What Makes a Best-in-Class Recovery Audit Firm in Healthcare?

SpendMend Team

Written By; David Hewitt, RVP of Sales – East

What are the basics for a Recovery Audit provider?

At minimum your Recovery Audit firm should be checking all the following boxes.

  • Working offsite/Remote access
  • Online claims delivery
  • Data files (AP, Vendor Master, PO, Receipt)
  • Data security
  • Healthcare experience
  • No initial investment to get started

What are the attributes of a Best-in-Class Recovery Audit firm?

It is not enough to settle for a firm that simply checks the boxes.  The following list outlines the attributes you should look for in a best-in-class Recovery Audit provider to ensure the best results and the highest levels of partnership.

  • Strong data security — ¬Provider should demonstrate strong security measures including encrypted data, SSAE16 Secured Data Centers, HIPAA Trained
  • Industry expertise and benchmarking — Healthcare is a unique industry, and your Recovery Audit provider should demonstrate deep expertise.  A few of the insights they should provide are as follows:

o    What are your healthcare peers doing to address issues like yours?
o    How do you compare to other healthcare systems?
o    Best practices to patch gaps leading to financial leakage
o    Proven industry methods for driving cost-saving efficiencies

  • Insights and visibility — Provider should offer meaningful root-cause analysis and recommendations. Some of the key insights should include:

o    A listing of which suppliers (and staff) are not complying with processes
o    A clear understanding of why and where dollars are falling out of the process
o    Strong recommendations for how to positively impact the problem
o    A focus on corrections and not collections

  • Cost-savings opportunities — As a result of the audit, you should gain a clear outline of where to save dollars in your annual spend that are not simply related to recovery.
  • An up-to-date scope.  Your best audit results will come from a scope that hovers around 90-days and provides real-time feed back.
  • RNI, INR Reconciliation — Your audit should support the RNI (receipt not invoiced) and INR (invoiced not received) reconciliation.  This is critical for healthcare.
  • Additional services — Ensure your provider has other solutions beyond Recovery Audit otherwise they will not be incentivized to help you fix your problems.
  • A healthy vendor database — Provider should have an up-to-date database of suppliers to help clean your vendor file and to aid in outreach to suppliers.
  • A strong partner ecosystem — Provider should be connected to other industry providers to help gain a wider view into how to fix your network’s larger issues.
  • A client portal — Claims should be delivered through an online portal with claim upload capabilities, drill down capabilities, in-depth reporting, communication, ease of use and 100% claim administration.
  • A full-time staff — Your auditors should be a team of full-time employees that are paid a salary or hourly wage to ensure they are consistently auditing all ranks of your vendor file and AP transactions history without competing incentives or prejudice.

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

The Typical Process of a Recovery Audit

SpendMend Team

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

“Internal Audit” can better support a hospital’s financial stability during the COVID-19 pandemic.

SpendMend Team

Written By: Dan Geelhoed

The Ongoing Cost of COVID-19

The COVID-19 pandemic has driven revenues down for nearly every industry especially the healthcare industry.  In particular, the widespread decision of practically all U.S. hospitals this past spring to suspend elective surgeries and services proved to be extremely costly.

According to data gathered by the Crowe Revenue Cycle Analytics (Crowe RCA) with very few outliers, “health systems across the United States experienced an average decline in patient volume of 56%… this equates to an estimated national decline of $1.44 billion in net revenue per day for hospitals with more than 100 beds.”

 

The Role of Internal Audit

Prior to the COVID-19 outbreak, hospitals routinely suffered operational lapses and financial leakage as a typical cost of doing business.  To counter these gaps, many healthcare systems depend on their Internal Audit department to better understand the cause of errors and put measures in place to stop them. No matter how meticulous these departments have become, they alone cannot cover the full scope of the problem and are forced to make priority decisions about which process gaps to address.
With few exceptions, Internal Audit teams chose to prioritize processes related to the hospital’s core charter: delivering patient care.  For the sake of limited time and resources, auditors are often forced to leave some cost-cycle and financial leakage issues unattended or un-resolved.

