strategies for revenue cycle success

by jeni williams

In an era of healthcare reform, excellence across all areas of revenue

cycle operations is critical to a hospital’s success. Here, winners of

HFMA’s MAP Award for High Performance in Revenue Cycle share

their strategies for performance excellence.

As healthcare reform leads to significant changes across the

industry, achieving optimal performance in revenue cycle opera-

tions has never been more important for hospitals.

“In an environment of healthcare reform, we’re going to need

to drive toward excellence,” Richard L. Clarke, DHA, FHFMA,

HFMA President and CEO, told attendees of HFMA’s ANI: The

Healthcare Finance Conference in June. HFMA announced its

MAP initiative and the 2010 MAP Award winners at ANI.

“The status quo and incremental change will not prepare us

for the drastic changes in patient access, insurance, and payment

coming our way,” Clarke says. “To thrive, we will need to provide

high-quality care and service at low cost. And we will need to

ensure that our revenue cycles are as efficient and productive

as possible.”

In 2009, HFMA created the MAP Award for High

Performance in Revenue Cycle to honor hospitals that achieve

revenue cycle excellence. MAP Award winners excel in

meeting key benchmarks for success, as established through

HFMA’s MAP initiative while adhering to the principles

outlined by HFMA’s PATIENT FRIENDLY BILLING® project.

The award is sponsored by 3M Health Information Systems.

Here, three MAP Award-winning hospitals share the

specific strategies and tactics that made their organizations

high performers—and what your organization can do

to enhance revenue cycle performance.

This award is an annual award recog-nizing healthcare organizations that achieve excellence in the revenue cycle. Applications for the third-annual award will be available in early 2011.

Map Keys are defining key indicators of revenue cycle performance. Using MAP Keys, healthcare finance professionals can improve business intelligence, strengthen revenue cycle management, and decide—based on industry-created metrics—where to focus for improvement.

The MAP App is a tool being piloted for tracking a provider’s performance throughout the revenue cycle and comparing performance with that of other organizations. The MAP App also offers tips on evolving best practices and includes a community discussion forum for airing common concerns. HFMA plans to roll out the tool for general use later this year.

The MAP Event will bring together the best ideas on how to improve revenue cycle performance. A MAP event will be held Nov. 7-9 in San Diego; more information is available at www.hfma.org/mapevent.

HFMA’s MAP initiative gives providers the tools they need to measure revenue cycle performance, apply evidence-based strategies for improve-ment, and perform to the highest standards of revenue cycle excellence. HFMA’s MAP initiative features the following.

For more information

about HFMA’s MAP initiative,

visit www.hfma.org/map.

HFMA’s MAP Initiative: Taking a Closer Look

Strategies for a More Collaborative Revenue CycleSeven years ago, Saint Francis Hospital in Tulsa, Okla., undertook an initiative to significantly overhaul its revenue cycle operations.

At that time, the hospital relied on four different IT systems for

revenue cycle management. The need for improved communication

between front-end and back-end revenue cycle staff at Saint Francis

had become increasingly clear, and the hospital’s days in accounts

receivable (A/R), which were in the mid-40s, were higher than the

organization would have liked. Additionally, Saint Francis sought to

implement new tools that would enhance insurance verification.

“We really imploded our revenue cycle operations to make

them more efficient and much more collaborative,” says Eric Schick,

vice president of finance for Saint Francis Hospital. “We studied our

revenue cycle from the front end to the back, and ran dry scenarios

to determine where areas of improvement existed. Through that

process, we determined that there were some processes that could

be shifted from the back end to the front end of the revenue cycle.

We also made the decision to create a centralized scheduling

department and prearrival department.”

One of the first challenges Saint Francis’ revenue cycle depart-

ment tackled was the need to increase collaboration between front-

end and back-end revenue cycle staff. “At that time, the front-end

staff really didn’t connect with the back-end staff; they were both

in separate worlds,” Schick says. He and Renee Edwards, director

of patient financial services, began to hold meetings with staff from

both areas to show them how their work is connected and the ways

in which their efforts are integral to the performance of the depart-

ment as a whole. “They began to understand that they are one

team—that they succeed together and that they fail together.”

When Saint Francis implemented new software and tools for

revenue cycle management, the hospital trained its front-end

revenue cycle staff in back-end processes, and vice versa. “This

helps front-end and back-end staff understand each other’s worlds.

