Non-Profit Facility Sutter Health - Essay Example

Introduction

Sutter Health is non-profit facility and is situated in Sacramento. It attends to patients from Northern California towns and cities. In 1918, after the influenza epidemic, the community leaders established Sutter Hospital for the community use. There are several Sutter Health-affiliated facilities in California dating back to 1800. In 2006, the health system started its commitment to patients’ collections improvement. Souza & McCarty, (2007) wrote the article ‘From bottom to top: How one provider retooled its collections' to describe the way Sutter Health System used its collection methodology to improve the revenue cycle. Through this process, Sutter Health System changed the patients’ collections and registration department culture. To achieve more, the health system used other methodologies apart from the retool procedures and registration.

The paper will examine and evaluate in details the presentation of problems, the important facts, the results achieved and the employed solutions. The essay will also identify and discuss the accounting practices used by Sutter Health System to solve its collective problems. From the article published by Margie Souza and Brent McCarty, the paper will provide background information about the health facility. From research, the paper will provide an opinion about the method used by Sutter Health System in California. To solve the problem of responsibility collection in healthcare facilities and hospitals, the management team should be equipped with skills and knowledge. Consequently, a program that keeps patients' payment records should be adopted and integrated according to the setting of the hospital management.

Sutter Health System

By 2006, in Northern California Sutter Health System was one of the largest medical facilities facing a reduction in dollar collections for responsibility amounts for patients. In additional it had a disturbing trend of increased outstanding balances in the account receivables (A/R). The combination of rising unemployment and employer’s provision of higher deductible health plans due to a collapsing economy caused the disturbing trends. For the purpose of improving the condition, a decision was arrived at to cautiously examine and analyze procedures and policies available without the need of reorganizing the revenue collection department or adopting a different accounting system. There were significant financials repercussions for administrative and general overhead in both solutions (Souza & McCarty, 2007).

In the Margie Souza and Brent McCarty article there were two critical issues revealed in the process of problem identification. The first issue was giving employees responsibility of collecting revenue relevant information. To achieve valuable management reports, it was discovered that a professional programmer had to be specifically requested to use complex code to write the reports (Souza & McCarty, 2007). As a result, the report became uncertain by the time of generation because the appeals were bottle-necked. The second issue was demonstrating past behavior when admissions personnel were not aware on how to collect the patients’ significant amounts. Simply, the admission employees did not understand the best method to use when asking for payments. During the historical period, the copayments for hospitalization were very small or even zero.

According to Souza and McCarty (2007), upon identifying the two problems Sutter adopted two divided approaches to reduce the days unsettled in A/R and develop its collection issues. Firstly, the Sutter focus was to supervise the metrics that would allow time decision making by managers and take the right actions. This involved managerial reports development, relevant to actions taken by the directors. Information is only relevant when it supports the suitable decision making. Gross, aging categories A/R percentage, main payer source, unbilled and billed A/R days were some of the metrics established for the purpose of reporting. Upon defining the relevant report, Sutter installed a customized report writer, and customized reports were provided to each responsible manager, which were supposed to be used as a dashboard to monitor the development towards the team and individual goals. The managers were also allowed to create ad hoc reports even without submitting a special request. Additionally, the system revisited the management of denied claims and developed a procedure and policy components to control the method of stopping denials.

The second strategy was to focus on skills training and individuals’ management aspects to improve understanding and communication skills. The primary focus was to analyze the collected information for the purpose of submitting legitimate claims for payments from the insurance company (Souza & McCarty, 2007). For Sutter, it was paramount for the registration staff at the front-end to be re-oriented on how to collect responsibility amounts from patients before admission. The system initiated a comprehensive training program that involved three-hour concentrated hands-on progress followed by online aptitude modules that were supposed to be completed for the employees to retain their employment positions in the hospital (Souza & McCarty, 2007). Without demanding a salary increase, the training improved the existing staffs' competence levels.

The completion of first implementation stage saw the reduction of the number of day outstanding in R/A from 65 to 59 in a three-month period. Each reduced day average collection was about 13 million dollars which recorded a collection of 78 million dollars. Souza and McCarty did not discuss in details the invested amount, but it consisted of report writer and training resources (Souza & McCarty, 2007). Without enough knowledge about the invested amount, it was hard to determine the exact ROI. Therefore, one could conclude that the management team of Sutter healthcare was satisfied with the outcome.

There are several organizations which use the same programs used by Sutter. Examples of these hospitals include Greenville Hospital. Greenville Hospital (GHS) decreased its account receivables in a period of nine months from 66 to 57 days. The Greenville hospital spent more time on creating and analyzing tools of management and accounting required by their department to solve their problem. In the process, GHS realized that they needed to train their admission staff better to equip the employees with skills that could help them collect payments before registering the patients. Another hospital that used staff training and the metrics to reduce the number of days outstanding in A/R is Crozer-Keystone. In some hospitals, counselors are available to guide the unable or unprepared patients to pay during the registration period. In recent years, healthcare facilities have adopted the Sutter program to increase revenue collection during registration. This has been achieved through IT training of the staff at the registering office.

