Using report cards to sustain revenue cycle improvement: we manage what we can measure, and we manage well what we measure well

Healthcare Financial Management, July, 2005 by David Haray

AT A GLANCE

Five guiding principles can help your organization achieve revenue cycle success:

* Have appropriate job functions and work flow design in place.

* Elevate staff performance through quality and productivity goals.

* Ensure effective technology infrastructure is in place.

* Deploy at all levels a comprehensive management tool set and report card metric (dashboard).

* Sustain a culture of accountability.

Are your revenue cycle processes "state of the dark" or "state of the art"? Stanford University Medical Center fosters a culture of accountability. Its revenue cycle is metric-driven for performance and sustainability. Its report cards and dashboards provide the controls, focus, and acknowledgment for doing things right. Peter Drucker's classic definition of management as "achieving results through others" still rings true.

A successful and sustainable revenue cycle reflects a team of accountable, talented, committed individuals who know how to execute well and are constantly learning and retooling, continually trying to make what is good better. We all work with challenging situations and less than optimal tools as our organizations make difficult choices around discrete resources. With consistent and straightforward use of and adherence to performance-based report cards, an infrastructure and culture can be created and sustained that go beyond any one individual or revenue cycle leader.

Think of the revenue cycle in terms of a team sport, such as basketball. All National Basketball Association teams play well. What separates one team from another besides individual skill mix is how well they execute the fundamentals. All players at this level have great field goal shooting percentages. If, however, they can improve by 1 percent (getting clean bills that pass all edits and "score" a payment the first time), it will make a difference over time. If the team can reduce the number of turnovers (denials) by just 1 percent, over time it can make a difference between a successful franchise (organization) and one that is just in the league. Continually and perhaps routinely executing well on fundamentals and constantly improving marginally differentiates top performers.

Five Guiding Principles

Although Stanford University Medical Center's transplant services, cutting-edge medical advances, and international patients add to the organization's prestige, these features bring significant corresponding revenue cycle challenges. Revenue cycle management is about collecting cash timely and to the organization's fullest entitlement while not running afoul of the three third rails of the revenue cycle: collecting too little cash (financial stability), failing to achieve regulatory compliance (reputation), and undermining guest relations (image). The following guiding principles are not an epiphany but an homage to performing the fundamentals meticulously well.

Guiding Principle #1: Have appropriate job functions and work flow design in place. Make sure work is stratified, with the most experienced people working the highest dollar accounts and compensated accordingly for their demonstrated knowledge and skill sets. At Stanford, the account categories are $1,000-$20,000 and >$20,000, with the most experienced staff working account balances > $20,000. Patient representatives at Stanford have four levels, with those attaining level four being the candidates to work balances >$20,000. Backlogs should be outsourced. Do not overlook any part of your business. Outsource firms should be treated as vendor-partners. They need their own metrics and report card. If you know your staff cannot get to a book of business, outsource the work early enough so that the outsourcer can help contribute to your goals. (This step assumes outsourced receivables remain on the books in active accounts receivable.) Look at outsourcing partners as a relief valve that can be opened or closed as the business situation demands.

Establish situation response guidelines for staff so they will always have on hand specific scripts of actions and know when they are to act upon them. Staff should be held accountable to following scripts that allow them to escalate actions proactively and appropriately. Ensure that work flow design reflects the responsibility and accountability of the performing unit (e.g., admitting, medical records, case management, patient financial services) throughout the revenue cycle core process.

Guiding Principle #2: Elevate staff performance through quality and productivity goals. Goals should be adjusted periodically. Make sure quality reviews are timed to drive desired performance. Reviews should ensure that situation response guidelines are being followed. Scoring should be weighted more heavily upon the appropriateness and timeliness of actions. Reviews should expand and occur more frequently based on desired outcome and less when goals are achieved. Ensure that quality and productivity goals are documented in the responsible employee's evaluation. When quality reviews and individual discussions take place regularly, no surprises should occur at yearly evaluations. You are hardwiring accountability into the culture.

For example, Stanford's quality scores are based on 3.0. Follow-up representatives are expected to score at least 2-75 or higher. Those scoring 2.9 to 3.0 are reviewed monthly. Those who score between 2.75 and 2.9 are reviewed biweekly. Those scoring below 2.75 are reviewed weekly, and a developmental corrective action plan is put in place. There are productivity scores as well. A follow-up representative is expected to touch and complete follow-up on 185 accounts per week. Both quality and productivity scores are reflected in the employee's evaluation.