It also increases collaboration among the revenue cycle team,”

Schick says. Saint Francis also hired two full-time and one part-time

trainer for the department, with training programs held monthly

for new staff and quarterly for staff who desire or need increased

education in a particular area.

Saint Francis measures performance against metrics such as

days in A/R; aged A/R as a percentage of billed A/R by payer,

which enables the health system to monitor its partnership with man-

aged care payers; days in discharged not final billed (DNFB), with

a DNFB goal of four days or less; point-of-service cash collections;

insurance verification rate; and service authorization rate. When

performance falls below expectations, revenue cycle leaders discuss

the issues with the directors of specific areas or with individual

employees, when appropriate, and develop plans for improvement.

And when a claim is rejected, the claim is sent back to the staff

person who originally made the error to be corrected. “This helps

the person who made the error to learn from it,” Edwards says.

“We’re a very productivity driven system,” Schick says. “For

example, we count transaction codes on the back end and look

at the number of claims that are processed to make sure staff are

meeting their monthly targets. Over the past year and a half, we’ve

also paid increased attention to the intricate role that our medical

records department plays in revenue cycle performance, and have

worked with medical records staff and physicians to ensure that

charts are completed in a timely manner. It’s important for physicians

and medical records staff to recognize that when DNFB spikes from

three days to seven days for a period of 60 days, then 60 days from

now, our organization is going to have trouble meeting our cash

goals, because that increase in DNFB days will have a domino effect

throughout the revenue cycle.”

The hospital’s focus on tightening its revenue cycle operations

has paid off. Saint Francis has dramatically reduced its days in A/R,

from the low 40s in late 2008 to the mid-20s today, and its days

in total DNFB measured just 3.42 in February 2010, when the

hospital’s MAP Award application was submitted. Now, the hospital

is working with managed care payers on issues that have caused

delays in processing claims. Ultimately, Saint Francis’ efforts in this

area will lead to claims being paid more quickly.

“Our efforts to improve revenue cycle operations have really

given us the capacity to move our performance to the next level,”

Schick says.

Using Data to Drive Revenue Cycle PerformanceAt Riverside Methodist Hospital in Columbus, Ohio, one of five OhioHealth facilities, an atmosphere of teamwork among the health system’s revenue cycle departments has helped to propel the hospital’s revenue cycle performance.

Several years ago, OhioHealth began to consolidate its business

office operations as a new IT system was introduced. The health

system also brought its patient access, health information manage-

ment, and central business office operations under the leadership

of the health system’s vice president of revenue cycle, who reports

to OhioHealth’s corporate CFO.

Weekly, OhioHealth’s revenue cycle leadership team meets

to discuss challenges, results, projects, training, and resources.

Monthly, OhioHealth’s revenue cycle leaders, hospital CFOs, and

other key finance representatives meet to review results and discuss

action plans. Cross-departmental revenue cycle teams meet at least

monthly, and targeted revenue cycle improvement teams meet as

frequently as needed. Additionally, OhioHealth hired IT personnel

who work solely with the revenue cycle team, as well as full-time

trainers who develop orientation and continuing education

sessions for staff.

This atmosphere of “systemness” among revenue cycle depart-

ments throughout the health system has enhanced OhioHealth’s

ability to effect significant improvements in its revenue cycle opera-

tions. At Riverside Methodist Hospital, aged A/R as a percentage

of billed A/R over 30 days is just 11.1 percent; over 60 days, 7.4

percent; and over 90 days, 4.5 percent. Days in total DNFB were

4.87 in February 2010, when the hospital’s MAP Award application

was submitted, and cash collection as a percentage of adjusted net

patient services revenue is 113.1 percent. And 80 percent of River-

side Methodist Hospital’s customers would recommend the hospital.

“One of the keys to our success in revenue cycle performance

is that all components of the revenue cycle report to finance,” says

Jane Berkebile, vice president, revenue cycle for OhioHealth. “It’s

very hard to achieve the same level of results in revenue cycle per-

formance if staff in health information management or patient ac-

cess don’t report to the same leaders as your billing staff. All revenue

cycle staff need to be on the same train, going in the same direction.

