The California Sutter Health Approach - Case Study Example

1. Summary of key problems and issues The problems that were faced by Sutter Health is that the patient financial services (PFS) staff members couldnot access real information on key financial and operational indicators such as account receivable (A/R) and cash collections. As such, managers were forced to wait for month end to track progress, set benchmarks as well as to make strategic decisions. The hospital also did not allow the managers to analyze and generate reports about the details required. This was the prerogative of a trained programmer which led to costly delays in identifying and correcting problems. The central business office also faced problems related to lack of real-time information and the accountants could effectively monitor their progress. Background information Basically, Sutter Health is a leading not-for-profit network of community-based healthcare providers which is responsible for delivering health care to more than 100 Northern California communities. This network is comprised of more than two dozen acute hospitals and physician organizations that are specifically meant to provide health care to different consumers. The group also consists of medical research facilities, hospice and occupational health networks, long-term care centers as well as home based care services. Though not every American does not have a valid health insurance, Sutter Health realized that about 47 million Americans can still pay for their medical requirements hence there was need to transform the cash collection system in order to improve the efficiency of the hospital in dealing with issues such as registration as well as discharge of the patients from the hospital. Proposed solutions Sutter proposed a strategy of increasing collections while reducing A/R days and the main focus of this was to empower the individuals PFS members to be responsible for all the accounts they dealt with. This strategy was meant to inculcate a sense of responsibility among the members of the health care group and the following benchmarks were implemented in order to turn around the fortunes of the organization. Cash collections were improved which made the hospital effective in dealing with financial problems previously faced by the hospital group. The following proposals were also made in order to improve the efficiency of collecting cash from the patients. It was suggested that there was need to generate timely reports on demand which included aging analysis, A/R stratification, discharged not final billed (DNFB) analysis, credit balance analysis, and analysis of problem payers. In order to achieve this feat, a new system accessible online was to be developed which enabled the members of staff to access all data which they may require in their operations in order to produce clean claims. Results achieved There were positive results that were achieved especially within the first three months of this particular project where it has been observed that the institution managed to reduce account receivable (A/R days) from 65 to 59 for the total of nine hospitals in the region. Each day amounted to $13 million and this translated into meaning that an additional $78 million was collected through the effective implementation of this particular strategy. The strategy of reducing the A/R days empowered the staff to gain responsibility in their operations which enabled them to put optimum effort in their performance. The improvement of the performance of the members of the staff bore testimony to the effect that the strategy implemented by the organization was effective. 2. Accounting practices used by California Sutter Health California Sutter Health mainly used the registration, back end- the central business office and collectors and front-end staff to define and solve its collection problems. Prior to their admission, the patients would first approach the back-end staff in order to register for their services where the payments would also be made. However, this accounting practice had its own limitations with regards to cash collection and there has been a move to turn around this system. Cash collection often took a long period given that the managers and staff had to wait for the end of the month to generate reports that were vital in the accounting system of the hospital. In order to increase the cash collection, the new accounting approach by this organization vests responsibility in the PFS staff members in dealing with various accounts in a customized way where progress can be traced towards the attainment of individual as well as team targets. Automating the account system is a strategy that is used by Sutter Health where different accounts are arranged according to their order of priority. This strategy is very effective in that cash collection is made relatively faster and it enables the staff to identify any problems that can be encountered in their operations. A problem that has been defined is easily solved given that the members are empowered to implement the right decisions that can correct the anomalies discovered. The customised dashboard used by the hospital allows the staff to track the progress being made with regards to cash collection as well as A/R days which have also been discovered to have an impact on the collection procedure of the hospital. The other accounting practice implemented by Sutter Health is to sort accounts in various ways, such as by dollar amounts, oldest previous work date, and payer. This strategy is very effective especially in defining the problems that can be encountered given that all the information would be outlined in a clear and concise manner. Solutions can be readily made from the available information which enables the staff members to improve their performance which ultimately lead to the effectiveness of cash collection for the whole organization. Such an approach also allows the staff to point out the accounts which can have the greatest impact on their A/R days and cash collection goals. Performance is measured as a percentage of the target achieved in terms of the cash collected. The strategy to empower the individuals with regards to accounting issues gives priority to the revenue collection goals for the organization as a whole. On the other hand, the managers have their own dashboards which enable them to query all aspects of receivables for trending purposes and identify problem areas. The managers can monitor revenue, payments, and adjustments as well as receivables days for periods from the previous day and week to the previous 18 months. This allows them to keep track of all the developments taking place with regards to the accounting issues of the hospital. Average daily revenue is also calculated by day over a 30 day period. The performance is assessed on a monthly basis and an estimation of the results is likely to be given where a quick analysis can be done in order to establish if all work is going according to schedule as well as plans. The point of access is another accounting practice envisaged by Sutter Health where all the collections are moved to the front end. The rules engine is used to analyse all the registrations in order to ensure that errors likely to be encountered are minimised given that all potential problems are identified at an early stage. All