Gaining a competitive edge through HIS technology - healthcare information systems - includes related information on costs

Healthcare Financial Management, June, 1991 by Richard C. Peterson, Kathryn M. Hanneman

Streamlined procedures, fewer errors, improved consultation on patient care, and lowered costs are among the advantages cited by health-care facilities that are using information technology in efforts to outpace their competitors. Technology ranging from executive information systems to medical record imaging can provide improved access to data and aid strategic decision making. Even so, the perceived benefits of a particular form of technology should not outweigh sound business planning.

To stay competitive and respond to pressure from government, consumer, and business groups, healthcare facilities are pursuing more efficient ways to handle the flow of information inside and outside their organizations. Facilities are investing in information systems technology with an eye on long-term rewards: reduced costs, improved market share, and enhanced patient care.

Information technology that provides strategic advantages can help an organization meet its business goals and distinguish it from competitor facilities. Technology also can help an organization find new or alternate ways to improve its services.

Even with these benefits, a decision to acquire information technology should grow out of careful planning among appropriate staff members. Some forms of technology may not fit a facility's needs or solve problems as intended. And significant outlays of resources frequently are involved.

Processing claims

Memorial Sloane-Kettering Cancer Center, a 565-bed teaching hospital in New York, N.Y., began using electronic claims processing in 1984. Today, more than 90 percent of its claims are handled electronically, including those from third-party and commercial insurers, creating an essentially paperless environment at the hospital.

Sloane-Kettering, which has approximately 19,000 inpatient admissions and 170,000 outpatient visits each year, reports several benefits from using electronic claims. Since the program began, its total patient accounting budget has decreased every year. Through attrition, the hospital also has decreased the number of full-time equivalent (FTE) employees during the past four years, resulting in a 9 percent savings in staff salaries. Meanwhile, its inpatient accounts receivable have dropped four to five days and outpatient receivables have decreased by 34 days.

Sloane-Kettering's use of electronic claims processing, coupled with the recent implementation of documentation imaging technology, has increased the accessibility of records. By sending medical records information more quickly to insurance carriers and receiving payments more promptly, the hospital's days revenue in accounts receivable is expected to decline. An automatic dialing telephone system, in use since 1987, also assists collectors in contacting patients with delinquent accounts.

A key concept is claims editing, which is to embed third-party edit criteria in the registration pathways,' said john McBride, the hospital's director of patient accounts. Sloane-Kettering now can submit inpatient claims to insurers within five days of discharge, he said.

Sloane-Kettering must contend with the fact that commercial carriers do not have standardized information requirements. Carriers frequently require additional data that must be added, usually manually, before information can be sent for processing. Blue Cross and fiscal intermediaries have determined standard requirements, but this activity accounts for only 50 percent of Sloane-Kettering's claims. Historically, manual billing adjustments have proved to be costly and have led to delayed payments.

Two recent events should affect hospitals' ability to submit claims and receive payments electronically. The White House Office of Management and Budget (OMB) has instructed the Health Care Financing Administration to participate in setting national standards for electronic claims processing. In addition, proposed national standards for transmitting health insurance claim checks and remittance advice have been released by the American National Standards Institute's insurance subcommittee.

Data for executives

Pitt County Memorial Hospital, a 582-bed tertiary care hospital in Greenville, N.C., began designing a custom generated executive information system (EIS) during the summer of 1989. It began operating in October 1990. The hospital, which soon will add 143 critical care beds, is affiliated with East Carolina School of Medicine.

An EIS system converts scattered data into useable information by acquiring, summarizing, and displaying information that is crucial to an organization's operations. The system is automatically updated as new information becomes available. EIS technology is intended to improve an executive's effectiveness and efficiency, improve support of the organization's planning and control processes, and enhance decision making.

Before Pitt County Memorial added its EIS system, executives sifted through numerous computer reports to obtain needed information. Those details now are collected electronically each night from various systems and made immediately available.