1. Sustaining a Financially Vibrant Healthcare Organization
ACHE
Sustaining a Financially Vibrant Healthcare Organization
Revenue Cycle Improvement Project 1

2. Agenda Tuality Healthcare Overview Revenue Cycle Improvement Project
Summary of Results
Future Revenue Cycle Initiatives
Questions

3. Tuality Overview
Tuality Healthcare is a community based not for profit healthcare organization based in Hillsboro, Oregon (18 miles west of Portland)
We have two hospitals - Tuality Community Hospital (Hillsboro campus), Tuality Forest Grove Hospital (Forest Grove campus).
Medical clinics (Physical Therapy, Physician Offices, Urgent Care) throughout western Washington County.
Beds – 215 Licensed/ 125 Staffed, 42 Employed Physicians.
Annual Net Revenues are about $190 million.
DRO (Days Revenue Outstanding) – 51.2 net 3

4. Revenue Cycle Overview
There are many areas of opportunities in healthcare to improve and sustain a financially vibrant organization
debt management, expense management, utilization control or revenue cycle functionality
Given the number of people, software systems and companies involved in the revenue cycle for a hospital – Estimates are many organizations loose between 1% - 3% of the net revenue in the process
With operating margins in the state of Oregon averaging well less than 5%, doing it right the first time, can be anywhere from a 20%–80% improvement in operating margin. 4

5. Revenue Cycle Opportunity
Our focus on Tuality’s Revenue Cycle opportunity really started after we went through the process of converting from a paper medical record to an electronic medical record (EMR)
July 2008 – Turned on the new EMR – Cerner. Net AR - $27,500,000
12/08 DRO 70 - $32,800,000
3/09 DRO 60 - $27,600,000
Summer of 2009 Multicare Consulting Services did an assessment:
They found our costs/structure (FTE) was pretty reasonable given claims volume
The real opportunity was in collecting more on our accounts mostly using new outside vendors and new software products. 5

6. Revenue Cycle Improvement Project
Project Timeline - January 1st 2010 to December 31st 2010
Project focused on six major areas
Self-Pay (Mostly Patient Responsibility after insurance) Collection Strategy
Vendor Expense Reduction
Government Eligibility Screening
Third Party Liability (TPL) Process Improvement
Transfer DRG Optimization
Improving our charge capture process 6

7. Revenue Cycle Improvement Project Self-Pay Strategy
Self-Pay Collection Strategy Goal:
Increase Self-Pay cash (Patient Responsibility after Insurance Pays) and while maintaining a high level of patient satisfaction
Action:
Engaged an outside firm (TOG) to work accounts from day after insurance pays.
We do the first pass on contacting the patient either by statement or phone (all accounts > than $500).
Their “auto dialer/predictive software technology allow them to touch more accounts than we could at the hospital.
The cost of this technology is generally prohibitive at Tuality’s size.
Results:
Self-Pay collection yield increased 15% - $1,475,000 7

8. Revenue Cycle Improvement Project Vendor Expense Reduction
Vendor Expense Reduction Goal:
Reduce expenses associated with third party assistance for revenue cycle processes
Action:
Benchmarked our current claim scrubber/editor activity (placement amount / utilization rate) with current industry rates in order to obtain a better rate structure.
Reduced use of statements as outsource vendor absorbed as part of their fee through the implementation of the enhanced Self-Pay process.
Consultant facilitated all contract negotiations with each third party vendor
Results:
Total Annual Expense Reduction: $108,000
Total Life of Contracts Expense Reduction: $432,000 8

9. Revenue Cycle Improvement Project Government Eligibility Screening
Government Eligibility Screening Goal:
Identify missed Medicare and Medicaid coverage for un-insured account population
Action:
Identified an additional software to assist with post-discharge (5 days) Medicare/Medicaid coverage.
We actually have a different software vendor do a screening during the admitting process.
Increased the number of areas for Provider Advantage in ancillary areas to ensure coverage is secured at the point of registration
Results:
We now have a new feedback loop to the front end to enhance the current registration process
Increased Medicare and Medicaid cash by about $235,000 in YEAR 1
Decreased Bad Debt expense
We are currently finding about 30 accounts a month were coverage wasn’t obtained at admission.

10. Revenue Cycle Improvement Project Third Party Liability (TPL)
Third Party Liability Goal:
Enhance internal billing and follow up processes for qualifying TPL account population.
Action:
Developed a new report to find specific Occurrence Codes in ER accounts.
Falls, Accidents, etc.
Follow-up with the patient to insure all appropriate insurance is obtained as we start the billing process.
Results:
Increased Net to Gross for qualifying account population from 60.6% to 82.5%
First year benefit about $300,000

11. Revenue Cycle Improvement Project Transfer DRG
Transfer DRG Goal:
Implement a comprehensive Transfer DRG process to ensure correct Medicare reimbursement.
Action:
When a patient is transfer to another level of care (Home Health, SNF etc) we indicate that on the claim to Medicare and receive only a partial DRG payment.
Implemented software to automated Transfer DRG scrubbing (software vendor has access to the Medicare data file system) so if a patient did not actually receive the level of care (family member cared for them at home and they didn’t receive the home health services) we re-bill with the discharge code.
Results:
Increased Medicare cash by about $172,000

12. Revenue Cycle Improvement Project Charge Capture
Charge Capture Goal:
Implement a comprehensive charge capture solution
Action:
Engaged an outside vendor with software for charge capture improvement
Developed a comprehensive workflow for charge correction that fully utilizes the available technology.
Results:
Year 1 improvement net about $60,000
Enhanced charging practices throughout the hospital based on a new feedback loop.
Detailed reporting available to share at the department level.

13. Revenue Cycle Improvement Project Results
Overall Project Results
Project generated $2,350,000 in recurring net revenue benefit
About 1.2% of net revenue.
Most of these efforts will produce the same level of benefit year after year.
Keys to Success
Support from Executive Team
Strong support from the IT department
Day to day leadership from the Patient Accounting management team
Effective internal collaboration to achieve a common goal

14. Revenue Cycle Improvement Project
Next opportunities for review in the revenue cycle for Tuality:
Physician Documentation Assessment for coding opportunities
Possible Clinical Documentation Specialists Staff Role
LEAN Process Improvement projects across all areas of charging/coding/billing.
Improving our denial management systems

15. Chief Financial Officer
Questions??
Tim Fleischmann
Chief Financial Officer
Tuality Healthcare 15