For the federal government, the beginning of the 2013 fiscal year is less than two weeks away. While most hospitals and health systems do not run on the federal government's fiscal year, the end of September does represent a turning point in the year.
For hospital CFOs, this may mean a few more months to hunker down and go after several financial projects before the calendar flips to a new year.
Tim Jodway is the CFO of Garden City (Mich.) Hospital. He's been with the 323-bed hospital since June 2010 and has more than 23 years of financial experience at other Michigan hospitals and auditing firms. Here, he gives some basic projects he is currently focused on at the hospital and explains why other healthcare CFOs should pay attention to them in the waning days of 2012.
1. Meaningful use and electronic health records. The federal government has given hospitals and other providers a major incentive to become meaningful users of EHRs in the form of direct repayment. As of July 2012, CMS' Medicare and Medicaid EHR Incentive Program has paid eligible hospitals and professionals more than $6.5 billion in payments, and there is still money on the table for hospitals that may be late to the party.
For Mr. Jodway, the meaningful use funds are not the only reason health information technology is so important for hospital CFOs. EHRs and other health IT initiatives are very expensive, and the CFO must ensure those projects stay under budget.
"If you don't make wise decisions about health IT hardware and infrastructure, you could easily spend an unlimited amount of money," Mr. Jodway says.
2. Point-of-service collections. After health IT, Mr. Jodway says the biggest area of concentration is the revenue cycle. Hospitals are becoming much more cognizant of the potential revenue leakage in coding, billing and collections, especially as budgets and reimbursements get tighter.
Point-of-service collections are of particular emphasis for Mr. Jodway. He says when a patient comes into the hospital for an elective procedure, both the patient and hospital should have an idea of what the co-insurance, co-payments and other fiduciary responsibilities are.
Garden City Hospital is currently implementing software to help with point-of-service collections. The software is based off data from health insurers and the hospital's charges — eventually resulting in specific costs for the patient upon arrival. "Getting the right data back from insurance companies is the biggest challenge, and then integrating that with our data is the next hurdle," Mr. Jodway says. "Our main goal is to communicate to the patient what their responsibility-amount is."
3. Clinical documentation improvement. As Garden City Hospital readies itself for ICD-10 — and the general trend toward greater accountability — Mr. Jodway says the hospital has focused on improving its clinical documentation through CDI specialists. Registered nurses, who are the CDI specialists, are being trained on extensive documentation practices and are ensuring there is no miscommunication between physicians and coders.
"Clinical documentation is going to be even more important with ICD-10, as documentation from doctors on the floor will have to support the correct DRG," Mr. Jodway says. "This involves some software and a lot of training. The CDI nurses want doctors to document [their] thinking."
4. Auditing efficiency. Medicare Recovery Auditors, or RACs, have been cited as major administrative burdens for hospitals for the past several years. In the second quarter of 2012, RAC activity continued to increase, as roughly one-third of hospitals said they spent more than $25,000 managing their RAC process.
However, Mr. Jodway says Medicare RACs are not the only auditing bugaboos. He says Garden City Hospital has also seen an increase in claims denials from Medicaid HMOs. Most importantly, hospitals need to monitor where auditing activity is coming from and make sure the process is as smooth as possible, even though it may be a hassle.
"There hasn't been a huge amount of dollars we've had to return. It's just the administrative burden of reviewing all these records," Mr. Jodway says. "Every couple weeks, our HIM department is always pulling records."
5. Innovative programs for the uninsured. Although the Patient Protection and Affordable Care Act will greatly expand health coverage to millions of Americans, that concept will not really start to materialize until 2014. In addition, there will still be a sizable uninsured population after the PPACA fully takes effect.
Mr. Jodway says Garden City Hospital is helping the uninsured in a unique way. Uninsured and self-pay patients sometimes don't have the means to pay for the entire cost of their care, and the hospital is able to write the provided care off as charity care. However, the process is not easy for either side. "Usually, a patient goes through the system, fills out charity care paperwork, may or may not get a discount and may or may not pay," Mr. Jodway says. "It's a hassle for both sides."
The hospital has used a concept called community assisting pricing for a little while now. Essentially, the hospital sets a heavily discounted fee schedule for uninsured patients. If the patient is able to pay off the discounted price at the time of service, the bill is automatically settled. While the hospital does not collect the full amount, some revenue is better than none. "With this fee schedule, we say if you don't have insurance, pay this amount, and you're good," Mr. Jodway says.
6. Physician engagement. Healthcare reform is putting physicians, especially primary care physicians, at the forefront of the battle lines. Mr. Jodway says hospital CFOs have to be a part of making sure the physicians are integrated within the system. That job should not lie solely in the lap of the CEO, CMO or other physician leaders.
7. Lean-based process improvement. Over the past decade, Lean principles — which emphasize the preservation of value-based processes and the elimination of wasteful byproducts — have become pillars of success for hospitals. Mr. Jodway agrees, saying hospitals need to examine every process, including things as simple as patient scheduling, to make sure efficiency prevails. "Like most places, we have to get more efficient," Mr. Jodway says. "For example, how can we reduce length of stay by cutting out waste in the system?"
