Client Profile

Summit Medical Group: Investing in Performance

Thinking of expanding your services? To ensure the investment pays off, make sure your business office is operating at its peak. Recently, Health Directions helped Summit Medical Group, a large multispecialty practice in New Jersey, support its growth strategy by optimizing revenue cycle performance.

Founded in 1929, Summit Medical Group is one of the pioneers of integrated health care in the United States. The group includes more than 100 physicians and operates several clinical sites in the Northern New Jersey area.

In 2004 group leaders were making plans for offering new specialty and diagnostic services and building a new outpatient surgery center (scheduled to open in 2006). The strategy made sense for this dynamic practice—with highly productive physicians and favorable managed care contracts, Summit was well positioned to take advantage of market opportunities. First, however, the group needed to address one critical issue. “Leadership felt the business office was not performing as well as it should,” says Dan Marino, vice president of Health Directions. “They needed to improve performance to be able to capitalize on all the new services they were planning to bring in.”

According to Marino, Summit's challenges centered around billing and collections. The group's net collections rate was 86%, placing it low on the MGMA scale. In addition, accounts receivable totaled more than $400,000 per physician, with A/R days approaching 100.

To tackle these issues, Health Directions helped the group develop a team-driven project structure that encouraged broad-based participation in performance improvement. Marino and colleagues provided technical guidance, while Summit managers and staff worked cooperatively to locate and fix revenue cycle problems. Beginning their work in summer 2004, the project team identified several key challenges and created targeted interventions to achieve superior results:

Challenge—Align Business Office Staff

•  Situation: Some back-end staff were organized by payer, others by specialty or individual physician. There were no standardized processes for core business functions and no way to track results or manage improvement.

•  Intervention: Business office staff were reorganized by functional area (claims, denials, follow-up, self-pay, etc.) and functional teams by payer.

•  Results: Reconfiguration allowed the group to develop and implement best practice processes, track results and manage overall performance.

Challenge—Identify and Fix Root Weaknesses

•  Situation: Edits and denials were seen as day-to-day problems. There was little proactive effort to address root issues.

•  Intervention: Staff were refocused to view edits and denials as opportunities to improve collections. The project team used information system capabilities to create edit and denial reports.

•  Results: Edit/denial reports enabled the team to investigate recurring patterns, discover internal and external problems, and create targeted solutions.

Challenge—Optimize Billing

•  Situation: No standard processes existed for addressing billing priority and coordination of benefits, resulting in inefficiencies and lost revenue.

•  Intervention: The project team created processes for prioritizing contracted and non-contracted payers, Medicare and patient financial responsibility. Sequential billing automations were built into the information system.

•  Results: New processes led to increased reimbursement capture, streamlined work load for staff and improved customer service for patients.

Challenge—Strengthen Follow-Up

•  Situation: The business office was slow to correct rejected claims and follow up on “no response” claims. Staff failed to take advantage of appeal opportunities.

•  Intervention: Staff were trained in aggressive denial/follow-up practices. Organization by payer helped members develop expertise in unique payer processes.

•  Results: Implemented aggressive denial management processes that contributed to 30% reduction in A/R days.

Challenge—Maximize Reimbursement

•  Situation: Payer remittance was found to be significantly below contracted fees.

•  Intervention: Plan-specific fee schedules were updated in the information system. Project team members established periodic reporting/review and processes for recapturing missing dollars.

•  Results: Established a payment evaluation process enabling the group to identify “underpaid” claims and achieve quick turnaround of appeals.

Within nine months, the project achieved significant results. The annualized net collections rate jumped to 96% and total annual collections increased by approximately 17%. In addition, the group realized a one-time A/R catch-up of more than $5 million. A/R days were cut by nearly one-third, and the business office is currently on target to eventually bring them down to the mid-40s.

Marino believes these performance improvements will contribute to the success of Summit Medical Group's expansion plans. “Many hospitals and group practices dive into service expansions without making sure the business office can capture all possible revenue,” he says. “Summit's concentration on back-end performance was a smart move, because it puts the group in a great position to maximize the return on its investment.”

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