the information about a patient is given where corrective action can be taken in order to rectify the problem. Computer interfaces are used to identify the accounts which may need special attention especially with regards to provision of correct patient information. Alternative solution On top of empowering the staff in issues related to handling of the institution’s accounts and finances, the alternative solution is to ensure quality customer service through development of the human resources so that they can keep pace with the changes that can take place within the organization. The human resources involved in a particular project form the base of the project and if that base is weak, the project collapses (Fox, 2007). Thus, the achievement of project objectives depends on a group of people working together as a team. Proper development of the human resources enables them to be customer oriented and this is a very effective strategy in that a good relationship between the hospital and the customers is likely to be developed. A lasting relationship with the hospital is good in that the customers will be satisfied with the services they will get. According to Kotler & Armstrong (2004), the viability of any organization is determined by the quality of relationship that exists between the institution and the customers. In order to ensure that such a relationship exists, there is need for constant development of the employees so that they will be customer centred. This enables them to decisively deal with all the queries that that may be raised by the customers. Customer loyalty is very important in forging a long term relationship with the customers in order to enhance viability and sustainability of the organization. In the case of Sutter Hospital, it has to build a strong relationship with all the customers through offering value and providing satisfaction on a consistent basis. Loyalty is created and referrals that often lead to an increase in revenue collection are also enhanced (Strydom 2004). The main advantage of creating customer loyalty is that costs are reduced given that it is relatively cheaper to serve existing customers than looking for new customers. The SOSTAC Model which was invented by Paul Smith is another effective alternative that can be implemented with regards to satisfaction of the customer interests. Basically, SOSTAC is an acronym for situation analysis, objectives, strategy, tactics, action and control (Aviv 2008). If these six steps are carefully implemented, there are likely chances that the services offered by the hospital will appeal to the interests of as many people as possible given that they will be in a position to get customized services which can fulfil their health needs. It is imperative to analyse the situation with regards to the needs of the customers where long term objectives can be set. A strategy centred on the needs of the customers is then developed and this has to deal with developing the human resources management so that they are in a position to treat the customers as valuable assets to the overall performance of the hospital. The development function of the employees is mainly concerned with training the members to perform their tasks more efficiently and effectively which can positively contributed to the satisfaction of the customers. Implementing this strategy requires the responsible authorities to control the situation so that all the efforts of the staff members would be directed towards the set goals and objectives of the organization. Personal reflection about the approach used by Sutter Health In my own opinion, I am of the view that the approach taken by Sutter Hospital is very effective given that training of the staff members is very important in as far as motivation is concerned. Training and development of the human resources is very effective in that members are educated to build knowledge, skills and abilities in order to enhance the general knowledge base in order to think strategically during the course of a particular project (Fox, 2007). Organizations operate in a dynamic environment that is characterised by various changes. In order to keep pace with these changes, it is imperative to implement strategies that are meant to constantly develop the skills of the employees so that they remain competent in their day to day operations. In the case of Stutter Health, it can be observed that the new strategy greatly enhanced the organisation to improve its operations as a result of the renewed skills and competencies of the staff members in the cash collection processes. Theoretically, the employees do not remain competitive hence there is need to constantly improve their skills so that they keep pace with the changing environment (Brand, 1998). If the employees are given the autonomy to make decisions as well as to find solutions to problems they may encounter in their operations, there are likely chances that they are motivated to put optimum performance in their operations. Robbins (1994) posits to the effect that motivated employees are productive and they contribute to the overall performance of the organization. In this particular case, Sutter has discovered that a boost in the autonomy of the employees is effective in that they will embrace the system wholeheartedly. A sense of belonging to the hospital is developed since the employees are empowered to contribute towards the decision making process where the employees will see them as important to the organisation as a whole. Therefore, I believe that this approach taken by Sutter Hospital is very effective in improving the operations of the whole organization. Over and above, it can be noted that Sutter Health faced numerous problems with regards to its financial operations such as cash collection as well as A/R days. However, the new strategy to empower the staff members to make decisions as well as to solve the problems they encountered in their operations greatly improved the overall performance of the hospital in terms of cash collection as well as other accounting aspects. Alternatively, there is need to improve the customer care services in order to create long term relationships which are advantageous with regards to the viability of the organization. Overally, the strategy implemented by Sutter Health is commendable given that it significantly contributes towards motivation of the employees. References Alvi S (13 December 2008). SOSTAC model of marketing-a step by step. Available at: http://corporateskills.co.uk/project-management-skills/sostac-model-marketing/ [Accessed 20 November,2011]. Brand, A., (1998), ‘Knowledge management and innovation at 3M,’ Journal of knowledge management, Vol. 2 No.1. Fox, W. (2008). A Guide to project management. CT. JUTA. Kotler, P & Armstrong G 2004, Principles of Marketing, New Jersey: NJ, Pearson Education, Upper Saddle River. Robbins, S.P. (1993). Organisational behaviour: Concepts, controversies and applications.6th Edition. NJ: Prentice Hall. Souza, M. & McCarty, B. (2007). ‘From bottom to top: How one provider retooled its collections’ [electronic version]. Healthcare Financial Management. Vol 61, Issue (9). 67-73. http://proquest.umi.com/pqdweb?did=1338108431&sid=1&Fmt=3&clientId=74379&RQT=3[Accessed 19 November, 2011]. Strydom, J. (2004), Marketing, 3rd Edition, CT: Juta & Co Ltd. Read More