If you don’t have that level of systemness, when there are problems,

you’ll have people pointing fingers at each other rather than working

together toward a solution.”

OhioHealth also relies on data to measure and drive revenue

cycle performance at facilities such as Riverside Methodist Hospital.

The health system recently implemented an automated quality as-

surance system for registrars that monitors all registrations, includes

more than 200 real-time edits, returns errors to registrars to cor-

rect, and provides detailed error reporting and quality assurance

data down to the individual registrar. “Following implementation of

this system, our overall percentage of returned mail dropped from

2 percent to 1 percent, and our clean claim rate increased,”

Berkebile says.

Data from revenue cycle operations also are used to set goals

for revenue cycle staff and to measure progress; results are regularly

shared with staff. “Last year we had significant targets around patient

cash and around write-offs. They were stretch targets for us—and

we exceeded those targets,” Berkebile says. “Our point-of-service

[POS] collection goals are developed by facility and down to the

department level based upon the percentage of opportunity. We

provide feedback to individual registrars and financial counselors,

comparing their individual collections with the target goal.” The

increased focus on POS collections has paid off for OhioHealth

and Riverside Methodist. In the previous fiscal year, POS telephone

collections at time of preregistration averaged $180,000 per

month. With focused efforts and targets, this year, that average has

increased to $370,000 per month. “This is just one component of a

very successful POS program that increased POS collections year

over year by 21 percent,” Berkebile says.

One of the keys to our success in revenue cycle performance is that all components of the revenue cycle report to finance.” Jane Berkebile, vice president, revenue cycle, OhioHealth

surance system for registrars that monitors all registrations, includes

To nearly all patients receiving an electiveprocedure (75% or more of all elective procedures)

To some patients (below 75% of all patients)

At scheduling upon request

At registration upon request

At time of service upon request

To What Extent Do You ProvideEstimates of Patient’s Financial Obligations Prior to Rendering Services?

x

x

x x x

x x x

x x x

The Valley HospitalRidgewood, N.J.

Saint Francis HospitalTulsa, Okla.

Riverside Methodist HospitalColumbus, Ohio

Estimating Patient Financial Obligations Prior to Service

R

Net Days in A/R 23.2 36.8 35.2

Operating Margin 10.3% 6.0% 7.7%

Cash Collection as a Percentage ofAdjusted Net Patient Services Revenue

105.7% 100.5% 113.1%

Total Bad Debt Write-Off 4.1% 1.02% 1.4%

Total Charity Care Write-Off 3.7% 1.59% 4.29%

Days in Total Discharged Not Final Billed 3.42 5.6 4.87

Patient Would Recommend 82% 79% 80%

The Valley HospitalRidgewood, N.J.

Saint Francis HospitalTulsa, Okla.

Riverside Methodist HospitalColumbus, Ohio

A Snapshot of Award-winning Performance

*Exhibits reflect responses provided by the organizations in February 2010, when applications for MAP Award were submitted.

“

HFMA’s MAP Award for High Performance in Revenue Cycle, sponsored by 3M Health Information Systems, recognizes healthcare organizations that are distinctive, innovative, and effective in revenue cycle process improvements and patient satisfaction. In addition, it recognizes sustainable financial performance that serves the mission of the organization. For more information, visit www.hfma.org/mapaward.

About HFMA’s MAP Award

The following organizations received HFMA’s MAP Award for Revenue Cycle Excellence in 2010.

MAP Award Winners

• Denials Overturned by Appeal • Net Days Revenue in Credit Balance • Preregistration Rate • Insurance Verification Rate • Service Authorization Rate • Net Days in Accounts Receivable • Aged A/R as a Percentage of Billed A/R

The following 19 KPIs comprise the MAP Keys:• Aged A/R as a % of Billed A/R by Payer Group • Days in Final Billed Not Submitted to Payer • Days in Total Discharged Not Submitted to Payer • Late Charges as % of Total Charges • Initial Denial Rate—Zero Pay • Initial Denial Rate—Partial Pay

• Point-of-Service Cash Collections • Cost to Collect • Cash Collection as a Percentage of Adjusted Net Patient Services Revenue • Bad Debt • Charity Care • Days in Total Discharged Not Final Billed

HFMA recently developed a common set of revenue cycle key performance indicators (KPIs) known as MAP Keys in collaboration with multiple stakeholders. The MAP Keys promote the consistent reporting practices and peer-to-peer comparisons needed to achieve significant revenue cycle performance improvement. Embracing the MAP Keys for tracking revenue cycle performance can help hospitals identify revenue cycle performance trends and pro-actively prioritize and address areas in need of attention.