 

The Current Environment

At present, amid a global pandemic, Internal Audit groups remain more focused than ever on supporting policies and procedures that are directly related to caring for patients.  Sadly, a staggering volume of revenue loss continues to go unchecked as staff sizes have been reduced, operations have suffered, fraud has increased, and compliance has lapsed.  Although many hospitals have resumed elective services throughout July and into August – enough time has already passed to cause severe revenue shortfalls.

 

Recovery Audit: Why is it Important?

Recovery Audit can serve as a vital part of an Internal Audit by discovering and returning hard dollars to the hospital’s bottom line.  At the same time, a Recovery Audit is also an effective tool to uncover compliance issues, control gaps and operational concerns in the financial department, the procure-to-pay process and the cost cycle.

In our 27 years of experience, SpendMend has observed that Internal Audit groups gain a dramatic increase in visibility when leveraging a Recovery Audit. At a time when the system has been strained and resources are particularly scarce, the additional funds and insights delivered by a Recovery Audit can potentially be the difference between a hospital’s ability to deliver crucial patient care… or not.

By championing a Recovery Audit project, the Internal Audit department is easing the burden on their own department, mitigating the impact of financial loss, helping to reinstate best practices, and most importantly doing their utmost to support patient care.

Webinar Recap: 5 Hidden Ways That COVID-19 is Impacting Your Business

SpendMend Team

Written By: Rob Heminger, SpendMend President, rheminger@spendmend.com

Yesterday I hosted a webinar entitled, “The five hidden reasons why COVID-19 is hurting your Procure-to-Pay (P2P) process.”

I used the presentation to reveal several hidden areas throughout the P2P cycle where U.S. hospitals are losing significant hard and soft dollars. I was motivated to deliver this webinar because of the unique visibility I gain through the work that I do on a daily basis.

The SpendMend team oversees many cost cycle recovery initiatives at nearly 100 top U.S. health systems.  We manage and review hundreds of billions of dollars in hospital spend.  By leveraging our in-depth data and analysis, we uncovered and outlined several trouble spots that seem to be hiding in plain sight.  Our goal was (and is) to create as much visibility as possible and to help P2P professionals throughout the healthcare industry to take notice of and to address these issues.

Specifically, for this webinar, I compared and contrasted trends I was seeing in client data that I had received in the last few weeks versus what I had noticed in the data from January of this year.  Basically, I just looked at data from right now versus from the period right before the COVID-19 pandemic took over our economy – and the difference was night and day. 

From the vendor data, I noticed that suppliers were being onboarded at an alarming pace.  The incidence of duplicate or related vendors being set up in the hospital system’s shot up 86% over the typical baseline. These suppliers records are 2.9 times more likely to include invalid or missing tax identification numbers.  As the “rush” to service COVID-19 related demands became a priority, vendor due-diligence and compliance decreased starkly.  And all this is occurring at a time when the strained commercial conditions of the market are giving rise to higher likelihood of fraud.  In fact, Google reported last month a spike of over 24M daily spam messages related to the novel coronavirus.

Related to the behavior of vendors, I saw (in our client data) a drop from 28% down to 13% in response to a basic “request for data.”  Which begs the question… “Why are so many vendors ignoring common data requests?”  I also recognized where the percentage of zero-balance statements submitted from vendors had increased 44% over the typical baseline numbers that we are accustomed to seeing.  This is a clear indication that vendors are either withholding information or they’re reconciling their accounts without the hospital’s input.  I also saw an unprecedented increase in messages from vendors that outright stated they would be applying open credits and cleaning up their accounts.

The strange vendor activity described in the above paragraph is supported in a U.S. Chamber of Commerce report from June 3, 2020 which asserted that 20% of companies had already gone out of business; 57% were worried they would have to go out of business and 44% of companies were feeling uncomfortable about their cash flow position.  So, it’s not a surprise that vendors are suppressing credit information or reconciling their accounts on their own. (Please note, you can reverse this trend and SpendMend has several strategies to help you recapture those otherwise lost credits).

From the transactional data, I noticed some even more alarming statistics that spoke directly to an increase in payment errors and a decrease in internal processing compliance.  Specifically, I saw where – in only three months – there was a 28% increase in the incidence of duplicate payments and a 29% increase in the volume of off contract spend.  Just consider how drastic those volumes are and this is just the beginning…  Conservatively, these numbers already translate into million-dollar losses at most U.S. hospitals.  As these numbers spike, internal investigation and resolution is on a downward trend.

