Case Analysis: Sutter Health

Case Analysis: Sutter Health

ACC281: Accounting Concepts for Healthcare Professionals

Date: Sept. 23, 2019

In this paper, I will be reviewing a case study on Sutter Health and how they reinvented their process and procedures so that they could improve the revenue they should have been receiving. The article describes what the issues had been, how Sutter went about creating a way to correct the issue, and the outcomes once they inputted the new process and procedures. In this paper, I will be telling you what the key problems had been, provide background information, relevant facts, the solution they used to correct this issue, and the final results of the implementation. I will also be giving you a couple of other examples of how this process or one like it was also implemented in other organization.

First I will start by giving some background on Sutter Health. Sutter Health was founded in 1921. It is a not-for-profit healthcare system in Northern California. It serves more than 100 Northern California cities. In 2006 Sutter Health as noticing that it was taking an increasing amount of time for their accounts receivables to be met. With multiple errors and a growing amount of patients being unemployed or having higher copays from employer-provided insurance. Since Sutter Health realized that there was a substantial problem in their AR they decided to try and identify the issue and come up with a process to correct them.

One of the things that Sutter Health believed was that just because there was a decline in the economy and that many people had been unemployed or had higher copays, didn’t mean that they could pay their bills. Instead, it was reviewed and determined that many people could pay their bills, but the best way to get the patients to be willing to pay was to be able to let them know right away what the amount required would be. They also identified that patients paid more out of pocket cost if they had the opportunity to meet with a financial advisor before being seen and could get an estimate of what they would need to pay.

However, the first issue that Sutter Health identified was that PFS (Patient Financial Services) team didn’t have the information that was needed for them to be successful at the key financial and operations needed for cash collection. The PFS staff wasn’t used to being the collectors or taking part in bill collections. It was also identified that many of the staff and managers had to wait at least a month to be able to track financial trends and know what to be asking for or identify an issue. Which wasn’t giving them the tools they needed to effectively assist, in collections or upfront payments.

The second issue that Sutter Health identified was that the managers didn’t have the analytics they needed. They needed effective tools that they could use to isolate data and generate reports and since the managers didn’t have access to this information they had been leaning on programmers whom they employed at a high cost and thus waiting for the programmer to identify a send the report caused a delay in correcting any problems. They realized that this wasn’t effective and didn’t allow for the speedy identification of trending issues or errors that they needed to be successful.

Third, they realized that their central business office (CBO) didn’t have accurate information. That most of the time they didn’t have real-time data to work with and only had lists of outstanding accounts that had been assigned to them to work. The representatives couldn’t identify what progress they had been making. They also couldn’t priorities what accounts to work since the information wasn’t accurate and true to the time.

With identifying these three issues, Sutter health decided they needed to break down what was happening and come up with a plan on how to correct the issues at hand. They decided they needed to focus on cash collections, unbilled AR days, Billed AR days, the percentage of AR over 90, 180, and 360 days, and also on major payer AR days. Major payer days can be explained as the amount of time it takes for insurance companies to pay. For example, Blue Cross Blue Shield might pay in 20 days, united healthcare in 45 days, and AARP in 60 days. Knowing these payer days lets the account representative know which accounts to focus on and priorities. If a Blue Cross Blue Shield account isn’t paid in 26 days, then we know there must be something wrong and the account needs to be looked into. However, if we see a United Healthcare Claim unpaid at 26 days, we know that it isn’t an account that needs to be looked at right at the moment and that there is still a chance that if we check on this account in 13 more days more than likely it will be paid.

One of the ways that Sutter Health chose to correct the issue with Patient Financial Services (PFS) staff not having the tools they needed to be effective was to educate and set effective business tools. These tools consisted of automatic worklists, a spreadsheet the prioritized the accounts in different ways, such as by dollar amount, oldest worked account, or payer. They also used the instinct for competition and gave them the option to see their ranking and productivity at a glance. This percentage was based on performance at a percentage of the target they had been trying to reach. They also offered training and education to the PFS, since they truly are the front line and the best way to collect from a patient first hand. They didn’t know how to ask for money in the beginning, however giving them trying on what to look for, a way to know how much to ask for, and confidence in their ability to ask through 3-hour training, continued learning courses, and a role-playing session.

Another set of tools they created was for the management staff. They gave them their own dashboard so that they could efficiently track receivable trends and identify any current issues. They also gave them the ability to focus on accounts on the patient level, the ability to monitor payments and adjustments, a report that calculated the daily revenue. They also gave them the ability to view and track the performance of the PFS staff, so that they could identify any education needs or trends. One of the main things that had been identified in why the AR dates had been so delayed was due to simple errors associated with patient’s marital status being wrong, guardian being listed and a minor, patients over 65 not having Medicare listed as a payer, and health insurance ID or group numbers being input incorrectly. These issues easily could have been identified and edited prior by the PFS once they are trained correctly.

Since Sutter Health did identify many easily correctable errors they implemented alert to let PFS know that there was probably an error and to please investigate. The alerts again helped to give the PFS the tools they needed to notice trends and be more efficient. Examples of these alerts is a statement saying to please check a patient’s address since mail had been returned. An alert letting the PFS know that an account is delinquent and to ask for payment before checking a patient in.

