10 Steps to Improve ASC Profitability With Benchmarking: Thoughts From Samaritan North Surgery Center Administrator David Kelly
The following article was written by David Kelly, administrator of Samaritan North Surgery Center in Dayton, Ohio, a Health Inventures facility.
Access to the comparative benchmark data for surgery centers within the Health Inventures network highlighted that Samaritan North Surgery Center was one of the lowest (bottom five) in the performance metric, in terms of percent of accounts receivable greater than 120 days. The center was sitting at 20 percent, and the national benchmark is 8 percent. Patient responsibility balances (self-pay) accounted for most of the "A/R 120 or more days old," which consisted of a great many payment plans where the center had previously accepted minimal monthly payments over a long time horizon. For all intents and purposes, patients were receiving interest free loans for whatever time period they desired.
The center initiated a Continuous Quality Improvement study to discuss the barriers to collections and brainstorm potential solutions to the problem. The CQI study was truly a collaborative effort that garnered commitment and support among all stakeholders in the surgical continuum: the physician offices, scheduler, pre-admission testing nurse, insurance verifier, registrar, business office staff working the self-pay lists and our collection agency partner.
After lengthy discussions and data analysis, the group defined the problem as a lack of a standardized method for verifying insurance benefits to estimate patient out-of-pocket expense and inconsistent procedures for collections follow up. The problem was significant to the center because the inability to collect estimated patient financial responsibility on the date of service decreases cash flow and increases the amount of time spent and expense on collection follow up efforts. Additionally, the team felt it was important for patients to be educated on their out-of-pocket expenses so they could make an informed decision regarding their elective procedure.
To improve collectability on accounts and reduce the A/R, the team defined the performance goal for the project as increasing collections on the day of service by 75 percent over the prior year to reduce the open A/R on the books for more than 120 days to less than 15 percent.
There were several corrective actions taken:
1. Developed a template in Excel to calculate the estimated patient responsibility. The insurance verifier enters the scheduled CPT code, the allowed amount based on the contract, the patient coinsurance, deductible, out of pocket maximum, and the template returns an estimate of the patient's total financial responsibility.
2. Updated the scheduling information request to include the CPT code for the scheduled procedure to determine the allowed amount.
3. Altered the insurance verifier's role to involve contacting every patients prior to date of service to request the entire estimated patient responsibility, offering various alternatives for payment. There is some room for negotiation from collecting the entire amount, but there are specific and consistent guidelines that are followed.
4. Entered the expected patient payment amount into the patient management system and collected by the registrar the day of service.
5. Tasked the pre-admission testing nurse with reminding patients at the end of the health assessment call to bring any co-pay or deductibles on the day of service.
6. Implemented Care Credit as another source for patients to pay their out of pocket expenses. The center also limited the center's interest free payment plan option to three months, and, if not paid in full, began to consistently turn over to collection agency for follow up.
7. Scheduled patients unable to meet financial responsibility to another time — after enlisting and receiving support from the physician's offices. After enlisting and receiving support from the physicians' offices, patients unable to meet the financial responsibility were scheduled to another time.
8. Created more user-friendly self-pay collector work lists and divided the accounts by alphabet among the business office team members who are responsible for the account form inception to close.
9. Developed verbal scripts and standard procedures for consistent follow up for the business office staff. For example, after three statements and one call, if no response or payment is received, patient account is turned over to collections.
10. Attended a vendor seminar on collection strategies to gain insight into what works well and what doesn't.
We knew that for this to be successful, everyone had to buy into the new model and everyone involved needed to be consistent in their message to patients. While the harsh reality of the patient's out-of-pocket expense is a difficult pill to swallow in these economic times, we found that patients do appreciate understanding their personal financial impact up front. We were quite frankly surprised that the center only had four patients out of 5,000 total cases who chose to cancel in the calendar year due to inability or unwillingness to pay their out of pocket expense up front. The project was very successful, exceeding the team's goals significantly.
It has been 10 months since the start of the CQI study, and Samaritan North's outstanding self-pay balances over 120 days have dropped by 50 percent. Up front or day of service collections have increased by 93 percent compared to our goal of 75 percent. Open A/R on the books for more than 120 days has dropped from 20 percent to 12 percent against a goal of 15 percent.
Access to external benchmarking data revealed to this administrator that his center was falling way behind. That's all it took and then the competitive spirit kicked in. While Samaritan North Surgery Center is still not quite leading the pack within the Health Inventures network of ASCs, we are making continued and consistent improvements each month and are no longer bringing up the rear!
Learn more about Health Inventures.
Related Articles on Benchmarking:
10 Metrics That Reveal a Surgery Center's Financial Performance
How Do ASC Management Companies Assess Value?
35 New Statistics on ASC Staff Compensation
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