Patient Accounting | 4 MIN READ

Do You Know Your Cost to Collect Correct?

Sondra Akrin

Cost to collect is a standard metric of revenue cycle success for most healthcare organizations. Too often, a big part of that cost comes from correcting breakdowns in the upstream revenue cycle flow. In many cases, the business office is the last stop to correct those problems. Do you know what it’s costing you to over-correct? Can you pinpoint the source of problems in your revenue cycle management (RCM)?

In this post, I’ll point out common pitfalls that add cost to RCM operations, and share tips to keep your corrections low and collections high.

Revenue-generating activities vs. clean-up work

Start by looking at your business office staff and their tasks. Is your staff doing a lot of rework that doesn’t have positive revenue implications?

Here are examples that cause grief to many healthcare organizations:

  • Skip tracing bad addresses.
  • Billing for patient financial responsibilities that weren’t collected at check-in/arrival.
  • Sorting out the responsible party for pediatric patients.
  • Moving money around or issuing refunds for patients’ credit balances.

Especially with high deductible plans so prevalent today, we need to focus on patients’ financial responsibility. Having accurate addresses and other contact information could mean the difference between getting paid and not. Some populations are very transient, so do not assume information is correct, even if the patient was in recently.

Pinpointing where mistakes arise in your RCM process

Take a hard look at your people, workflows and technology. Ask what is causing problems that bedevil the back office.

  • Is verifying patient demographics not built into your pre-arrival and check-in workflows?
  • At patient check-in, is staff seeing a screen crammed with extraneous information that can’t be easily updated?
  • Do front-end staff have easy access to accurate patient co-pays and past-due amounts?
  • During intake for pediatric patients, is staff forgetting to document where the statement needs to go – to Mom, Dad, guardian or the state?
  • Are front desk clerks expected to do everything – answer phones, send faxes, check in and room patients?
  • Is your organization mistakenly collecting copays for preventive care visits or follow-up visits for surgery during the global period?

Optimizing people, processes and technology

Once you’ve identified the problems, figure out the best way to improve, be it people, process or technology.

Here are areas to consider:

  • Examine your workflows to be sure they follow best practices, like regularly verifying patient demographics and checking insurance eligibility before patient arrival.
  • Update your system so it presents info the front desk needs at check-in/arrival, on the fewest screens possible. Be sure staff can see the amount owed and can collect and post payments to the right place. In many organizations, this process is quite cumbersome.
  • Beef up staff training so employees have the right skills, know the rules on copays (and other matters) and can apply them correctly.
  • Unload tasks from front-desk if signs indicate they are handling too much. You might need to add or shuffle staff for phone coverage or to take patients to exam rooms.
  • Do some patient education before they even get in the door, as a way to ease front desk load. Scripts for appointment reminder calls and emails could inform the patient of their copay for the upcoming visit and any past-due amounts. Setting expectations ahead of time goes a long way toward instilling positive, repeat behavior in patients.

Quantifying the cost of corrections

It’s essential to keep track of all the back-office corrections and to share that information with the front office. If you’re fixing everything on the back end without saying a word, no one knows it’s a problem.

Start with proactive communication. Alert the front office to problems the back office is fixing repeatedly. Point out the likely causes, whether people, process or technology. Establishing a collaborative, cross-functional team can help your organization tackle issues occurring across the revenue cycle continuum. To avoid a perception of back-office finger pointing, take a cohesive team approach to “collecting more.”

It can be tedious to quantify the cost to correct, but data is often the best way to spur action. If handling credit balances takes up 12% of an FTE’s work, and that FTE earns $65,000 in salary and benefits annually, it’s costing the back office $7,800 each year for that single employee. Consider the cost of 100 to 200 back office staff making a multitude of corrections and the productivity loss amounts to $780,000 to $1.5 million!

Putting a dollar amount on the cost of corrections makes it harder to ignore the problem. It also puts you in a position to request an offset of the cost of rework from the Finance Office. A sure way to call attention to the problem is asking for an overhead distribution from the front desk to back office.

Money talks. It’s a controversial approach, but can be very effective.

Have you quantified your cost to correct? I invite you to post a comment on our Facebook page tagged #costtocorrect.