Business-office challenges of small and rural hospitals

Healthcare Financial Management, April, 2004

All hospitals face tremendous challenges in optimizing their business-office operations these days. Tighter and more complex reimbursement requirements, ongoing human resources shortages, rising HR costs, and changes in information technology all affect operations and the bottom line. But small and rural hospitals, with their more limited resources and greater geographic and corporate isolation, are particularly challenged to optimize their business-office operations to improve revenue cycle management and reimbursement.

Presented here are the thoughts of a group of senior healthcare executives--three CFOs, one CEO, and one senior executive of an outsourcing firm--regarding business-office challenges confronted by small and rural hospitals and solutions to those challenges.

THE PARTICIPANTS IN THIS HFMA ROUNTABLE ARE:

Alberto Diaz

CFO of Kern Medical Center, Bakersfield, Calif., the 222-bed regional trauma center for Kern County. Kern is a public hospital.

John Hales

CEO of the 80-bed Williamsburg Regional Hospital in Kingstree, S.C.

Frank C. Massi

Senior Vice President for New York-based Accordis Inc.

Curtis Olson

CFO of the 128-bed East Valley Hospital Medical Center in Glendora, Calif., an outlaying suburb of Los Angeles.

Jeffrey Shutak

Director of Patient Financial Services of the 35-bed Memorial Hospital in North Conway, N.H.

ROUNDTABLE DISCUSSION

* Among the financial challenges that smell and rural hospitals face, how significant a challenge is business-office operations?

* Olson: It's a very big challenge. Really, the business office and cash flow are just critical for a hospital like ours. This is especially true because we're a standalone hospital now. Until recently, we had been affiliated with four other hospitals in a system.

* Shutak: Running a tight ship is the essence of effective business-office management, in a rural environment, because of the huge demand for capital acquisitions and improvements within the institution, together with scrutiny to the bottom line, it is imperative that we manage out" operations within the revenue cycle to the highest productivity levels possible. We achieve this by effective use of human resources along with the most efficient, affordable software available. The key word being affordable.

* Hales: On a scale of 1 to 10, I'd say business office operations are a to.

* What are the most significant business-office challenges facing small and rural hospitals?

* Diaz: The nature of operations is 24 hours a day, seven days a week. We're providing so many different services now, and the payers have so many different requirements--preauthorizations, calling specific phone numbers, going to particular facilities, and so forth. People who come into the hospital as patients typically are facing a stressful situation. Our front-office staff members must be sensitive to that while being well versed in many different requirements to make sure we don't miss anything needed for admitting the patient. Missing just one element will result in a loss of revenue or a delay in revenue. For that reason, it is critical that we have a well trained staff that stays with our hospital long term, and that is a challenge.

* Olson: Yes, having properly trained people, and making sure they're staying on top of things, is the biggest challenge. With managed care, it can be difficult Io bill and collect--and make sure we're getting the proper reimbursement.

* Massi: First and foremost, the business-office area--which in process terms includes admitting and registration--is an administrative function whose importance and complexities have many times outgrown the resources available in that small area. In fact, the term "business office" is really a misnomer as it relates to areas responsible for cash flow within a hospital. It's important to look at the whole process to appreciate the many factors that can affect reimbursement. Some of the most important information, for instance, is obtained at registration, which is really where good and bad A/R starts. The vast majority of denials can be prevented at the front end, in admitting. That's why the admitting position is so important. So whether a hospital is looking to improve cash performance on its own, or engaging a vendor for assistance, admitting and business office are the first areas to attack, followed by feeder functions and departments like charge entry and medical records.

* What are your most pressing stalling and training challenges related to the revenue cycle?

* Diaz: The revenue cycle has many components, and every component requires a different discipline and a different body of knowledge. The coordination and timing of all of these things are essential to be able to generate revenue. On top of that, you're often spending a lot of time and effort to deal with a high volume of low-paying accounts. By the nature of the business, as you move into the outpatient model, large volumes can be a concern. You need those large volumes, but with large volume comes a large opportunity for error and for missing information that can cause denials. In that operating environment, not only do you need to look at the patients as your customers, but also you need to meet the expectations of every unit, every department, and every ancillary and support service that expects you to manage the revenue cycle for areas ranging from home health to intensive care. And all these requirements are different.