Issue link: https://beckershealthcare.uberflip.com/i/324690
13 Focus on the revenue cycle is critical. We are actively collecting what is owed to us and creating a more efficient revenue cycle. We've invested some money in the revenue cycle to ensure that we can collect every dollar. The executives must work together as a team and focus in the right areas. For example, we spent quite a bit of money on physician acquisitions, and it's worked out well for us. A few specialties — orthopedics, bariatrics — have helped our bottom line significantly. Those were strategic investments that helped us overcome those types of problems. DM: We did experience lower admissions in 2013, but we were able to keep expenses in line. We're the only hospital in our county, so we have a little bit of a competitive advantage. All of our commercial contracts are favorable. Twenty-eight percent of our business is commercial, so for that chunk we have favorable reimbursements. We tell our management team and our board one of the things we strive to be is a high-performing hospital. The consensus is if you have a 4 percent op- erating margin, you're high-performing. That always seems to be the number when you're talking to people. We're ecstatic to be at 7 percent, and when we budget, we make sure to get to at least that 4 percent. If we do what we do and do it well, people will continue to come to us, and managed care contracts will continue to give us good rates. We also work very hard with self-pay clients and make sure everyone can get Medicaid if eli- gible. We try to maximize the government reimbursements that are out there. DN: We are primarily in the northwest section of Wisconsin. The closest metro area is Minneapolis. It's kind of a far drive but still doable. Labor force and employment is really driven by a lot of smaller employers here. Our larg- est employers are school districts and county governments. Because of that, there really isn't strength of a strong commercial product that can take on a managed care market. What's really interesting about this market, the managed care network has never taken hold. About 35 percent is managed care, 53 percent is Medicare and the rest falls to self-pay and Medicaid. The managed care business is such that we are able to get pretty decent contracts, and that's what drives our margins at this time. But I will say this: We know as the markets are changing, there's a little bit more pressure coming in from Minneapolis west of us, and east of us is Aurora Health Care and Ministry Health Care expansions. As that happens, narrow networks and managed care are coming in. When we look at the future, we have to get costs down. We've done a lot of education with our staff on how the markets are changing. If you're a high- performing hospital with high margins, people may ask, "If we're doing so well, why do these things?" To get that to stick, you have to spend time edu- cating and working with staff so they understand not just that we are doing this, but why. RR: You have to look at your business lines and really drill down and see if it's something you want to [offer] long term. Get rid of business lines that aren't throwing anything to bottom line, especially if someone else in community has it. Home health was an example. We were going to sell our home health because it was in a negative position, but we actually improved it and made it better. Q: You all have mentioned labor in some fashion. Layoffs are un- deniably on the rise in healthcare. Do you foresee more layoffs in the future as hospitals are no longer defined by four walls? Are you being forced to rely on third-party contractors more as a result? GE: I think we're all under the understanding and expectation that the acute- care side of the healthcare equation is going to be shrinking, and we need to adapt to that. There may be significant closures of hospitals, and people need to be prepared for that. But we all need to shift our resources out of the more expensive inpatient side to the less expensive outpatient side. I don't know if layoffs are the answer, but reallocation of resources to outpatient areas is the best option. There is a lot of competition on inpatient, and that's why being strategic is so important. DM: We utilize the Premier productivity system. We've been on that for six to seven years. The management team looks at productivity every two weeks, which runs with pay periods. We can pull in staff, and we try to work part- time people up before we give overtime to full-time people to limit overtime expenditures. We don't use agency staffing anywhere, which is obviously a nice cost saving. We have the message out there: We don't want to get to the point where layoffs are necessary. We want to stay efficient. We have a good drive and good attitude, and we are improving patient satisfaction scores as much as possible. DN: Layoffs are one of the things none of us want to do. That's why part of it is education for our folks and staff. Productivity is about what's the allowable [staffing] rate, and how do you maintain that? If you are right-staffed and maintain high quality, it will help your business grow, and you won't have to worry about layoffs. It has forced a lot of our staff to take a lot of flex time, probably more so than ever before. But they also understand it in most cases. It's feast or famine when the census comes in. We staff 180 beds at Sacred Heart, we were really going well earlier, but today we're down to 104. When you have those wild swings, that's part of the challenge of how you staff right. RR: That's a good question. That's hospital-dependent. Some hospitals have no-layoff policies because they are so big. If you're in an area of no growth and you have your costs under control, I can't see any other way [of main- taining profitability] than by reducing services, which may include layoffs. We happen to be in a small growth market — at least we're not shrinking. So fortunately we haven't had to do that. But if we were shrinking, and you asked me that, it's something we'd have to consider. It's never a popular thing as hospitals are a big part of the economy in communities. If we were to do that, it would have horrible implications. Q: What are some of the biggest revenue cycle and cost ac- counting challenges on your plate right now? GE: Payers are always adept at finding ways of not paying. We also went live with our electronic medical record recently, and we are meaningful use stage 2 compliant. When we did that, we had to blow up and reset the revenue cycle. We've developed key metrics and processes to make sure it's working correctly. We did use some outside help, not a lot. It's really an internal focus on what are the key drivers of the revenue cycle. It's a roundabout way of saying, with the advent of new EMR systems, we had to revamp our system. There's a whole host of information in there. We just make sure we find the right information and use it correctly. DM: For the revenue cycle, our biggest is there are a couple commercial payers who have gotten very aggressive with denials — and unsubstanti- ated denials. We've talked to our hospital association about this, and they found it to be a statewide issue. We've got the staff and dedicated the horsepower to appeal those and go after them, but sometimes I wonder if colleagues are just rolling over on these and basically giving up and focus- ing attention on other areas. We're really trying to document right. We say if you didn't document it, you didn't do it. We hammer that message at employee meetings. Yes, collecting money is the billing office's responsi- bility, but it's all of our responsibility to give them the tools they need to get claims right the first time. We have some point-of-service initiatives. Those are in their infancy, and we don't know how they will play out in the long term. We've also worked with our local bank, a regional bank, and now we have a loan program with them for people who are making payments and to help them make those payments. We're also dealing with RAC audits, and all those hurt. They take time away from people doing their jobs. DN: Denials — we're starting to see those come up. We're seeing a push around medical necessity, especially around short stays. That's been driven around the Medicare two-midnight rule. There is still a tremendous amount of confusion for case managers and physicians for not having the right documentation. What will Medicare do three years from now? Will those be denied later on? There's a lot of uncertainty, and that's probably the largest challenge we have.