When the implementation of the program began at the Sutter Health facility, the staff at the front-end were skillful to manage the pressure. It was a chance to help decrease claims denials. The process assisted in the analysis of individual's registration by identifying possible problems earlier enough before the patient had left the registration desk. The following problems would be checked by the program. The age of the guarantor which was set at 18 years, the type of patients that are not valid for services in the hospital, the age of the patient; whether she or he is 65 years older and has a missing medical insurance program, Errors of punctuations, abbreviation and format in the patient's address, Patients with duplicated medical number records, the marital status of a patient; whether it matched with the medical record and lastly the identification of whether the policy ID or the insurance claim number is missing

Bearing in mind the results achieved and the methodology used by the Sutter Health systems, the paper will use each component attained to provide an alternative solution. It can be argued that the priority is the use of metrics to create management report as the foundation for a revenue cycle created by the information improvement initiative. A management system that is ineffective or outdated is very common in hospital system environments as evident in the Sutter case. Healthcare systems have settled behind the IT spending curve affecting their collection policies.

Operating cost as a percentage in the manufacturing of 4.5 percent has been spent on IT development with the aim of enhancing efficiencies, banking to 6.1 percent and insurance to 5.2 percent. Hospitals and healthcare, in particular, have used only 2 percent of their total cost of operations to develop IT (Berger, 2005). Therefore, the failure to keep a well-informed IT development strategy has caused challenging problems in the collection for healthcare providers. However, the gap measure can be stopped through the use of a report writer that is user-friendly on the back-end if the existing accounting system of hospitals can store and gather the required data.

The deployment and creation of specific dashboards for a department that the responsible managers can roll up to a single mechanism of reporting are definitive. Every day, the dashboards should be updated to currently available information in real time. Before the accounting period is closed the department, managers will be able to take mutual actions because they can detect short-term trends. It will be ideal for the hospital to train everyone in the department and permitted them to access the current hospital information. I believe at the intuitive level, it will create a buy-in.

My informed opinion is to use the Sutter’s training strategy. However, I will provide financial rewards to the employee aware of the importance of new knowledge and skills. This is because employees with unrewarded skills are susceptible to be recruited by other healthcare facilities offering better financial rewards. Developing an employee’s competence level is an asset for the hospital hence through compensation the asset is protected.

Simone Rauscher (2008) study examined the likelihood of a negative connection between the amount of revenue and speed of income collected. The study employed a methodology of statistical analysis so that a person can prove a null hypothesis. The correlation was not evident in the Simone Rauscher (2008) study because they lacked evidence. However, the study found that hospitals with high collection speed recorded higher amounts of charitable care. The study failed to analyze the reason for this behavior according to logical deduction to this the result could be; the hospital was unable to explore the payment sources of accident or indigent patients sufficiently.

Koenig (2009) explores the connection between patients with limited means increase in self-pay and the high unemployment rate present. The argument of Koenig article is that employers cost shifting to employees in the form of co-pays or deductions and high employment causes the direct result to rise of self-pay. The article connects decrease levels of responsibility collection and increased days outstanding in A/R evident in Sutter healthcare system. Koenig attributes the above issue to various key reasons. Koenig (2009) conclusions were that if these fundamental problems are solved, the hospital will improve collections because almost 80 percent of self-pay patients can afford to pay for full medical care. However, the article failed to give a provision for the unemployed patients which may contradict this assumption.

With industry leaders' input, the Healthcare Financial Management Association created a program called the Measure performance, Apply (MAP)program. This program includes the principles and techniques explored in the case of Sutter. The MAP program is aimed at helping healthcare providers improve revenue cycle through the use of a device. HFMA has also started training students to equip them with skills that assist them to understand the industry trend. For the success of a hospital, the focus should be monitoring accounts at registration period and then create procedures and policies to control interactions in their self-pay patients. (Czerwinski & Friend, 2008).

My opinion of a good self-pay process is for a hospital to hire an account receivable segment manager who is expected to supervise the original balance and the collection rate expected. From the information system of the hospital, the manager will be able to retrieve the initial balance (Berger, 2005). However, it’s hard to measure the expected rate of collection. Altogether, most hospitals depend on the former patients' payment history if available to retrieve the intended rate of collection. Health care facilities and hospitals should develop a service that predicts payments information and gives the credit scores of a patient (Czerwinski & Friend, 2008). This modeling will use automated tools to show patients payment possibility. The hospital will also develop a streamlining strategy after the creation of segmentation account to develop communication skills and improve self-pay.

Sutter succeeded in implementing their approach, even though the approach took long for the returns to be realized (Berger, 2005). I would recommend all the hospitals to adopt a strategy that can sell many delinquent accounts receivables (A/R). This program was used in the case of Sutter and the facility still uses the approach today. If offending accounts are sold off, a hospital can at least receive from those accounts some partial payments instead of getting nothing. Another method that Sutter Health facility used was the selling written-off accounts receivables.

Conclusion

In conclusion, the Sutter Health System is complex, sophisticated large healthcare organization. Scholars have recommended the use of the principles Sutter Health System used to change their culture and retool the collection process. Hospitals charges on self-pay patients should not be more than what the third-party payers are charged because it will cause more bad debts. The solution for reducing the number of days in outstanding A/R lies on the IT development. Only through IT, a hospital will be able to monitor short-term trend and make the right decisions through their management team. Equipping the hospital staff with current knowledge and skills is important. However, to avoid the employees from being contracted by other organizations, the hospital should reward them financially. The registering staff should be re-oriented frequently and supervised to ensure that they collect payments before the admission of the patients. The Sutter program for solving problem in A/R can be adopted by hospitals because it has given good results.