The Typical Process of a Recovery Audit

Written by: Kylee Savage, Marketing Manager

Every Recovery Audit firms offers a slightly different approach, but the general approach of most firms follows a similar pattern:

  • Discovery —Each firm goes through an investigative or discovery phase in which the Recovery Audit firm will learn about the client, their process, and their preferred recovery parameters.
  • Planning — Leveraging information from the “discovery” phase, the audit firm determines and presents a strategy for identifying and recovering payment errors. This phase outlines all tasks, timeframes, and schedules for future client review meetings.
  • Data Collection – The Recovery Audit firm provides client’s IT with templates for pulling the necessary data for the review.  This process is quite well established and should not require much time from client’s IT staff.
  • Auditing — Through automated and manual efforts, the Recovery Audit firms runs trend and anomaly analysis to identify potential errors.  It is at this point where industry familiarity plays a big part.
  • Recovery —The Recovery Audit firm works directly with suppliers (and client’s staff when needed) to validate and prepare claims for deduction against future payments.  When the supplier has a debit balance, auditors will secure a check from the supplier.
  • Recommendations —Audit firms offer recommendations from their findings to help the client patch the gaps that  caused the financial leakage.

For more information regarding the benefits of using a Recovery Audit firm to help boost your hospital’s bottom-line, or to drive new insights and visibility into your Cost Cycle, contact SpendMend today

Introduction to Cost Cycle Management

Introduction to Cost Cycle Management

Reimbursement constraints continue to put pressure on Health Systems throughout the country. Consequently, more and more efforts are focused on creating an efficient well-organized Cost Cycle Management process. Ensuring every bit of revenue captured can make a difference when considering bottom-line margins.

 

While a sound Revenue Cycle Management approach is definitely “best practice” and necessary, SpendMend has recently noticed Health Systems applying this same approach towards Cost Cycle as well. Cost Cycle Management gives visibility to the costs associated with conducting business and securing the necessary products and services to support the Health System on a day-to-day basis.

 

An important facet associated with Cost Cycle Management is the containment of Financial Leakage.

 

The Reality is financial Leakage occurs in every organization. Even though organizations invest considerably in preventative controls (to prevent financial leakage), it still exists. Due to the unique challenges within the Healthcare Industry, Financial Leakage is more prevalent than in any other industry:

 

Complexity – Departments tend to function independently with different systems and procedures that are not easily transparent, and many times structured to support the clinical needs. (i.e. Surgery, Supply, Pharmacy, etc.)

 

Compliance – while investment in processes/procedures is sound, a Health System still relies on individuals to comply with those processes. Lack of compliance will harm the data used to contain Financial Leakage.

 

Change – one of the most consistent attributes in today’s Healthcare Industry is “Change”. Merging with other Health Systems, upgrading or even changing ERP systems, restructuring departments, and changing GPO providers are just a few examples. Many of these changes are also happening with a demanding vendor base as well.

 

When considering the bottom line margin at the typical Health system, every dollar not contained within the Cost Cycle has a huge impact and can correlate to 50 – 75 times its weight in new revenue.

 

Here are some compelling stats from our 2017 audits:

 

For every $1 billion in hospital spending, the recovery equals over $1 million.

 

Every $1 million recovered is equal to more than the profits of $75 million in Patient Billings

 

In 2017, we recovered over $100 million for our clients, or the equivalent of over $7.5 billion in Patient Billings

 

As attention grows towards prevention and containment within Cost Cycle Management, organizations are discovering that the issues causing Financial Leakage are not transparent but rather “Dark”. By uncovering the “dark data” embedded in the process, organizations are beginning to gain full Spend Visibility. Only when full visibility is accomplished can an organization approach a sound Cost Cycle Management process.

Interested in reading more SpendMend blogs? Click here