The California Sutter Health Approach - Case Study Example

Case Study Analysis: The California Sutter Health Approach The health care industry is a very vital one in any society. Itis the one that ensures that the population remains productive at all times. There are, however, a number of challenges that practitioners within this industry face. The most pressing one is the ability for them to remain profitable. This article will look at the steps that the California Sutter Health has taken to ensure that it is able to get more patients to pay for their treatment. It will also investigate whether there are other ways of doing what California Sutter Health has done. Introduction California Sutter Health is a family of hospitals that are found within San Francisco (Spetz, Seago & Mitchell, 1999). The history of this health provider starts in 1923 when Sutter Hospital came up in Sacramento. This was to be followed up by a maternity branch in Sacramento. This has gone on to merge with a number of health care providers within Northern California such as California Pacific Medical Centre. The California Sutter Health is not really the owner of all those hospitals as it has not been reported to be so. It is, therefore, more of a merger between different health care providers. Overview of the California Sutter Health Case Problems Encountered There are a number of issues to look at when assessing this particular case study. One of these is the problem assessment that was undertaken by California Sutter Health. Sutter Health came up with a number of issues that it would need to address if it was to make more collections in terms of revenue. One of these problems was the lack of coordination between the front-end and back-end staffs’ roles (Souza & McCarty, 2007). The problem in this case was that the best time to ask a patient seeking admission or services was at the point of registration (Souza & McCarty, 2007). This was, however, difficult since the registration staff found at the front-end were not accustomed to asking for money. This was the role of the back-end staff who manned the accounts department. The matter was, therefore, how to get the function of collecting money from the back-end to the front-end taking into consideration the needs of all the patient financial services staff members. In an attempt to ensure this discrepancy is resolved, the health provider has sought to empower all the front-end and the back-end patient financial services staff members. The aim of this was to ensure the eventual transfer of many back-end functions to the front-end. This will eventually lead to making the point of service collection to be the norm. As a result of this effort, started in 2006, the health provider was able to reduce the accounts receivable (A/R) days in nine hospitals in the region from 65 to 59. This translated to an addition 78 million dollars more, collected from an average 13 million dollars a day in each of the hospitals (Souza & McCarty, 2007). Another problem that the patient finance services collectors faced was the matter of accessing real time information on key financial and operational indicators. This was adversely affecting the planning process as the management would have to wait until end month to set their targets and objectives. The other problem was the inability of the management to analyse and process specific data on demand. They instead had to rely on a trained programmer from outside to do this for them, something that was costing them a lot of money. The third problem was lack of real time information for the Central Business Office (CBO) staff. With all these restrictions in place, the attempts to prioritise or even monitor accounts were very difficult (Souza & McCarty, 2007). Solutions There were a number of solutions that were applied by Sutter in order to get rid of the afore-mentioned problems. One of these was the empowering of the staff members. The patient finance services staff members were each made to feel as though each of them was in charge of their business. This meant they were fully accountable to themselves in terms of meeting the targets set for them and their teams (Souza & McCarty, 2007). Sutter provided these staff members with the tools to monitor their accounts. The management was, at the same time; given tools to ensure that they could effectively monitor what the staffs were doing. At the front-end, half of the billing elements on a UB-92/04 originated from here. This presented an optimal opportunity to reduce claims denials. As a result, a rules engine was introduced by Sutter to vet every patient before they can go past the registration desk (Souza & McCarty, 2007). The essence of the rules engine was to help avert problems in the future for the hospitals. This also allowed corrective action to occur and in case of lack of information, further training was undertaken. The healthcare provider also sought to avoid having to hire new and better trained employees who would then demand more wages. The need to avoid raising wages from the current 10-20 dollars an hour, the company embarked on a comprehensive training of the current staff. This training was specified to the needs of different staff members. The registration staff was, for example, empowered with skills that would allow them to be effective in asking for this money (Souza & McCarty, 2007). In terms of the training, the staff members have the alternative of a technological ‘tutor’. This