The California Sutter Health Approach - Research Paper Example

Case Study Analysis: The California Sutter Health Approach Introduction With the current recession in the world, health care organizations have witnessed an increase d inability to collect its debts when they fall due and self-pay, underinsured and uninsured patients. This has lead to a fight on the institutions to meet operational profits and margins. Several reasons have been singled out as the major causes of this new increase in patient debts, most common being lack of patient information, poor accounting practices and correct demographics of patients. Getting the right patient information plays a massive part in non-collectable debts since reaching these patients are sometimes not easy. Despite there being uninsured persons, a significant part of the population, “more 80% of uninsured individuals hail from working families according to Souza and McCarty (2007). Most of these persons have the ability to pay hospital services but fails to pay their funds since they are not being requested to do so. The objective of this paper is to discuss the problems faced by Sutter Health and steps that have been taken organization, to rectify the issue. The paper will analyze the accounting practices employed by California Sutter Health, in defining and solving these problems. It will also discuss alternative solutions to the issue pertaining to debt collection for self-pay patients and opinions regarding the actions taken by California Sutter Health. Sutter Health is one of the leading non-profit networks of community-based healthcare system that deliver care in not less than 100 Northern California Communities according to Souza and McCarty (207). They note that the health care is composed of more than twenty-four acute care hospitals, as well as medical health facilities, physician organizations, hospice, home health services, long-term care centers, and occupational health networks. The healthcare service providers share expertise and resources to increase the quality of healthcare to patients. Sutter Health has grown from on the smallest independent healthcare facility to today’s largest healthcare provider. Souza and McCarty (2007) research reveals how Sutter Health has been reputed as one of the largest and most successful health care provider in North California. This is because the organization was able to implement new strategies on how to increase debt collection. This is revealed in their 2007 article “From Bottom to Top: How one Provider Retooled its Collections.” The new program employed by Sutter helped the accounts receivable department in establishing solutions to their problems, thereby giving them the opportunity to recognize that, however much the program seem to be successful, the need to guarantee that the program remains successful remained open for better enhancement. One of the major problems that Sutter health experienced was the fact that each of the health care’s facility acted autonomously “island” of innovation (Souza and McCarty, 2007). The fact that there were several accounting and operating systems made it difficult for the organization to obtain reports and data in a similar format from all locations. Moreover, Sutter Health lacked a common practice within the different departments of the organization. Other problems identified by Souza Health while analyzing its revenue management cycle before beginning to implement it new program according to Souza and McCarty (2007) include the fact that the patient financial service (PFS) staff were not able to get access to real-time information on important operational and financial indicators such as daily cash collections. This slowed down the organization’s functioning as the staff and the managers now had to wait till the end of the month to set benchmarks, make vital business decisions or track any progress within the organization. Secondly, the accounting system of the hospital did not give room for managers to analyze or isolate select data or create reports on demand to the required level according to Souza and McCarty (2007). Instead, the hospital’s facilities depended on a specially trained programmer to generate its reports. This certainly led to costly delays in identifying and rectifying discrepancies. Thirdly, the staff of the central business office (CBO) was faced with the problem of lack of real-time information (Souza and McCarty, 2007). In this regard, the accounts representatives were not able to prioritize effectively or follow up the progress as only a list of accounts due were being assigned to them. As a way of turning around this situation, Sutter Health took an initiative by focusing on a number of primary benchmarks, namely gross accounts receivable days (credit balance accounts and less capitation), cash collections, unbilled accounts receivable days, billed accounts receivable days, percentage of accounts receivable over 90, 180, and 360 days and major payer accounts receivable days. Accounting practices California Sutter Health used in defining and solving its collection problems. Souza and McCarty (2007) note that Sutter’s empowering staff made use of Sutter’s strategic program for minimizing accounts receivable days and increasing collections by focusing on empowering the staff members of PFS to assume responsibility with regard to each account they deal with. As a result, every individual in the central business office were now expected own their own businesses, fixed with complete dashboards. The purpose of this dashboard was to aid in tracking progress in accomplishing team and individual targets. Souza and McCarty (2007) argue that, in order to help the staff of PSF manage their businesses effectively, Sutter had to provide them with a set of tools, which gave them the opportunity to sort out accounts in different ways such as using previous work date, dollar amounts and the payer system; automate and prioritize account work lists; and observe very first their ranking within their offices and groups, based on their performance measured as a percentage of the target. Souza and McCarty (2007) argue that the tools helped to inform members of the staff how they were progressing as well as how and in which areas improvements were needed, revealing which accounts receivables, if performed successfully, would impact significantly on the accounts receivable days and the goals of cash collection. Managers also had their own tools and dashboards that enabled them to ask all aspects receivables needed for tendering purposes and reveal problem areas; calculate average daily sales by day and monthly period; drill down to the level of patient accounts; assess their monthly performance and estimate all the probable outcomes at month-end. Moreover, Souza and McCarty also reveal that the tools and dashboards also assisted in production of timely reports on demand (2007). The reports generated in this case include accounts receivable stratification, aging analysis, credit balance analysis, analysis of discharged not billed (DNFB), as well as problem payers’ analysis. Sutter Health also implemented a denials management component according to Souza and McCarty (2007). This was done on a UB-92/04, which originated at the point of access. The main purpose