Strong medicine: rethinking the PFS director's role - patient financial services - includes related article on accounts receivable management

Healthcare Financial Management, August, 1991 by Carol Bradford, Arnold Simoni, Dudley Medlock

* At the time of admission, inaccurate information concerning a patient's insurance coverage is collected, perhaps rendering all or part of an account uncollectible. Administrators at St. John's estimate that such a problem could increase its bad debt by 2 percent--or $200,000;

* When billing is late because of missing information, funds tied up in outstanding accounts begin to lose value, a fact that receivables computations generally fail to show.

If a service department does not provide patient charges needed for billing or if medical records are not completed within a designated period, millions of dollars remain idle each day. The hospital, in effect, must fund these outstanding accounts and forgo better returns on its investment. Improved communication and management between departments is critical to healthy cash flow;

* The roles of other hospital departments and physicians' offices in providing complete, accurate, and timely information should be emphasized. Unless the functions and objectives of the PFS department are understood by tose who interact with it, efficiency and productivity can be limited;

* Many hospitals lack a system for stratifying accounts. More often than not, focus is given to particular accounts or classes of accounts, rather than to the billing system used; and

* Many hospitals need a monitoring system to provide information on the status of an account from the time the chart leaves the nursing floor until it is billed. an effective system should minimize collection efforts by placing emphasis on billing large accounts and by expediting the retrieval and collection of information.

Changing role

The role of the PFS director has grown more complex from earlier days when hospitals received payments for usual and customary charges in providing patient care. In those days, managed care contracts had not entered the picture to add more complications, and hospital billing systems were based on receiving full payments for services.

Today's environment of prospective payments, contractual discounts, multiple payers, and many othr variables demands a greater degree of professionalism and sophistication. Despite these developments, hospitals have made few fundamental changes in requirements for PFS director positions, unlike changing criteria used in filling controller, financial planning, or information services posts.

According to a 1991 profile study (b) of patient accounts managers conducted by HFMA, the Chicago, Ill., office of Coopers & Lybrand, and Accelerated Receivables Management, Lincolnwood, Ill., only 54 percent of surveyed PFS directors hold college degrees. The figure represents fan increase of only two percent from the previous survey in 1988.

At the same time, those surveyed identified a maze of issues increasingly complicating their positions and requiring their attention in the years ahead, including government regulations, third-party reimbursement, uninsured patients, and increased deductibles and coinsurance. These demands clearly require a broadened skill level that does not appear to e occurring on its own.