Key Performance Indicators for Tracking Performance

• Baylor Medical Center at Irving, part of Baylor Health Care System, Irving, Texas• CHRISTUS Schumpert Health System, part of CHRISTUS Health, Shreveport, La.• Hospital of the University of Pennsylvania, part of the University of Pennsylvania Health System, Philadelphia• Riverside Methodist Hospital, part of OhioHealth, Columbus, Ohio• Danbury Hospital, part of Danbury Health System, Danbury, Conn.• Saint Francis Hospital, part of Saint Francis Health System, Tulsa, Okla.• The Valley Hospital, part of Valley Health System, Ridgewood, N.J.• Princeton Medical Center, part of Baptist Health System, Birmingham, Ala.• Geisinger Medical Center, Danville, Pa.• Brookwood Medical Center, part of Tenet Health System, Birmingham, Ala.

The collaborative approach to revenue cycle performance

improvement has pushed revenue cycle performance to a higher

level at The Valley Hospital. Department by department, operating

margins have increased, from 2.1 percent in 2000 to 3.5 percent

in 2009. Managers’ yearly goals are tied in part to the hospital’s

financial performance, so that all hospital leaders have a stake in

the hospital’s revenue cycle performance. Monthly reports that

compare each department’s performance with its target goals keep

departments on track. Notably, the hospital’s patient satisfaction

scores, quality indicators, and employee satisfaction have demon-

strated improvement.

“I think the continual feedback we provide for managers and

employees throughout the hospital helps them to participate in

working toward the hospital’s revenue cycle goals,” Klutkowski says.

It’s important to take the time to sit down with individual departments

and talk with them regarding their concerns, because every depart-

ment is different. For example, what’s going on in radiation therapy?

What problems is the department experiencing with managed care

contracts? What are the concerns of leaders and key stakeholders

in the department? It’s also important to involve medical records in

these discussions, where appropriate, so you can really concentrate

on any coding issues that exist and help the department take steps

toward improvement.”

One of the keys to effecting change in individual departments

is to include all the appropriate stakeholders in discussions, not

just the department leaders. “Often, revenue cycle leaders choose

to meet with the department director when in fact a staff member

might have more influence in improving the department’s revenue

cycle performance,” Klutkowski says. “In some instances, including

an IT person in discussions with a department also can be key. Bring

payment records with you—most departments have no idea what

they actually get paid. Show the departments what they charged in

relation to what Medicare and insurance companies actually paid,

without saying, ‘You missed a charge.’ Information such as this will

be an eye-opener for leaders and staff and will help them to better

focus on the actions needed for improvement.”

We began to offer revenue cycle educa-tion to everyone throughout the hospital—specifics that really mattered to their department—and provided the support to helppeople improve performance as it relates to the revenue cycle.” Bill Klutkowski, CPA, assistant vice

president of finance, The Valley Hospital

Accelerating Revenue Cycle Improvement through a Change in CultureAt The Valley Hospital in Ridgewood, N.J., a change in the hospital’s culture and the mindset of staff have fueled significant improvements in revenue cycle performance.

We’ve always been strong in revenue cycle performance, but not

as strong as we are today,” says Bill Klutkowski, CPA, assistant vice

president of finance for the hospital. “We weren’t struggling for cash,

but we knew our revenue cycle performance could be even better.

The challenge for us was how to go from ‘good’ to ‘great.’”

The Valley Hospital began its quest toward excellence in

revenue cycle performance in 2000 by educating all employees

regarding their contributions to the hospital’s financial performance.

Everything changed with the introduction of Medicare’s ambula-

tory payment classification system. Edits and payments were all in

turmoil. We learned something new every day and realized quickly

that we couldn’t do it alone. We needed department head involve-

ment and accountability to the revenue cycle,” Klutkowski says.

