Building a Revenue Cycle Vendor Management

ProgramPresenters:

Leah Klinke – Director Patient Financial Services, WVU Healthcare

Nicholas Fricano – President, Healthfuse

September 26, 2014

“If you chase 2 rabbits…you will not catch either one”

– Russian Proverb

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Background

• Big shoes to fill

• Growing list of projects – EPIC upgrade, meaningful use, business office consolidation, etc

• “Tightening of the belt” – cost savings initiatives and revenue recovery goals

• Shifted more to external partners to “share the load” (and the risk)

• Required more from our vendor partners; management is a 2-way street

• Focus was required achieve goals in a timely and efficient way (doing it the right way)

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WVUH Trend Similar to Industry* – Spending More (on third-parties) and Getting Less (rising cost to collect)

Percentage of Revenue Cycle Operating Budget Spent on Third-

Parties

Cost to Collect (Headcount, Technology, Third-Party

Spend/Outsourcing)

* Healthfuse statistics as of January 2012 – based on combination of collected data and surveys from 983 health systems

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Our Top 5 Challenges:

• Patient complaints or compliance issues

• Over invoicing or high fees in general

• Sub-par performance (and functionality) or limited visibility into performance

• Mistakes requiring our time to resolve (e.g. inventory reconciliation)

• Limited vendor interaction or limited vendor understanding of our goals and day to day operations

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#1 – Developed Vendor Portfolio

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#2 – Formed a Vendor Management Office (VMO)

• Manager – dedicated leader for all things revenue cycle vendors – evaluating current partnerships, new partnerships, etc. Liaison between WVUH RCM leadership and vendor

• Analysts – dedicated team responsible for tracking and monitoring outcomes, evaluating trends regarding outcomes and activities, developing business cases for change, and conducting market research

• Auditors – dedicated team responsible for auditing accounts and determining root causes of errors – manual audits and technology-enabled audits

• Legal – full time resource is not required. Contract renegotiations required

• IT – full time resource is not required. We generated reports and customized a technology to enable macro-auditing, streamline reporting, and reconcile invoices and inventories

#3 – Developed Outcome-Based ScorecardsNet Liquidation Comparison

KPITarge

tActua

l

Gross liquidation % on balances > $5,000 12.5% 9.5%

Gross liquidation % on balances < $200 48% 45%

Median number of payments per patient 0.5 0.3

Average payments by patient $113 $56

Median age of first payment - BAI 54 63

Median age of first payment - PSP 93 94

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#5 – And Set Goals

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#4 – Developed Activity-Based Scorecards (Audit)

KPITarge

tActual

Median # of phone attempts – first 120 9 3

Median contacts per patient 0.7 0.2

Median statements per patient 4 4

Median day of first contact 41 78

Median age of account placement 32 56

Vendor compliance to SLAs 85% 47%

#5 – And Set Goals

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#6 – Monthly Reconciliations

-Invoices

-Inventories

#7 – Consistent Operating Rhythm & Governance

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#8 – Coaching & Remediation

Common Findings

• SLA and compliance discrepancies

• Improper balance adjustments

• Incorrect patient demographic information

• Mismanagement of automated workflow tools

• Unanswered requests for the application and/or release of account holds

• Insufficient tracking of defaulted payment plans

• Inadequate documentation of account notes

Common Improvements

• Refined inventory and transaction reconciliation to correct balance discrepancies

• Revised system logic used to apply automatic f/up based on manually applied acct dispositions

• Honed tracking of FA and CC apps

• Elevated accounts in need of supervisory review - weekly

• Shortened response requests for the app and/or release of acct holds

• Augmented utilization of skip tracing protocols

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• Invoice issues – 100% audits (and across vendors)

• Accounts not worked to SLA or industry standards. SLA compliance was 8% - 100% account audit (tech-enabled) and manual review of exceptions; compliance is over 95% today

• Outdated contracts; old terms – vendor getting paid, but not receiving or working accounts – renegotiated contracts

• Tools not used but being paid for – discontinued contracts

• Addressed RFPs (underpay, TPL, BD) that were sitting on desk for 6 months – dedicated resource to coordinate entire process

High Impact Efforts (Areas of Focus) – First 180 Days

“Barry Bonds doesn’t step up to the plate thinking home run. He

steps up to the plate focused on a sweet swing”

– Jim Camp (renowned expert negotiator)

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Managing the Fundamentals is Key…

“Success demands singleness of purpose”

– Vince Lombardi

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But Since It’s Football Season…

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Questions?

For Additional Information:

Leah Klinke

klinkel@wvuhealthcare.com

304.598.4198

Nick Fricano

nfricano@healthfuse.com

414.988.1136