Roundtables

Hospitals Feeling the Squeeze: 4 CFOs on Today's Most Pressing Financial Issues 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 accounting 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. ere's a whole host of information in there. We just make sure we find the right informa- tion and use it correctly. DM: For the revenue cycle, our biggest is there are a couple commercial pay- ers who have gotten very aggressive with denials — and unsubstantiated 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 aer them, but sometimes I wonder if colleagues are just rolling over on these and basical- ly giving up and focusing 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 responsibility, 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 initia- tives. ose 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 pay- ments and to help them make those payments. We're also dealing with RAC audits, and all those hurt. ey take time away from people doing their jobs. DN: Denials — we're starting to see those grow. We're seeing a push around medical necessity, especially around short stays. at's been driven around the Medicare two-midnight rule. ere is still a tremendous amount of confusion for case man- agers and physicians about what is required for the right documentation. What will CMS RAC audits do three years from now when they may look back on these two-midnight stay cri- teria? Will these cases be denied later on? ere's a lot of uncertainty, and that's probably the largest challenge we have. One of things we are doing to address denials and revenue cycle issues, was to start a revenue integrity committee. Once a month, this multidisciplinary committee that is led by the director of patient financial services, and includes our directors of case management, health information management, managed care, information systems, and several ancillary directors, work through many of billing issues asso- ciated with denials, coding and other issues identified as a result of internal audits. is is something we've really worked on to establish this year. RR: In the revenue cycle, it's the ever-changing rules of Medicare. No matter how well you bill or code, you're going to get less reimburse- ment. But if you bill the old way, it'll be considered incorrect. You have to quantify that and adjust your bud- get accordingly. For cost accounting, we're too small to have full-blown cost accounting system. We have a hy- brid system. It's critical to know your costs and know where you're making money on certain DRGs. Most hospi- tals need to break even on Medicare today. When commercial insurers start paying less and less, you're not going to be around [without breaking even on Medicare]. Q: On the supply side, what are some of the more innovative and effective measures? How do physician prefer- ence items, vendor credentialing and other areas fit in? GE: ree years ago, we exited from one healthcare system for our pur- chasing and supply chain. We had to rebuild it. We then signed an agree- ment with Yale New Haven (Conn.) Health System where we utilize their supply chain services. We have access to Yale's pricing now. We're a $160 million organization, and that's a $2 billion system. So we've realized $1 million or more in savings on that piece alone. We have a lot of service and vendor contracts. I went through and renego- tiated every material contract. I said you have to cut what we're paying. We "no matter how well you bill or code, you're going to get less reimbursement." Rich Rico, CFO of Sky Lakes Medical Center in Klamath Falls, Ore.

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