“We began to offer revenue cycle education to everyone

throughout the hospital—specifics that really mattered to their

department—and provided the support to help people improve

performance as it relates to the revenue cycle. Our organization

also offers a leadership institute series for department leaders

three times a year, and we’ve given presentations to leaders that

address common budget issues, expense management, and various

aspects of the revenue cycle. When new managers join the

hospital, they meet with our director of budgets and reimbursement

staff to review their responsibilities. Each of these initiatives helps

to set targets and expectations related to revenue cycle

performance earlier.”

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Lessons Learned

Build the morale of your staff. The Valley Hospital in Ridge-

wood, N.J., created a “finance morale committee” to discuss issues

that could affect employee satisfaction and ways to boost the spirits

of staff. Each quarter, representatives who are chosen by their peers

plan events for the staff (the group once held a carnival for revenue

cycle staff in the hospital parking lot) as well as community service

activities, such as contributing to a compassion fund set up to help

hospital employees who are experiencing financial hardship.

“Finance is a very stressful environment; we’re all expected to

do more with less. It’s good to invest in the morale of your staff,” says

Josette Melillo, director, patient financial administration, for The

Valley Hospital. In 2009, employee satisfaction scores ranked in the

91st percentile for revenue cycle staff, with a mean score of 85.7

percent, 12.6 percentage points higher than in 2000.

Invest in continuing education for revenue cycle staff. MAP Award winners have dedicated trainers for their

revenue cycle departments. At Brookwood Medical Center in Bir-

mingham, Ala., trainers provide reeducation for staff who are strug-

gling and conduct mandatory education refreshers for the revenue

cycle team. “We also encourage our staff to obtain certification,”

says Doug Carter, CFO. “Staff who achieve certification receive an

increase in pay, so there is an incentive for them to meet this goal.”

At Saint Francis Hospital in Tulsa, Okla., where front-end staff

have been trained in back-end revenue cycle processes, and vice

versa, “Staff realize that they are one team, and that they succeed

together,” says Eric Schick, vice president of finance.

Meet regularly with managed care payers to address issues that are delaying processing of claims. Such meetings

have enabled Saint Francis Hospital to address problems with con-

tract enforcement and claims processing that are delaying payments

Move your organization’s revenue cycle performance to the

next level at HFMA’s MAP Event. The event will feature revenue

cycle leaders from high-performing hospitals, who will discuss

proven tactics for achieving revenue cycle excellence.

Learn Strategies for Transforming Your Hospital’s Revenue Cycle Performance

HFMA’s MAP Event, to be held Nov. 7-9 at the Coronado Island

Marriott Resort and Spa in San Diego, will offer interactive op-

portunities for participants to learn best practices for revenue cycle

performance. Additionally, the event will feature a tour of MAP

Award-winning Sharp Grossmont hospital and insight from keynote

speaker Quint Studer, who will discuss the importance of evidence-

based leadership

For more information, or to register, visit

www.hfma.org/mapevent.

to the hospital. “Because our revenue cycle is as tight as it is,

we’re able to pay attention to details such as why some claims aren’t

being paid quickly, and to dial down into those issues and address

them with payers,” Shick says. “It takes diligence, perseverance, and

a lot of data to effect change, but it can be accomplished. There are

a lot of other providers in our market who are benefiting from our

efforts in this area.”

Maintain a dedicated IT staff for revenue cycle. “I have

my own IS team that works solely on revenue cycle projects,” says

Jane Berkebile, vice president, revenue cycle, for OhioHealth. “This

allows us to move very quickly to resolve any issues with technology

within the revenue cycle.”

Celebrate successes. OhioHealth keeps a treasure chest

full of dollar-store items in each of its revenue cycle departments to

reward employees who reach certain targets. This year, the health

system also held a “Right Choice Awards” program to honor individ-

uals and teams who contributed to the health system’s revenue cycle

success. Staff at Saint Francis Hospital are treated to an afternoon

at the zoo or the movies to celebrate the achievement of significant

goals. “It’s important to let your staff know that they are doing a great

job and that their efforts are appreciated,” Schick says.

Recognize the efforts of other departments in the organization that contribute to the organization’s revenue cycle success. At The Valley Hospital, revenue cycle staff recently

showed their appreciation to employees in other departments by

inviting them to a “sweets party,” complete with a chocolate fountain.

You have to develop a good relationship with other departments

that contribute to your organization’s revenue cycle success,” says

Bill Klutkowski, assistant vice president of finance.

“