CAPTURING MISSED REVENUE IN HEALTHCARE
By Doug Davison
Twenty years ago, studies showed that healthcare organizations lost 3-5% of potential revenue due to incomplete charges (supply or procedures) on a patient’s bill. After 20 years of increased computerization/automation it has improved only to 3-4%. In their rush to adopt technology, organizations frequently take what was on paper and put it into a computerized format, without consideration of the basic theory. If the process did not work in a manual setting, it will probably not work in a computerized format either.
In the early 1990’s, I volunteered for a project to install MEDITECH into a group of 7 for-profit hospitals. Specifically, I focused on nursing and ancillary departments’ documentation. I soon realized that although we were bringing the hospitals into a more technical era, many things were still done manually. The same errors we had on paper, we now had input into a computerized system.
To help the hospital group quantify the extent of their charge problem, I began looking at detailed bills for all ER patients for one facility, amounting to about 2000 visits/month. I soon realized that I could not review every bill for each of the patients seen in that group of hospital ER departments in a month. To assist my review I devised several NPR reports where it was possible to pull a more concise format. The report that started at 2120 pages suddenly became less than 800 pages. Then I focused in on specific charges, such as the hospital ER level charge, and set up a report to just look at those. That moved the 800 page report down to less than 40 pages.
That one report was a tremendous starting point. Running it for a month for each hospital, I discovered that the average hospital missed 2.5% of the ER level charges. In other words, 2.5% of 16,000 visits or 400 patients seen in the ER did not receive an ER level charge on their bill. Considering that the average ER level charge was $178 we can extrapolate that the organization was potentially missing about $70,000 a month or an annualize amount of $840,000 in revenue. Focusing in further on the data, I discovered that almost 50% of those missed ER level charges were on patients that had been admitted to the hospital through an ER visit.
Also, if a patient is admitted from the ER their acuity is likely to be higher. When I ran reports to look at the level charge for all patients admitted following an ER visit the average ER level charge for that segment was $290 versus the average ER level charge of $178. That original annualized missing revenue forecast of $840,000 suddenly became almost $1,400,000.
These statistics motivated a more in-depth study that eventually showed that all together the 7 facilities were missing more that $3.5 million a year through their ER’s alone. It took 2 months to compile all the data and format a usable report. It took another 8 months to convince the business offices, accounting and the ER departments that there was an issue. Unbelievable, huh?
Later, I took the same reports and moved them into another 27 hospitals owned by the same company and duplicated the results. I have since repeated the processing in for-profit and not-for-profit facilities ranging in size from 22 beds to 660 beds with the similar results. MEDITECH is a very flexible system in many ways and its simple integration is one of the reasons it’s installed in over 1500 hospitals in North America. When I reviewed the work I had done on the MEDITECH reports, manual calculations, review of charts, etc., it appeared that I spent less than 300 hours in total that resulted in an increase in billing of over $3.5 million.
This process can be repeated in a variety of departments with similar results. Facilities using EDM and NUR/PCS can reduce the missed charges by an astounding 50-75% by using the “charge by query” features built into the modules. This ties the documentation directly to the charge generated making it stands up well to charge audits performed by many hospitals and insurance companies.
If you would like more information on reducing the occasion of missed charges, please email us at vcs@getvitalized.com or call us at 610.444.1233. For more information on VCS and our MEDITECH services and solutions, visit our website at www.getvitalized.com.