of this point in the organization’s revenue cycle was to help reduce claims denial from debtors. Consequently, as a way of optimizing performance here, the organization’s new process required an analysis of each registration using rules engine before patients could be allowed to leave the registration desk so as to be able to ascertain any potential problem. Souza and McCarty identified a number of potential errors and problems. These include the patients guarantor is underage, patient’s service not authentic for hospital services; patient’s address has errors in format, abbreviations and punctuations; the patient’s is 65 and above years of age, but insurance plan is missing among others. In fact, the front-end claims editing allowed PFS staff to allocate problems quickly so that prompt corrective actions can be taken or further training in areas that still need adjustments. Souza and McCarty (2007) reveal that admitting clerk was now able to receive an alert such as those of specific actions that could be taken. A case in point is, an alert notifying a receiving clerk that a particular patient has other accounts with returned mail, please ascertain the address validity according to Souza and McCarty (2007). Other notifications that could be made include those pertaining to accounts with bad debts notifying the receiving clerk to demand their payments. This strategy indeed helped reduce bad debts and increase collection of debts. In order to solve its debt collection problems, Souza and McCarty (20070 observed that Sutter Health had to employ the use of simple prompts to the registrar informing him to collect established preregistration amount. As a result, the organization used a tool to trail how much each member of the staff collected up-front, then linking it to contract and estimating management systems so that the organizations registrars can be evaluated based on estimated targets collected and contracted rates. In fact, the system is designed to promote existing PFS and staff registration without necessarily having to hire additional expertise or to increase remuneration packages beyond its current average of $10 to $20 per hour according to Souza and McCarty (2007). They note that these systems require staff training. However, the training objectives differ in accordance with staff areas. For instance, those members of the staff who are not used to debt collection are trained on how areas to do with patient communication such as script rehearsal and role-playing. Souza and McCarty notes, for example, that CBO staff are accustomed to asking people for money, but are not used to playing the role of stewardship with regard to their assigned accounts. At the beginning of educational sessions, are provided with technical alternatives to personal trainers in order to practice in the test system mode on their individual capacity for not less than 30 minutes daily for the whole week (Souza and McCarty, 2007). The purpose of this highly intuitive system is to give the Sutter staff the opportunity to work autonomously with minimum supervision or assistance. In fact, every member of the staff is obliged to pass an online test as a way of establishing their competency level after which they are issued with user ID (Souza and McCarty, 2007). This indeed has enabled Sutter Health acquire competent employees who are able to work in all departments. Alternatives There are a number of alternatives to the strategy used by Sutter Health. The first strategy that can be employed by Sutter in order to improve its collection problem is by ensuring that measures are in place to ensure easy allocation of hard-to-find debtors. This can be achieved by developing debtors database that is frequently updated to enable Sutter locate elusive debtors, make contact with them, and collected the debts that have fallen due (Healthcare Financial Management Association (U.S), 2008). Collection prioritization and strategy can also help improve debt collection problem experienced by Sutter Health. In this case, Sutter health should establish a more focused collection plan by establishing which accounts receivable have the highest payment potential. This can also be achieved by establishing scoring and segmentation tools. Sutter can also employ the use of portfolio monitoring techniques (Healthcare Financial Management Association (U.S), 2008). This would also involve carrying out an analysis of the industry’s trends and testing new strategies. This indeed would help Sutter solve its collection problems. Constant monitoring of unpaid debts may also act as a good strategy for Sutter Healthy. For instance, it is a matter of fact that patients who have gone in areas could easily become solvent again after sometimes in the future. This, therefore, calls for constant monitoring of debtors accounts receivables to assess if their ability to settle their debts have improved (Healthcare Financial Management Association (U.S), 2008). Sutter health can also define and improve its collection problems by institution a strong internal control system. This is by establishing an internal audit staff whose function is to oversee and verify the organizations financial statements by ascertaining if they are properly prepared, maintained and reflects true and fair states of affairs of the organization. The internal audit will ensure that proper books of accounts are kept, and debtors followed up immediately as stipulated in terms of debts (Healthcare Financial Management Association (U.S), 2008). Conclusion The approach used by Sutter is indeed one of the best approaches that should be emulated by other organizations that are facing similar collection problems that once caused nightmare to Sutter Health. This is due to the fact that these approaches have helped turn around the status of Sutter from a small organization to one of the leading community-based health care provider in North California. This was achieved mainly by integrating all its data elements in the organization's revenue cycle management, concentrating on obtaining complete and accurate information, making PFS staff accountable for their actions, as well as establishing a cash up front. It is also imperative that Shutter Health could still have used other alternatives as a means of turning around the performance of the organization as regards defining and solving its collection problems. This includes instituting a strong internal control system through establishment of the internal audit department to oversee the operation of the organization. Other alternatives would include developing debtors database, constant monitoring of unpaid debts, collection prioritization just to name a few. Incorporating all these strategies will ultimately help Sutter Health in defining and solving its collection problems. This would eliminate all the problems to do with debts, thus improving the performance of the organization. References Healthcare Financial Management Association (U.S). (2008). Healthcare financial management journal of the Healthcare Financial Management Association, Volume 62, Issues 5-8. New York: The Association. Souza, M. & McCarty, B. (2007). From bottom to top: How one provider retooled its collections electronic version. Healthcare Financial Management. 61(9). 67-73. Read More