The Healthcare Financial Management Association (HFMA) recently met for its annual ANI conference in Orlando, Fla. With technology continuing to shape the clinical, as well as administrative, processes in hospital and physician offices, sessions focusing on IT were more prevalent than ever. Following are some highlights from the show that looks to keep healthcare organizations in the black.
Gergen touts HIT
The more healthcare providers adopt electronic solutions, the more they will be held in high esteem by the general public, said David Gergen, professor of public service, John F. Kennedy School of Government, during a keynote address at the conference.
"I believe your reputation will go up the more electronic you become," he said.
Gergen held up the Veteran Administration's extreme electronic makeover during the past few years as an example of how going digital can make a world of difference. "Their investment in electronic systems transformed the VA system to become one of the best health systems in the country," he said, adding that the VA's adoption of Six Sigma quality measures helped reduce mistakes.
"I think the government should invest more in electronic systems," Gergen added. "The VA's investments helped them get their cost structure under control."
As part of his overall talk on leadership, he noted that it was the responsibility of industry stakeholders — like the chief financial officers (CFO) he was addressing — to convince the country that electronic systems are a necessary investment. "It's expensive," he said, "but we ought to do it."
Children's Hospital's AR overhaul
When Dennis Ryan took over as CFO at Children's Hospital of the King's Daughters — a 186 bed facility in Norfolk, Va. — in August 2003, he discovered that accounts receivables (AR) were at 95 days and the organization was fully extended on its credit line.
"We called Medicare. They haven't called us back," was a typical response from the department when he asked about the status of a particular claim.
That type of answer was not going to cut it, according to Ryan, who added that the total amount of money on the books for AR was $80 million.
To help solve the problem, he contacted Deerton, Mich.-based Gustafson + Associates, Inc., a healthcare organization revenue-cycle-management consulting company. Despite the fact that the consultancy recommended Ryan outsource AR — as it was not a core-competency of the healthcare institution — he decided to keep the department in-house, but give it a major overhaul.
Working with Gustafson + Associates, the hospital developed a project plan, identified team members, defined the risks and how to mitigate them, and defined the quality criteria. "They didn't know how to work with payers. They thought they were the enemy," said Bobette Gustafson, president of the consultancy.
The issue of systems rose to the top of the list, according to Gustafson. Specifically, issues around exception processing — how to deal with instances where processes do not achieve the desired results. To help solve the systems issues, Children's Hospital converted to claims submissions software from Dallas-based Xactimed.
After months of training, the hospital's revived AR department went live with its new processes on Jan. 13, 2005. For each account, the hospital's representative would analyze the situation, determine the appropriate action, take the action, document the action, and set the next activity date. Every day, a sample of those accounts was analyzed by a quality control team that made sure the correct actions were taken.
In 76 working days, 66 percent of the hospital's total insurance balance was resolved.
On the clinical side, the hospital recently implemented an EMR solution from Kansas City, Mo.-based Cerner Corp. — a project that should cost between $20 and $25 million.
Legal advice — for free
All future payer negotiations will be driven by data, according to John Marren, managing partner, Chicago-based Hogan Marren, Ltd., a law firm with a focus on the healthcare industry.
Marren, who spoke at an HFMA conference session focused on the clinical integration of health systems, noted that only those providers that have data at their fingertips will be able to negotiate with insurers for better rates and refute attempts to reduce their payments under the pretext of questions about competence.
He also stressed the importance of providers readying themselves for pay-for-performance programs by embracing evidence-based medicine and advised tech-adopting physicians to approach insurers and ask for financial assistance with their projects.
A Banner accomplishment
Banner Health System, a 20-hospital organization headquartered in Phoenix, is five years into its enterprise resource planning overhaul — and still going.
The project began in 2000 following the merger of Lutheran Health System (LHS) and Samaritan Health System (SHS) which created Banner. In that year, the company had an operating loss of $6 million, a new CEO, and a need to better understand its finances to get some negotiating power with vendors.
Dennis Dahlen, system vice president, finance, Banner Health, said the organization approached its ERP project with a few guidelines in mind. The first, he said, was to utilize integrated suites of applications in a "vanilla" way, rather than customizing software to suit each user group's individual needs or desires. The second, Dahlen said, was to consolidate IT operations to single instances of applications to reduce costs and simplify maintenance.
Banner chose St. Paul, Minn.-based Lawson's Supply Chain Management software for its materials management team to further the goal of reducing supply chain costs by $5.1 million annually. "We needed a materials system, and what we had was compartmentalized," he said.
Banner also worked with Chelmsford, Mass.-based Kronos in the financial/business support area.
Two years into the project, the healthcare provider was able to reduce total supply spend by 3.5 percent, or $16.3 million, Dahlen said.
Regarding the plain-vanilla software, not every part of Banner bought into the concept. "We had one or two hospitals that felt like they were above the law, so that required bringing about a cultural change," he said. "That was supported by our executive sponsors, and appeals for exceptions were generally denied."
The next step in Banner's IT growth will be on the clinical side, Dahlen noted, but that project will not be approached with the same aggressive ROI expectations. "People know that you have to have clinical IT now. I think (executive management) knows it's just something we have to do," he added.
The organization is currently implementing software from Kansas City, Mo.-based Cerner and plans to complete that project in 2008.
There is one newly built hospital in the Banner family that was created from the ground up to be a paperless institution. That facility is up and running with computer-based provider order entry and electronic medical records. "There's no paper anywhere," he said.
The new facility is using Cerner for clinical documentation and Eclipsys (Boca Raton, Fla.) Sunrise Manager for decision support, as well as Kronos for scheduling.