Progressive fiscal thinkers connecting the dollars: materials, pharmacy managers strive to link both sides of balance sheet

Healthcare Purchasing News, April, 2008 by Rick Dana Barlow

To a growing number of healthcare materials and pharmacy managers, the left side of a balance sheet never looked so inviting.

For a group that historically has concentrated on overseeing and controlling components of the right side, which highlights expenses, current and future healthcare business and financial operations are telling them it's no longer enough. Furthermore, within the last decade more are recognizing they can contribute to the revenue stream.

This has awakened a sleeping giant on the service and vendor side as more management and software firms catering to revenue cycle management emerge as hot properties, and the nation's leading group purchasing organizations roll out their own programs.

The premise behind materials and pharmacy management's newfound mission is simple: Link their product item masters (IM) to their facility's chargemaster or charge description master (CDM) to close the fiscal loop between what they're buying and what they're billing payers and patients.

But the process to link the databases can be a bit more complex, hinging on a variety of factors. They include the number of facilities within an organization, the ability to recruit the key department heads to participate, the capabilities and flexibility of an organization's information technology infrastructure and the accuracy and integrity of the data themselves within the item- and chargemasters.

John Gaida, senior vice president, supply chain management, Texas Health Resources, Arlington, TX, represents an organization probably furthest along in the process. Not only is his organization's item master connected to the chargemaster for all 13 of its hospitals, but the item master is the charge master, he noted. Gaida emphasized four reasons why as a mantra for the industry: "Consistency, accuracy, simplicity, and just makes good sense!" he said.

Maricopa Integrated Health System, Phoenix, contracts with MedAssets Inc. to use the group's CrossWalk application. "Data is mapped in a single application giving us access to both datasets," said Siobhan Mee, director, revenue cycle management. Mee praises the ability to conduct seamless data queries that may include elements from either or both datasets, as well as the formula overlays and automated error reporting mechanisms that proactively correct pricing. But she counters with one major challenge, which is the reason they outsourced the service to MedAssets. It requires extensive initial and ongoing mapping, according to Mee.

Where Texas Health created its system internally and Maricopa outsourced the service, the pharmacy department at Kingman (AZ) Regional Medical Center took a blended approach. Bruce Latimer, R.Ph., MBA, director, pharmacy services, classifies it as a "two-step process" with manual and automated segments for a "disparate system." Julian Southerland, R.Ph., informatics pharmacist, manually loads item entries into the chargemaster and an automated database of CDM information. Each formulary item is input into the drug master file of the pharmacy computer system, according to Latimer, and a unique CDM number is a data element of that file. "There is a process of evaluating each item and assigning it a CDM number," he said. "Multiple items [with National Drug Code or NDC numbers] can be tied to a specific CDM number."

Kingman Regional relies on Craneware Pharmacy ChargeLink software to serve as a single database for items, purchase history, CDM numbers and reimbursement data, Latimer indicated. They learned about Craneware through their GPO Amerinet Inc.

"We use the Craneware Pharmacy ChargeLink to assure we can effectively charge for items dispensed; provide appropriate pricing, accurate billing and best reimbursement," he said.

Latimer extols the software for providing them with consistent pricing with efficient methods of updating but laments the "considerable time" needed for the manual process to build and maintain their system. "The time it takes," he said, "that's our real stumbling block, our pitfall right now."

Added Southerland: "We're pretty far off from automating the whole process."

Setting the tone

Kingman Regional started using the Craneware Pharmacy ChargeLink about a year ago as a test facility to manage pharmacy items and the revenue cycle. Latimer indicated that they supplied Craneware with the facility's wholesaler historical spending records and volume reports, its chargemaster and its billing algorithms. "With their reference points they can build the item master on what you've purchased and not just your formulary," he said. Plus, the software provides an accessible dashboard to check on a routine basis. "Aggregate data is like a snowstorm," Latimer added.

Maricopa was in the process of determining how best to develop an application internally and complete accurate initial and ongoing mapping, according to Mee, when MedAssets contacted them. The ability to send data from the CDM, IM and closed receipts to an outside application service provider was too tempting not to choose.