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

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.

4 Innovative Ways to Contain Healthcare Financial Leakage

Written By: Michael Koory, RVP of Sales

4 Innovative Ways to Contain Healthcare Financial Leakage 

The financial risk to health systems has never been higher. Decades of reimbursement reductions coupled with operating cost increases have left health systems executives no choice other than innovation. The traditional methods are no longer enough.

For something to be transformational, it must change to grow or metamorphize. And, change can be difficult even when moving from bad to good. We have all seen our New Year’s Resolutions fly out the window in March or even the end of January. So, what works? How can we bring the change so desperately needed to the health systems?

A Guide with a Map - If you have ever been lost in the woods or lost in a new city, you immediately understand the value of a guide and a map. If you rely (as I do) on your GPS to help navigate the way, it is easy to understand the value of a guide with a map. We all need someone who has trekked the path before to help us achieve our goals. A guide is especially essential in healthcare. Our industry is, in some of the most change persistent times in history. The layers of change heaped upon the healthcare providers are unprecedented.

Add Visibility - No one sets out to build a system with leaks. The course of stopping financial leakage is not about finding who failed or who didn’t do something. All procurement systems have oversight and usually excellent system controls. Healthy system purchasing operations are complex and contain millions of moving entities, because of the constant pace of change, compliance variable, and multiple human handoffs, control gaps exist. They exist, but they are hard to see because of dark data.

Illuminate Dark Data  – SpendMend views dark data as the practices, information, and system data hidden from the standard operative view. It exists due to disparate systems, numerous handoffs, multiple entities, vendor practices, not shared industry information, and practices. These cover the control gaps or cause the control gaps that lead to financial leakage.

Limit Financial Leakage  – Beyond the hard dollar financial costs, there are high soft dollar costs in the financial leakage. How much time does your staff spend chasing issues outside of their job description? How many corporate initiatives get inadvertently sabotaged because the team is distracted, chasing problems down outside of their department? Are you experiencing excess turnover? Are goals being missed? All of these are caused in part or entirely from financial leakage the strain of closing down the gaps.

The Path to Prevention  – There is hope, and the path is one I know exceptionally well from guiding clients down it in the past. My experience helping health executives by using a recovery audit has proven that a guided audit identifies more initial savings and more control gaps to close for future savings. Using a guided audit like SpendMend’s Mending audit can identify up to $1.25M for every $1 Billion in spend (click here to learn more from our webinar). You can innovate and contain loss in your health system.

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

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

Where Visibility Meets Actual Recovery

By: Michael Koory – Regional VP of Sales – Mid America

In the last post ( Read it Here) I discussed the importance of being able to see your entire hospital as one whole entity. As discussed, a typical traditional 3 years back cost recovery firm will find savings missed inside and outside of your system. Recovery by itself is not enough, nor is it good enough for the changing healthcare environment. Only an in-depth continuous audit with deep dynamic analytics will reveal every issue or confirm your processes’ work.

 

Deep analytics give rise to the following types of questions:

1.    Why did we have $2M in duplicates caught last month?

2.    What is the full value of our unprocessed returns?

3.    How are many duplicates payments made?

4.    Where does our return process break down?

 

The force multiplier is root cause analysis and mending.  The ability to ask why is this happening?  Where does our system come unstitched?  How do we mend this?

Recently, a hospital was able to recover a $1,000,000 duplicate payment that had evaded their internal controls.  In fact, during the process, it was revealed that the internal system had gaps in their measures.  The deep analytics and horizontal view across their enterprise discovered the issues and pointed the internal team toward the corrective measures. This is where recovery and visibility meet to deliver recovery and resolute savings.

Financial Leakage Sneaks into Supply Chain

Financial Leakage Sneaks into Supply Chain

Financial Leakage can find its way into Supply Chain in a variety of ways, but a lack of time, insufficient data, expired, returned, and recalled items, as well as cost management, can plague an entire department.

 

  • Lack of Time – A SpendMend 2018 survey showed that the average Supply Chain Professional spends 2.5 hours per day on tasks outside of their daily assigned tasks. That adds up quickly over a week which is 12.5 hours, 78 workdays, or 30% of your total working year on other tasks. These tasks could be due to training, inadequate systems, understaffing, or manual processes overriding system or human errors. Financial leakage can fall through the cracks by rushing through tasks or never getting to them. Imagine having 30% more time every day to finish your specific tasks.
  • Insufficient Data – Actionable data allows you to make informed decisions to best serve your health system. According to Global Healthcare Exchange, 66% of healthcare leaders say they lack Real-time reporting. Financial Leakage can creep in where decisions need to be changed after orders are made or the wrong product is chosen. Insufficient Realtime Data can all cause communication to fail between Contracts, Purchasing, AP, and Supply Chain allowing Financial Leakage to drop through the cracks.
  • Expired and Returned Items – Expired items are often caused by insufficient data. Global Healthcare Exchange estimates 7-10% of products expire on shelves. Based on previous monthly or quarterly data you can order less of certain products, so products are not just thrown away. From our own SpendMend experience we find most health systems have dysfunctional return models and processes allowing for a major recovery area. Healthcare Distribution Management Association estimates that 3-4% of products are returned. Return modules are often not accurate and suppliers may or may not make you aware of return credits.
  • Costs – Financial Leakage caused by cost inefficiencies can cost hundreds of thousands of dollars every year. One small area where money is rapidly spent is shipping. An overnight shipped product can easily cost over $100. Another area that can be easily overlooked falls on the supplier. You may be getting charged the wrong tier for items you purchase often.

All these areas are where Financial Leakage can sneak in unseen, but with a strong united effort reaching for full Spend Visibility you can gain better control over your process

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