How the best hospitals get their money
Best practices in revenue cycle operations
Hospitals that rate the best in terms of days revenue and percentage of bad debt are more likely to focus on the basics of good revenue cycle management and prioritize their efforts on larger balance accounts while maximizing their use of automation, according to a survey by Zimmerman Communications of Hales Corners, WI.
The consulting firm surveyed more than 125 hospitals for the report. Along with data and statistical reports, the survey includes case studies of facilities that have overcome obstacles and are among the best performers.
The hospitals that qualified for best performer status averaged 51 gross days revenue outstanding (GDRO) and 2.4% of gross revenue in bad debt. The numbers are considerably better than the 1999 national average of 70 GDRO and 4.6% bad debt, according to the survey. Meanwhile, the worst performing facilities averaged 80 GDRO and 6.4% bad debt, far above the national average.
Some other characteristics of best performers:
• Preregistration of patients.
The best hospitals consistently preregister scheduled patients and focus on third-party payer information. Specifically, their preregistration procedures include collection of full demographics, insurance eligibility, and verification of benefits, as well as pre-authorization and pre-certification requirements. Where the best hospitals preregister more than half of their scheduled patients, only a third of the worst performers achieve that level.
• Quick collections.
Best performers focus on inpatient collections. More than 80% verify insurance while patients are still in-house, and more than a third request that patients stop at the cashier’s office prior to discharge.
Both the inpatients and outpatients of the best performers get their bills an average of two days faster than patients of the worst performers.
More than two-thirds of the best performers contact higher balance self-pay accounts by phone, while less than half of the worst performers make such calls. Best performers rely on their automated dunning cycles for outpatient claims, and more than a third get a statement to patients within 20 days of service.
Using electronics to get paid
More than a third of the best performers accept credit cards copayments, while only one in 10 of the worst performers accept credit cards.
The best performing hospitals begin to follow up on third-party payers within 30 days of billing, and the top 20% of those hospitals start within 20 days.
• Technology use.
Best performers submit more than 80% of their claims electronically and generate Medicare secondary bills automatically. Only about a quarter of the worst performers achieve this level of billing automation.
The best performers also make use of electronic remittance, patient accounting, and automated collection follow-up software. And the best performers like using those products, too.
• Collection progress and performance tracking.
Best performers consistently track collector performance by both dollars collected and calls made. Worst performers reportedly tracked dollars collected, but only about 15% tracked activity.
The self-pay collection cycles for the best performers are very tight. Almost two-thirds route outpatient self-pay to agencies within 120 days of service; and almost half route inpatient claims within that time frame. Worst performers consistently allow self-pay to age past 180 days.
Interestingly, about half of the best performers have three or more agencies competing for business. Worst performers use fewer agencies.
Best performers closely track dollars collected and written off, by both financial class and individual collectors.
[To order a copy of the complete Best Practice Report, call Zimmerman Communications at (888) 577-7445 or fax your request to (414) 425-2035. The cost of the report is $97.]
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