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Tightening Up the Revenue Stream

March 31, 2011
by John DeGaspari
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Internal workflow audits and understanding the revenue cycle

How important is having a good understanding of your billing process to controlling your revenue stream? Very, according to Dan Klaber, director of central business operations for the 450-member University Physicians Healthcare (UPH) physician group, part of the University of Arizona Health Network, a two-hospital academic system and health plan in Tucson.

Klaber, who has responsibility for the physician providers, says his group lagged in account receivable days, a performance measure of the number of days it took to collect a dollar of revenue. As he put it, his billing staff simply was not billing and collecting for the group’s invoices.

To tighten up the billing process, Klaber called in Tatum, an Atlanta-based consultancy that applied an internal audit to identify the source of the problems. In 2008 and 2009, Tatum put in place an internal auditing procedure known as activity-based management, which analyzed who does what in terms of billing tasks at the physician group.

According to John Ortiz, the partner at Tatum who was involved in the project, activity-based management is based on six-sigma, a business strategy that grew out of the manufacturing industry, which was used to identify the causes of defects. As applied to healthcare, and, specifically to UPH, activity-based management was used to understand the activities in the billing cycle and, just as important, what resources were being applied to those activities.

Ortiz notes that the activity-based management audit revealed several gaps in the billing process that were resulting in lost revenue. For example, a high number of claims were being held up because of delays in supplying supporting medical records to the insurance company. In addition, personnel were not using all of the feature of the billing system in a consistent manner, or even at all, so claims were not being followed up in a consist manner. The billing department also burdened with unrealistic goals of handling 100 accounts a day.

What’s notable about the audit was that the fixes were relatively inexpensive—and effective. Klaber instituted a dedicated team to handle claims documentation; steps were taken to make sure that everyone had the right tools to capture the documentation and standardize their tasks; and a new set of workflow measures were put in place based on reimbursement rather than the number of claims handled. Klaber says his group has reduced its account receivable days from 53 to 37; and it has significantly reduced the turnaround time to get proper documentation to the insurance companies. Ortiz notes the changes have been sustainable.

The experience of UPH in no way serves to question of the value of software tools in making sure that the provider organizations is legitimately compensated for all of the services it provides. But it does suggest that understanding the process—who does what in the organization—is just as important to minimizing revenue loss.

Stay tuned for more on revenue cycle strategies in the may issue of Healthcare Informatics.

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John DeGaspari

Managing Editor

John DeGaspari

www.healthcare-informatics.com

John DeGaspari is a journalist with more than 20 years of experience reporting and writing about...