allows them time; approximately 30 minutes a day for a full week to exercise in test system mode. The autonomy enjoyed by the patients has according to Souza and McCarty (2007) given the staff at Sutter the incentive to accept these changes completely. There is the added advantage of an online manual that the staff can revert to if they have difficulties. Results There are a number of successes of this process. One of them is the CBO winning of the Business Process Excellence Award for outstanding achievement. At the same time, the health provider has been able to collect an additional 80 million dollars in revenue, which is an affirmation of a job well done. There is also the high level of morale among the members of staff and the positive reviews that the health provider has gotten from all those interviewed in the evaluation of the healthcare provider’s strategy. Strategies Employed Elsewhere The costs of medication have gone up and event those with insurance are now unable to afford health care. This means that the health care providers are faced with the difficult task of raising money from the self-pay patients and avoid bad debts. One of the ways that the hospital is exploring is that of upfront collection of co-pays and deductibles (Herbert, 2007). This is the process where the patients get to pay for the medical services they receive through third party lenders to pay for their medication. One way of ensuring an increase in the revenue collected is through reduction of the time before the final billing (Crowley, 1998). Ordinarily, the A/R that is finished, but not billed normally leads to the hospital loosing revenue. However, the reduction of the time to make this billing is instrumental in the hospital’s growth in revenue. The action of reducing the billing time has been known to strengthen the bond between health information management and patient finance services (Crowley, 1998). Another strategy for ensuring the improved revenue collected is through conducting the aging analysis report (Crowley, 1998). This analysis involves taking stock of the health care provider’s aged trial balance and summarizes them into various strategies (Crowley, 1998). This is billed as the best tools for the managers to ascertain the value of their A/Rs. The aging analysis report has a number of benefits to the management of a health care provider. One of these benefits is that it allows the management to improve their cash in flow (Crowley, 1998). This strategy has the advantage of identifying new and potential income bases. It also gives the management insights into how these new sources can be exploited. Aging analysis also is instrumental in ensuring that the management can identify potential problem areas that are likely to cause hitches in terms of income generation (Crowley, 1998). The aging analysis has the capacity to identify possible places where the timeliness limitations are reaching critical stages. It is also possible to use this strategy to segment the market. This is done through the separation of potential income generation basing on age criteria. Another method if ensuring an increase in revenue for the health institution would be to hike the prices of various commodities. This is an unethical way of earning income, but according to Hammake & Tomlinson (2011), a lot of top notch hospitals in the United States do enforce this method of revenue collection. This means that they lock out people who are uninsured and cannot, therefore, afford upfront payments that these hospitals demand. While this is unethical for obvious reasons, it does however allow the hospitals to maintain their profitability. Suffice to say these hospitals maintain the bottom line by targeting primarily insured patients. Health care institutions can also safeguard their revenue through the altering of its admission criteria. This involves the changing of the diagnosis-related groups. This will allow the hospitals to place patients in higher paying classifications than they should (Busse, Geissler, Quentin and Wiley, 2011). As a result of the fraudulent coding system, the hospitals are able to swindle more money from the patients. It thus allows them to make money and maintain profitability of the company. California Sutter Health has a strategy in which it has empowered its staff which has allowed the hospital increase its profitability. The health care provider has therefore managed to create a sustainable profitability potential. On the other hand the use of aging analysis report has also proven to be highly beneficial. This strategy is beneficial because it allows the health care provider to identify profitable areas and new income areas and thus allows the hospital management to exploit them. References: Busse, R., Geissler, A., Quentin, W. & Wiley, M. (2011). Diagnosis-Related Groups in Europe: Moving Towards Transparency, Efficiency and Quality in Hospitals. Berkshire: Open University Press. Crowley, C. R. (1998). Understanding Patient Financial Services. Maryland: Aspen Publishers, Inc. Hammake, D. & Tomlinson, S. J. (2011). Health Care Management and the Law: Principles and Applications. New York: Delmar, Cengage Learning. Herbert, B. (2007, January 22). Your MasterCard or Your Life. New York: New York Times. Spetz, J., Seago, J. A. & Mitchell, S. (1999). Changes in Hospital Ownership in California. California: Public Policy Institute of California. 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