Achieving Record Financial Performance Through Revenue Cycle Management Partnership

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Achieving Record Financial Performance Through Revenue Cycle Management Partnership

When The Outsource Group (TOG), a Parallon® Company, partnered with Madison County Hospital to revitalize its revenue cycle, the returns were far reaching. Today, the hospital, has a user-friendly billing system, a high-performing workforce, and implemented best practices, all of which cut bad debt in half and doubled days cash on hand.

Madison County Hospital

Not-for-profit community hospital

London, Ohio

Facing the collapse of the financial market and poor economy, Madison County Hospital needed to grow revenue by making sweeping changes to its revenue cycle processes.

As if the failing economy didn't create enough of a challenge, Madison County Hospital, like many independent, rural facilities, had existing challenges, like its payer mix of mostly Medicare, Medicaid and uninsured patients.

Furthermore, finding skilled resources who are able to navigate the complexities of healthcare reimbursement is becoming more difficult. Madison County Hospital was no exception. Combined, these challenges resulted in limited cash flow and prevented the facility from investing in upgraded technologies, introducing new services and recruiting experienced, knowledgeable revenue cycle professionals.

A full-scale revenue-cycle assessment identified several target areas for improvement, including staff training, revenue cycle processes, technology, and communication practices. CFO Michael Browning believed that the hospital's financial wellness depended on sticking to core competencies, such as providing high quality patient care. He determined an outsourcing partnership was the best course of action for a fast and effective turnaround. "We were looking to quickly accelerate cash, implement proven industry practices, and provide long-term consistency," explains Browning.

Given the breadth of changes Madison County Hospital faced, leadership decided to fully outsource all revenue cycle management functions, including billing, cash posting, financial counseling, charge posting, insurance, and self-pay collections (and later, management of all patient access functions). The hospital chose a partnership with TOG, now a Parallon company, given its highly experienced professionals and its proven expertise in everything from improving revenue capture and billing throughput to decreasing vendor fees, and labor and process costs.

Together, the hospital and TOG defined priorities and developed an action plan. Goals included improving the hospital's bottom line, patient advocacy, and physician relations, all with no capital outlay, consulting fees, or budget increases. As a first step, most hospital business office functions were moved to TOG's specialized claim centers. Nearly 90 percent of employees affected by the transition were either hired by TOG or moved to other positions in the hospital.

Essential processes were addressed, such as "balance-after-posting reconciliation." The hospital did not have a reconciliation process established to address balances left on accounts that had transactions posted. In some cases, it took several months before the account fell into a follow-up work queue. An automated balance-after-posting process was created, allowing secondary bills, credit balances, and denials to be addressed and resolved daily.
Additionally, employees were educated to think like analysts and a new user-friendly billing system was installed. On the patient services side, eligibility and patient bill estimator products were implemented, along with new processes for screening uninsured patients for Medicaid and charity care.

Ultimately, the changes gave CFO Browning more control and more time for strategic planning. "I no longer have to micromanage the day-to-day operations," he notes. "I can focus on other priorities and opportunities."

Madison County Hospital quickly enhanced its financial situation. Days cash on hand more than doubled from 86 days to 183 days. Net A/R days decreased from 65 days to 37 days and cash flow improved greatly with average monthly point of service collections rising from .1% to 1.8%. Finally, stronger patient advocacy processes and cohesive financial policies served to improve physician and patient relations.

Before and After Performance Metrics

TOG Madison Before and After Results

Hospital leaders are enthusiastic about the transformation. "We needed a partner that could provide those additional resources at approximately the same cost level," says Browning.  The question was, which partner to choose? Based on the results, I think The Outsource Group was the best choice.