Truly, the examples listed above are only a sample of the content we shared in the webinar – which was only a small portion of what we’re seeing in the clients’ data.  And as shocking as a lot of those trends may seem, I have to admit that I am not entirely surprised.  I’ve understood for a while that the P2P cycle in a large healthcare network is often disjointed and as a result very elusive dark datasets can emerge in the many gaps that widen between departments and locations.

I’ve also come to learn that presence of dark data is even more pronounced in the healthcare industry because of a series of pressure points that I refer to as the “Three C’s.”  Change, Complexity and Compliance.  You can learn more about that concept here: https://www.linkedin.com/feed/update/urn:li:activity:6625783662342479872

All is not lost, however.  With the realization that these hidden reasons exist, we can continue to inspect the trends and analysis and begin to formulate strategies to reverse the trends and put U.S. hospitals back on a path of cost-savings and profit recovery.

Borrowing heavily from my discussions with key clients – I ended the presentation with a couple of tested ideas and projects that hospitals are using to improve their situation and to greatly reduce the loss of hard dollars.

For more information on this topic and for tips on how to address the hidden issues that are hurting P2P cycles in healthcare – view a free download of our webinar here: https://register.gotowebinar.com/recording/3138529960732615938

Why Finance Departments in the Healthcare Space Need to Start Talking About the “Dark Data” in Their Cost Cycle

SpendMend Team

By: Dan Geelhoed, CEO, dgeelhoed@spendmend.com

Before we can have this conversation, we first need to outline what we mean by “Dark Data.” In the simplest terms, “Dark Data” can be defined as the information embedded in the cost cycle that is not easily visible, sometimes not accessible, and rarely timely.

The main causes for this lack of visibility are that this critical cost cycle data is being kept in disparate systems; there is a lack of integration between systems; there is limited reporting across systems; there is significant delay between transactions and information; and there is overwhelming complexity in the healthcare industry overall.  The list goes on and on – we are just scratching the surface as to why this is such a persistent problem.

Over time, much of the system data, which you may assume you have access to, will severely decay and, in many cases, it will become nearly impossible to get to.  This lack of quality and visibility is extremely costly.

Let’s inspect the impact that dark data has had on just one industry – Recovery Auditing.  For years, a traditional recovery audit would return an average of between $400K-900K per every $1B in annual spend.  These estimates are observable through countless samples of traditional audit results.  By contrast, a deeper end-to-end review of light and dark cost cycle data can deliver up to $4M per every $1B in annual spend.  These are quantified results from dozens of huge hospital systems over the past several years. Just think about the impact of these dollars to a hospital’s bottom line.

Getting to the “Dark Data” is difficult, but consider how much of a demonstrable impact it has in this one example.  In the example above, we are talking about the difference of $900K in value versus $4M in value. (per $1B in annual spend) This is of massive and material importance.

Despite the steep benefit to reviewing “Dark Data,” few firms and companies can source the elusive datasets and the massive available value frequently goes undiscovered and unrealized.  That said, a change will soon be coming to the marketplace as anecdotal evidence of the value becomes available and as financial executives are becoming more knowledgeable and more curious about the impact of better data on their operations.

In a recent poll by Health Care Financial News to uncover the top priorities of CFO’s throughout the healthcare space it was revealed that over half of CFO’s and Executives acknowledge that their organizations “lack access to clean, consistent, and trusted data.”  In addition, 90 percent of CFO’s think their hospitals “should be doing more to leverage Financial and operational data to inform strategic decisions.”

The point I would like to leave people with is that the pursuit of uncovering or exposing the “Dark Data” within the cost cycle is a more complete approach to providing visibility to the full berth of financial leakage throughout the cost cycle.  An inspection of “Dark Data” requires a paradigm shift where financial professionals are looking to the review the data that they do not have access to, rather than the records that they are accustomed to reviewing.  In one sense this requires a leap of faith that this “Dark Data” is source-able and when finally sourced will unlock massive savings and efficiency potential.

For any questions about how “Dark Data” may be causing financial leakage in your healthcare organization please click here