Top Tool for Turbulent Economy: A Better Steering Wheel

Healthcare organizations are difficult to steer in the calmest of waters. Navigating the waves of today’s threatening economy is even harder.

One challenge is simply understanding what is happening within your organization. Most healthcare leaders have a hard time maintaining a comprehensive view of their market environment, their operations and their financial performance.

A second challenge is knowing where to focus your management energy. How do you find the best opportunities to move forward?

The issue is not too little data. In fact, the typical hospital or medical group administrator is overwhelmed with data but has little information.

In my experience, the key is using information more efficiently. The most effective healthcare leaders rely on well designed business intelligence—such as performance dashboard reports and operational metrics—to maneuver out of organizational problems and drive better financial performance.

Getting Started

How do you build a business intelligence “steering wheel”?

First, identify your “critical numbers”— the performance measures that say the most about your organization. For example, the critical numbers for collections are 30-day, 90-day, 180-day and annual collection ratios as well as accounts receivable indicators. Key metrics for operations include cost per bed days, support staff full time equivalents (FTEs) per physician (provider) and staffing expenses per net revenue.

Second, create systems for capturing and reporting your critical numbers. This does not necessarily mean purchasing new technology. Most existing information systems have strong reporting capabilities that allow for the extraction of data. Organizations can easily use Microsoft Excel or Access to roll up key metrics into quick-view dashboard reports. You will want to create individual dashboards for scheduling, registration, patient census, charge capture, claim processing, expense monitoring, collections and other business and operational processes

Hands-On Practicality

Effective dashboard reports let you identify operational problems early, while they are still small. For instance, monitoring weekly payments by payer can alert you quickly to budding reimbursement troubles. Say you post $80,000 every week from a certain payer. One week, payments are suddenly down to $60,500. Has there been a change in the payer’s claim rules, a glitch in their processing systems? Your job is to investigate, find the cause and correct it. The benefit is that you can identify the payment problem and correct it immediately— as opposed to weeks from now when it shows up as a major cash shortfall.

Well designed dashboards can also help you move forward proactively. Say that your claim denials dashboard reveals a particular problem with patient eligibility. Using your information system to drill down further, you might find that most of these denials are linked to patient registration in a specific department or clinical location. A little digging reveals that scheduling and registration personnel at that unit are using weak verification procedures. You can fix the problem with a few key process changes and some staff training. Overall, systematically addressing the issues that lead to high denials can help you increase revenue by 10 percent or more.

This is just one example. Dashboard reporting can help you steer performance improvements throughout your organization:

• Improve all aspects of revenue cycle management
• Identify opportunities to strengthen payer contracting
• Reduce costs by uncovering process inefficiencies
• Enhance productivity by improving patient access

Many provider organizations find that this kind of proactive management is the key to realizing the financial benefits of an electronic medical record (EMR) system. For hospitals, focused business intelligence is essential to ensuring the success of operations and business units.

What You Need Now

While robust management systems are always important, keeping your hands on the wheel is critical in today’s turbulent economy. All payers, both government and private, will be tightening the screws on reimbursement. Effective dashboard reports can help you react quickly to changing payer strategies so that you can ensure appropriate reimbursement and maintain cash flow.

Business intelligence is also a low-cost strategy for investing in the future. It can help you identify ways to strengthen your organization now so that it will emerge from the recession stronger and healthier than ever.

Daniel J. Marino, MBA, MHA, is president and CEO of Health Directions, a national consulting group that provides business solutions for health care organizations
He can be reached at (312) 396-5414 or dmarino@healthdirections.com. For more information, visit www.healthdirections.com