The Struggles of a CFO in 2018
In today’s healthcare market the CFO’s job has become more stressful and encompassing than ever before. To keep pace with board requirements, changes in regulation and reduced budgets the CFO must become a master of efficiency and visibility. The three most significant areas of struggle that every single CFO deals with on a day-to-day basis are reimbursements, meeting cost reduction goals, and cost containment.
In a 2017 study, SpendMend asked CFOs an open-ended question to identify their most significant daily difficulty. Every single CFO responded with the problem of decreased reimbursements. While a magical solution for increasing reimbursements has not been found, best practices have started to become established.
An effective and efficient reimbursement process can be broken down into five necessary parts
Beginning with a scalable, coordinated, powerful practice management system. This is where technology starts to play a large role in communication. Some health systems have found success in creating a portal for patients to enter, knowing exactly what insurance will cover, and what they will be expected to pay upfront before the service is completed. Electronic billing has also helped some health systems move the process along faster. Health systems with practices associated have started to have the practices run certain tests and procedures rather than the hospital to lower costs on insurance and file under office visits. The most important part is to create a set of processes in which your specific healthcare system can thrive and manage.
After a practice management system has been established training staff to support billing is crucial. A training coordinator should be in place to teach the entire system the same way. The training coordinator maintains consistency, so you don’t run into the problem of Becky doing it one way, Rob overrides the system another way, or Tim teaches the skill the way he does it instead of the way it is supposed to be done because it is “easier.” Proper training and consistently documented refreshers about how the system works allow staff to support professional billing.
Once your staff is fully trained shared accountability between the front and back end is necessary to lower and eliminate wasted time and efforts in the revenue cycle. Creating a team environment between physician billing offices and hospital billing will decrease response lag, the “not my job” mindset, and decrease different standards during times of staffing loss or new employment. Constant communication and breaking into team environments will create shared accountability.
Management of the trained and accountable staff with consistent, well, easily communicated policies, procedures, and performance expectations ensure a happy, efficient, and coordinated staff. Be sure to place people in leadership positions that interact well with all departments, know the policies and procedures as well as trainers, can problem solve solo, with others, and with insurance companies, and can track performance.
Cost Reduction Goals
As a health system CFO, you need proper visibility to ensure effective management reporting and relevant performance metrics. The CFO should be able to look at performance metrics and see hospital B is having more reimbursement issues from insurance company C and problem solve from there why that issue is occurring. Overall a full and unobstructed view of processes and results should be available.
A 2018 SpendMend study showed 67% of hospitals today have a cost savings program or a cost-saving initiative they are working towards, and 55% have said that their goal increased for 2018. A way to quickly bring some cashback is through a recovery audit project. It is precisely what no one wants to do, but it brings money back to you immediately. A recovery audit project can also show where breakdowns in procedure reside, where control gaps have formed, and areas that may need structure.
A major struggle in healthcare is controlling returns costs and medical device warranties. Creating a system for returns could save millions. Explanted pacemakers are often thrown away or improperly filed causing Medicare to lose the warranty payment. Between 2010-and 2017 OIG medical device overpayments were $30-300,000 per hospital (site). Proper protocols and procedures will limit those overpayments and fees. Visibility and reporting while working hand-in-hand with Supply Chain are crucial for reducing financial leakage in hospitals.
Cost containment similar to a cost savings program is visible in every health system. According to the Association for Healthcare Resource and Materials Management, supply costs will exceed labor as a hospital’s most significant expense by 2020. To handle this new cost we will need actionable analytics and data. Up-to-date Actionable analytics reveal opportunities for replacing manual workflows, making more informed decisions about cash flow, and showing where more human training efforts are needed.
It is also beneficial for benchmarking data to be studied. Benchmarking internally can show where inefficiencies have crept up quickly. Competitive benchmarking will compare your health system’s performance to others of similar size. If we continue with the example of returns mentioned earlier by internally benchmarking the number of returns you can see which products are being returned most often and possibly change suppliers. If you competitively benchmark you may notice that your hospital has less than hospitals of your size and from there create a new system of returns to bring that money back into your hospital.
Overall reimbursements, cost reduction, and cost containment boil down to three main things communication, process, and visibility. If the CFO is not able to see into the operations, communicate where errors or inefficiencies are occurring, and create new procedures that solve the problem then hospitals are going to continue to lose funds. The job of the CFO is never finished or straightforward, but a clear vision and processes ease the path to preventing cost loss.
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