-of-service environment to get complete, accurate bills from the start is crucial to an optimally efficient CBO, he says.
"If the CBO just serves as the collection point for several entities, the gains are marginal," amounting to some reduction in middle management and other minor efficiencies, Duffy says. "I’m afraid the state of the art [in the health care industry] does not understand the true power of access management."
Understanding and managing a claim at the point of service, "when the physician is still there and the record is still there," and allowing [access] employees to set their own goals and standards of accuracy is the best model, he contends.
That point-of-service encounter will take "more than 12 minutes," Duffy concedes, but it will allow the access employee to facilitate getting a physical therapy note or an emergency department chart because he or she knows the insurance company won’t pay the claim with-out it.
An hour’s worth of labor
Studies have shown, he adds, that there’s about an hour’s worth of labor on the business side of dealing with a patient registration, billing, and self-pay collection, for instance.
"The issue is how you organize that hour," Duffy says. "The hour is traditionally spread over 70 to 80 days, with 30 days of rest in between five minutes of activity here and there. Then it takes two minutes when you get the payment in and post it. What’s wrong with this picture?"
The worst-case scenario, he says, is when the CBO executive also is in charge of access as a subordinate department, where the executive’s instinct is to say, "I need more follow-up people," which places an emphasis on the wrong end of the transaction.
"I don’t want to diminish the value of a well-run CBO," he adds, "but without overall leadership for technology, goals, and standards from a single source of inspiration or a very strong team built on equal representation and equal authority it’s going to be way too late and way too fat."
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