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(HealthNewsDigest.com) – Hospital administrators are challenged on all sides by pressure to cut costs. Changes to Medicare budgets, cost-cutting measures driven by private insurers, a drop in charitable donations, and the rise of “retail-minded” patients who demand better results for a competitive price are clashing with the central mission of the hospital to provide the best care possible.
In the face of intensified cost pressures, hospitals might be best served by evaluating administrative functions in their surgical services to make sure the lights stay on. As the financial industry has already demonstrated, automated billing and data mining allow an organization to more quickly process their accounts, thus freeing up staff resources to more actively analyze incoming data to enact true organizational improvements, and promote greater financial growth. Hospitals and other healthcare organizations are now beginning to apply these lessons to their complex operations.
But where do they start? According to recent HFMA studies, today’s operating room (OR) is the economic engine of most hospitals – accounting for up to 60% of a hospital’s revenue and some 35%-40% of the hospital’s expense. Over 60% of the average hospital’s profits come from surgical patients. Based on data from DJ Sullivan Healthcare Consulting’s database of 700+ ORs, each empty but open OR suite costs a hospital an estimated average of $1,000 per hour (including pre/post op staffing and anesthesiology costs). The OR is also a primary source of up to 50% of hospital-based errors.
With so much of the hospital’s bottom line and liability dependent on the surgical services, the OR is the most logical place to review how billing and quality information is collected and can be used to either improve care or streamline billing and reconciliation.
In working with hospitals and integrated delivery networks, I have seen an epidemic of perioperative units still using mostly paper to collect data and generate bills. This approach, while nominally “cheaper,” creates huge time drains on nurses, physicians and administrative staff; delays reimbursement, often resulting in cash-flow issues. These largely paper-based systems are prone to errors, which waste even more resources both in reconciliation and medical liabilities. A rules-based charging system can help hospitals automate billing while reducing errors and freeing nursing and administrative staff to execute the core function of an OR: to provide high quality care for patients in serious need.
Two providers in particular, an integrated delivery network with five centers in New Orleans, and a rural 28-center network in Upstate New York, can demonstrate the benefits of rules-based charging, and have found millions in new billings while freeing up staff over the past few years. These hospitals have found that an automated data-driven approach is not only more efficient, but it is essential to the survival of healthcare delivery in good economic times and bad.
Rules-based charging alleviates the stress on an integrated delivery network
Ochsner Health System, a not-for-profit hospital network in New Orleans with five centers, 42 operating rooms and over 1,000 beds, recently changed its manual charging system for its surgical departments. Prior to the change, Oschner used an 8-step process to generate charges from surgical procedures, with full-time data control nurses checking all billing requests. This process, whereby surgical nurses used paper pick lists to update four different data forms (material charges, case resources, implant log and charge sheets, and the case charge level) before being reviewed by a data control nurse, was used on 20,000 surgical cases annually. To handle such a large case volume with such time-intensive processes required resources that might otherwise be used for the direct benefit of Ochsner patients.
Ochsner implemented a rules-based charging system in 2003. The system automates the pick list, and allows nurses to input the key billing data into one centralized system. While the data is still reviewed for accuracy, the data control nurses are no longer necessary, and have since been redeployed into other functions throughout the hospital.
“Not only has the use of rules-based charging improved our treatment-to-billing time, but it has allowed us to redeploy staff to areas of much more urgent need,” said Tressan Hinton, Manager of Information Systems for Ochsner Health System. “With fewer nurses spending time tracking down old care data, we can focus on improving care, be it through better analysis of care data or lightening the clerical workload of our stressed active-care nurses enabling them to spend more time taking care of patients.”
Through the first month of using a fully integrated rules-based charging system, Ochsner was able to increase its gross surgical billings by $1,000,000. By the end of the first quarter using rules-based charging, surgical billings had grown by $3,000,000.
Automated billing helps find 30 percent of missed charges
Bassett Healthcare, a 28-center integrated delivery network in upstate New York, was using paper tickets for every charge associated with the OR at Mary Imogene Bassett Hospital, its 180-bed central hospital in Cooperstown. The paper system required that perioperative nurses, in addition to upholding their patient advocacy and patient care responsibilities, were also responsible for supply orders and collecting billing data for each case. In addition to the strain that this system placed on the nursing staff, the surgical ward at Bassett also had data control technicians that spent two hours per day entering the charge data for each case. Because the OR at Bassett sees 8,000 cases each year, this accounted for 16,000 staff hours annually spent solely on entering already-recorded data.
This system allowed for multiple errors, with the finance department often sending back the entire bill to be re-calculated, resulting in more lost time to tracking down billing data. This represented a large compliance issue, as Bassett is funded in part by the State of New York. Not only were accurate bills important to the financial health of the hospital, they were also imperative for state reporting compliance.
In 2004, the center evaluated the performance of the paper billing system by collecting every supply package used in the OR, and reconciling supply charges included in each bill against the supply packages used. This evaluation found that the manual paper system had missed 30 percent of all supply charges during the survey period.
“We could not afford to continue that rate of missed charges, and if we were missing that just in supplies, it had to be just as bad for other items on the bill,” said Kathleen Brooks, Operating Room Director for Bassett Healthcare. “On top of that, I’d much rather have my nursing team spending time on patient care and advocacy than doing billing paperwork.”
Bassett installed a rules-based charging system in its OR, which allowed for automated billing entries. Within the first month of using rules-based charging, Bassett’s OR reported a 30 percent increase in billing. Eventually the data control professionals were redeployed into other areas of the OR, and Bassett’s finance department has also saved many, many staff hours, both on data entry and reconciling billing errors.
One unintended benefit of the rules-based charging system was that Bassett was able to analyze surgeon preference lists. This analysis allowed Bassett to look at individual costs per surgeon on similar procedures. The analysis created healthy competition among the surgeons, creating even more savings as more “expensive” practitioners were inspired to run their procedures more efficiently.
Conclusion
With healthcare dollars getting ever tighter, every opportunity to save money is absolutely critical. By using a rules-based charging system, hospitals can not just save staff time and catch charges they may have otherwise missed; they can also create a more competitive environment that creates savings well beyond the intended targets.
While these systems require the implementation of software systems developed specifically for the OR, the savings they create in improved efficiency and previously missed charges often pay for the system within the first year. The healthcare industry simply cannot afford to avoid what other industries already know: paper records and billing are no longer sustainable, from both an efficiency and accuracy standpoint.
Kermit Randa, FACHE, CPHIMS is Senior Vice President, Surgical Information Systems. He can be reached at [email protected]
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