Accounting Concepts for Health Care Professionals: Sutter Health Essay Example

itself to improving patient collections in 2006.

They began the task with their patient account representatives, collectors and other members of the central business office of its Sacramento/Sierra region. They are in due course to working their way forward with the registration staff, which will eventually be in charge of for many of the functions that the back-end collections that team is responsible for. Within the first three months of the project, the ompany reduced the number of accounts receivable days for the nine hospitals in the region from 65 to 59.

Each one of the A/R days equals $13 million, which in turn means that Sutter Health collected an additional $78 million (Souza). Before beginning the project, Sutter Health identified several areas in which the project needed to focus. There are three identified problems that would result in the staff of Sutter Health being unable to work efficiently. First, the patient financial services Staff or PFS could not access real-time information on key financial and operational ndicators such as A/R days and cash collections.

To manage this problem they had to wait until the end of the month to do so. Next issue that they acknowledged was the hospital's accounting system did not allow managers to isolate and analyze select data or generate reports on demand to the level of detail required. Fixing this resulted in the region having to rely on specially trained programmers to develop the reports, which would be costly and cause delays in indentifying and correcting the problems. The third problem identified was the central business office (CBO) staff lso suffered from the lack of real-time information.

The CBO was

only able to enter accounts where they were assigned, with an outstanding balance. This made an issue to where the account representatives were unable to effectively prioritize or monitor their progress (Souza). Sutter Health began their Journey for increasing collections and reducing A/R days by focusing on empowering individual PFS staff members to assume responsibility for each account they deal with, allowing managers to have their own tools and receivables dashboards, thus implementing a denials management component.

In order to insure each staff member was obtaining their individual and team goals, each member was given their own business (Souza). The tools in which the PFS were given provided them with the tools to prioritize and automate account work lists, sort accounts in various ways and see at a glance their ranking with their work group and office-wide.

Managers were given their own dashboard and tools which able them to use query all aspects of receivables for trending purposes and identify problem areas, drill down to the patient account level, monitor revenue, payments, adjustments, receivables, and days for periods rom the previous day and week to the previous 18 months, calculate average daily revenue by day and 30-day period, assess their performance for the month to date, and estimate likely results at the month end, view all receivables or select any segment for quick analysis, and generate timely reports on demand, including aging analysis, A/R stratification, discharged not final billed (DNFB) analysis, credit balance analysis, and analysis of problem payers.

For example, registration staff, who are not accustomed to asking people for money, receive training that focuses largely on effective patient communications and includes role-playing and

script rehearsal. The new program will of course include training for each staff member, but by ensuring that a new training system is in place to give their current employees at the nformation that is needed for the program it will keep costs down. There are several similar ways were Sutter Health could have approached retooling their collections department. In the article "Selling Written-off AIR," explains how selling off a hospital's AIR can be a benefit to the organization. Hospitals that sell their written-off bad debt have the potential to unlock a dormant asset, one that can have a positive impact on their bottom lines.

Understanding why hospitals should consider the sale of unpaid accounts receivables (AIR), how to mitigate concerns about such sales, and ays to optimize the financial benefit of selling written-off AIR is very important. Generally, the receivables that are of interest to potential buyers are one to three years old, and have spent approximately six months with the hospital's primary collection agency. These debts do not include Medicare or Medicaid patients, but the debt is evaluated for potential purchase based on a variety of factors, such as: the age of the debt the zip code of the debtor the size of the debt the age of the debtor Hospitals that wish to sell their written-off A/R should first make sure their objectives nd the debt buyer's objectives parallel one another (Czerwinski).

Selling A/R does not resolve issues the company might have within their AIR department but it is a quick and easy solution to resolve delinquent accounts the hospital has. When assessing the A/R department within a health organization the need

to ensure that best practices for self-pay collections is in place. The article "Best Practices for Self- Pay Collections," gives an overview of best practices that have been validated by multiple leading healthcare groups. The article, further states, the following examples of best practices: success starts at registration hart your self-pay population assess expected collection rates use predictive modeling The most successful hospitals focus first on using technology to screen their their self-pay patient interactions.

The first step toward a smarter self-pay process is to have accounts receivable (AIR) managers segment the self-pay patient population based on two variables: expected collection rate and original balance. The original balance is most often retrieved from the hospital information system (HIS), however, measuring or assigning an expected collection rate (or payment likelihood rediction) to a patient is much more difficult. To determine the expected collection rate for patients, most hospitals look at past payment history, if available. They could also influence a service that provides patient credit scores and other payment predictor information.

Predictive modeling involves the use of automated tools to assess probability of payment. Predictive modeling also enables hospitals to catch fraudulent claims by identifying patients who submit incorrect information at registration. This is done by comparing the provided financial information provided y the patient with data received from third-party providers and/or credit bureaus. Once segmentation of accounts has been performed, hospitals would then develop strategies to streamline and improve self-pay, starting with their communications (Eller). Sutter Health has approached solving issues within their PFS department by researching what impending problems that were in the department.

Sutter Health was doing well in finding those problems and

finding a solution to fix the problem. Their approach did and will continue to take time to ensure each phase of the solution is implemented successfully. By slowly arranging the solution into their company they will continue setting themselves up for continued success of the program. Sutter Health was successful in the implementation of their approach; however that approach has taken time to see any profit. If the company wanted to see faster results of the improvement of the AIR there are other solutions, stated in the articles mentioned above, on how to see a positive result faster.

I would recommend that they take an approach in which to sell many A/R accounts that are delinquent. Sutter Health used this program and still continues with their current retooling of AIR. By combining both programs Sutter Health will profit. Selling off accounts that are already offending will ensure the company receives at least partial payment from those accounts, instead of possibly not receiving it all, even with the new programs in motion. By having those accounts already paid off, the CBO can focus on ensuring that accounts do not enter into delinquency. CBO will start with a clean slate, they will be able to be more efficient in managing their A/R that they are giving to administer.