With Sutter Health identifying these issue and creating a plan to correct or improve them and then implementing the above policies and procedures. Sutter Health was able to change the AR days in nine regional hospitals from 65 to 59. Given that each one of those days equals 1.3 million (Souza & McCarty, 2007).That is a dramatic impact and a great success for Sutter Health It also provided many other organizations with a learning opportunity to re-evaluate the current process and move to a new one.

Another successful case was identified in the article titles “Billing Alert for Long-Term Care”. In this article, a case is identified as being “Another Great Success Story”. The case was Long-Term Care and the increase in AR days. This article states that they identified their issues and decided that “Clearly and thoroughly documentation expedite the follow-up process”. They identified that they needed to better document data that they found to be important and use this information to prioritize there claims. The main data they identified as being relevant was: Name, Payer ID, Payer, Identifying which payer is coinsurance and which is primary, a late payment date, discharge date, and what they called buckets. Buckets in the article are identified as how many days the claim had been out for repayment. This again goes back to identifying when payments usually come back from third-party payers. The example given was Blue Cross Blue Shield taking an estimate of 20 days, United Healthcare 45 days, and AARP taking 60 days.

Identifying this information helped them to rely more on an analytical revenue cycle. Allowing them to identify and prioritize what needs to be worked and thus decreasing return dates. With doing that they then had been able to increase the amount of revenue coming in and easily identify which accounts still needed to be worked. Thus in a way identifying one of the issues that Sutter Health had and also implementing a process similar to then also become a success story.

Another success story is in the article titles “Centralizing Registration Boosts Collections, Patients Experience at Crozer- Keystone. This hospital system chose to focus on analytics and staff training to help improve their AR days. Another major thing that they chose to do was pull four different hospital registration/ admitting departments together to create one centralized department. This department was used to contact the patients before them being seen or admitted and discuss the financial aspect of their care with them prior to them being seen. This approach seemed to make the patient more open and understanding of making payments. It allowed them a beforehand look at what they would need to pay and what the amounts would be paying for. It also allowed a patient who couldn’t afford to pay all of the cost upfront the option to discuss payment plans and thus gave them more of the ability to plan for the expense, versus just springing a major bill onto them that they don’t think they can afford. It was discovered that giving them this option helped them be more open to making payments. Giving the patient a way to pay a bill versus making them feel like there is no way they would be able to and thus just letting it go to collections.

Now that I have given you the key issues and problems Sutter Health faces, providing background information on how this issues came to light, the solution they proposed and implements, as well as the results on how successful it was and also providing two other healthcare organization and the issues they identified and the improvement process they created and implemented I would make my suggestion on an approach I would have taken if being in the same position.

My suggestion would be those analytics be ran. Reporting is a major part in identifying key errors. Being able to run reports on productivity, AR days, payers, and what errors are causing denials is a major impactor in correcting issues. Whether the issues are coming from one employee who needs further training, from the EHR (electronic health record), or another source such as maybe a medication NDC number not being documented right or a provider not being listed as supervising for a PA. All these issues need to be identified and trackable by a reporting system. Once these are created reports can be run and either training or other measures taken to correct the errors. I think another step I would take would also be implementing training and giving the PFS the ability and tools needed to be able to identify front end errors instantly and correct them. Also giving them a financial revenue system that would let them know how much money they should be collecting for a copay, deductible, or percentage (example 80/20 plan) so that they can ask these patients right away for a cash or debit card payment. I believe implementing these processes would greatly improve the AR days.

In conclusion, I hope this paper has done exactly as I had stated. Providing background information on Sutter Health. Helping give an overview of the key problems and issues identified in 2006, the background information on how this information and errors had been coming to light, the solution that Sutter Health had created and implemented, as well as the final results. These results being the success and a decrease in AR days. I also hope that it has given a good overview of a few other healthcare organizations and how they identified similar issues and what they had done to create a process and implement that process to also become successful in decreasing their AR days and finally ending with a suggestion of how I might approach and implement a plan and strategy to correct issues in my healthcare organization if I identified the same issues.

References:

Rauscher, S., Wheeler, J., & Hilleary, G. 2008. Effective Hospital Revenue Cycle Management: Is There a Trade-off Between the Amount of Patient Revenue and the Speed of Revenue Collections? PRACTITIONER APPLICATION. Journal of Healthcare Management, 53 (6), 392-404; discussion 405-6.

Reducing accounts receivable and improving collections: A success story. (2018). 20(11), 1–4. Retrieved from http://search.ebscohost.com.proxy-library.ashford.edu/login.aspx?direct=true&AuthType=ip,cpid&custid=s8856897&db=ccm&AN=132914561&site=ehost-live

Souza M, & McCarty B. (2007). From bottom to top: how one provider retooled its collections. Hfm (Healthcare Financial Management), 61(9), 66–73. Retrieved from http://search.ebscohost.com.proxy-library.ashford.edu/login.aspx?direct=true&AuthType=ip,cpid&custid=s8856897&db=ccm&AN=105825471&site=ehost-live