For hospital CFOs, this may mean a few more months to hunker down and go after several financial projects before the calendar flips to a new year.
Tim Jodway is the CFO of Garden City (Mich.) Hospital. He's been with the 323-bed hospital since June 2010 and has more than 23 years of financial experience at other Michigan hospitals and auditing firms. Here, he gives some basic projects he is currently focused on at the hospital and explains why other healthcare CFOs should pay attention to them in the waning days of 2012.
1. Meaningful use and electronic health records. The federal government has given hospitals and other providers a major incentive to become meaningful users of EHRs in the form of direct repayment. As of July 2012, CMS' Medicare and Medicaid EHR Incentive Program has paid eligible hospitals and professionals more than $6.5 billion in payments, and there is still money on the table for hospitals that may be late to the party.
For Mr. Jodway, the meaningful use funds are not the only reason health information technology is so important for hospital CFOs. EHRs and other health IT initiatives are very expensive, and the CFO must ensure those projects stay under budget.
"If you don't make wise decisions about health IT hardware and infrastructure, you could easily spend an unlimited amount of money," Mr. Jodway says.
2. Point-of-service collections. After health IT, Mr. Jodway says the biggest area of concentration is the revenue cycle. Hospitals are becoming much more cognizant of the potential revenue leakage in coding, billing and collections, especially as budgets and reimbursements get tighter.
Point-of-service collections are of particular emphasis for Mr. Jodway. He says when a patient comes into the hospital for an elective procedure, both the patient and hospital should have an idea of what the co-insurance, co-payments and other fiduciary responsibilities are.
Garden City Hospital is currently implementing software to help with point-of-service collections. The software is based off data from health insurers and the hospital's charges — eventually resulting in specific costs for the patient upon arrival. "Getting the right data back from insurance companies is the biggest challenge, and then integrating that with our data is the next hurdle," Mr. Jodway says. "Our main goal is to communicate to the patient what their responsibility-amount is."
3. Clinical documentation improvement. As Garden City Hospital readies itself for ICD-10 — and the general trend toward greater accountability — Mr. Jodway says the hospital has focused on improving its clinical documentation through CDI specialists. Registered nurses, who are the CDI specialists, are being trained on extensive documentation practices and are ensuring there is no miscommunication between physicians and coders. "Clinical documentation is going to be even more important with ICD-10, as documentation from doctors on the floor will have to support the correct DRG," Mr. Jodway says. "This involves some software and a lot of training. The CDI nurses want doctors to document [their] thinking."
4. Auditing efficiency. Medicare Recovery Auditors, or RACs, have been cited as major administrative burdens for hospitals for the past several years. In the second quarter of 2012, RAC activity continued to increase, as roughly one-third of hospitals said they spent more than $25,000 managing their RAC process.
However, Mr. Jodway says Medicare RACs are not the only auditing bugaboos. He says Garden City Hospital has also seen an increase in claims denials from Medicaid HMOs. Most importantly, hospitals need to monitor where auditing activity is coming from and make sure the process is as smooth as possible, even though it may be a hassle.
"There hasn't been a huge amount of dollars we've had to return. It's just the administrative burden of reviewing all these records," Mr. Jodway says. "Every couple weeks, our HIM department is always pulling records."
5. Innovative programs for the uninsured. Although the Patient Protection and Affordable Care Act will greatly expand health coverage to millions of Americans, that concept will not really start to materialize until 2014. In addition, there will still be a sizable uninsured population after the PPACA fully takes effect.
Mr. Jodway says Garden City Hospital is helping the uninsured in a unique way. Uninsured and self-pay patients sometimes don't have the means to pay for the entire cost of their care, and the hospital is able to write the provided care off as charity care. However, the process is not easy for either side. "Usually, a patient goes through the system, fills out charity care paperwork, may or may not get a discount and may or may not pay," Mr. Jodway says. "It's a hassle for both sides."
The hospital has used a concept called community assisting pricing for a little while now. Essentially, the hospital sets a heavily discounted fee schedule for uninsured patients. If the patient is able to pay off the discounted price at the time of service, the bill is automatically settled. While the hospital does not collect the full amount, some revenue is better than none. "With this fee schedule, we say if you don't have insurance, pay this amount, and you're good," Mr. Jodway says.
6. Physician engagement. Healthcare reform is putting physicians, especially primary care physicians, at the forefront of the battle lines. Mr. Jodway says hospital CFOs have to be a part of making sure the physicians are integrated within the system. That job should not lie solely in the lap of the CEO, CMO or other physician leaders.
7. Lean-based process improvement. Over the past decade, Lean principles — which emphasize the preservation of value-based processes and the elimination of wasteful byproducts — have become pillars of success for hospitals. Mr. Jodway agrees, saying hospitals need to examine every process, including things as simple as patient scheduling, to make sure efficiency prevails. "Like most places, we have to get more efficient," Mr. Jodway says. "For example, how can we reduce length of stay by cutting out waste in the system?"
More Articles on Hospital CFOs:
5 Key Points on What Hospital CFOs Can Learn From Corporate CFOs
3 Pressing Health IT Issues for Hospital CFOs
8 Tips to Improve Your Hospital's Operating Margin