Healthcare Consulting

Revving Up Revenue

The cost structure of the entire healthcare delivery system continues to price care out of sight for many, and government initiatives will continue to increase pressure on all segments of the healthcare delivery chain to address efficacy and cost. Some providers are taking direct steps to address these issues now.

For Christus Health, a 40-hospital system based in Dallas, that meant taking a non-traditional approach of redesigning the entire revenue cycle, from admitting to the business office, using the principles and methods of Toyota Production Systems and Lean-Six Sigma. The goal was to establish a world-class revenue cycle organization including standardized processes that could be rolled out across franchise entities.

Christus is in the midst of implementating the philosophies, methods, and (ultimately) the culture of the Toyota Production System into its healthcare revenue cycle. This implementation is not a traditional project-based approach focused on individual contributors and small teams. Rather, it addresses the organizational, process, and technology elements of the revenue cycle comprehensively and simultaneously.

The project began with training a group of revenue cycle leaders and associates in one of the hospital’s regions on the philosophy, tools, and methods associated with a project of this size. The team conducted a baseline of the entire revenue cycle process, including extensive observation and data analysis. All encounter records for an 18-month period were analyzed to understand where the biggest margin impacts could be made. The team concluded that:

There were no cohesive metrics in place to motivate performance change.
Processes were varied and inadequate, particularly given today’s changing payer environment.
The organizational structure was not designed to implement or manage standardized processes, sound measurement, or continuous improvement.

The results highlighted opportunities with respect to bad debt, time of service collections, and overall cash realization.
In response to the findings, the team crafted a detailed plan for the implementation of organizational change, a performance management system, and standardized processes.

Step by step
In the first phase, the organizational design changes were implemented. This included aggregating associates from pre-admitting, HIM, and patient financial services into a single, cohesive organizational structure with centralized regional ownership.

The next step was to implement the initial performance management system, which included a balanced scorecard. New metrics were designed to include cash realization, collections quality, billing quality, and transaction cost per encounter alongside more traditional metrics. A software application was designed to automate metrics tracking and provide drill-down tools for root-cause diagnostics.

Team-level metrics were deployed that are discussed daily during shift briefings. The briefings follow a standard format that includes the identification and resolution of issues, problems, and opportunities.

The existing corporate culture proved to be the primary challenge in implementing radical, simultaneous change—traditional change management methods were not as effective as had been initially hoped. To combat this problem, a focused and rapid approach to change was adopted.

Most of the dramatic process changes were accomplished during five-day events in which associates, supported by process improvement experts, assessed the existing process, designed a new process, and implemented the improved process. Local associates were actively involved in the process change, and by the end of the week each team was left with:

An implemented process
Physical layout change to increase flow and throughput and decrease errors
Physical or electronic work management tools
Visual workplace elements
Team metrics and goals
Required tools to improve the process
Tracking board for metrics, issues, problems, and opportunities, and management-by-fact (MBF) activities
Discipline of shift briefings
Structured mechanism for continuous improvement

Fast results
Although the approach was demanding, results were quickly achieved, to the point where associates began to request a chance to improve their respective processes. Admitting, HIM, cash posting, billing, and collections have all implemented new processes using the five-day, event-based model. Eventually, some clinical areas requested the opportunity to improve their processes; an ED and a same-day surgery department were addressed at one of the hospitals.

Taking this approach to improving the performance of a healthcare provider organization is not a traditional approach. It requires a dedicated, disciplined leadership team to retain the focus on changing not only organizational structures and processes, but also the cultural norms of the organization.

Implementing new processes will inevitably highlight problems that were previously hidden, and not all associates will be pleased with the new processes. The new culture and structure provides higher levels of accountability for performance. Results are measured and problems are addressed with facts (rather than opinions and anecdotes), changing the way people interact in the organization.

Some examples of the results that have been achieved so far are:

POS collections have increased by 100%. POS collections are measured both in actual dollars collected prior to final bill and as a percentage of the patient responsibility.
Billing quality has increased by 12%. Billing quality is measured as a percentage of net revenue paid within 30 days.
Cash realization has increased by 2%. Cash realization is measured as the percentage of cash collected between discharge and day 120 compared to net revenue at day 120.
HIM processing is completed the day of discharge.

As with any change towards a performance-based culture, this is a work in progress. During this initial implementation, the culture has changed to create an infrastructure and environment able to handle the process changes facing healthcare such as even higher patient responsibilities, MSAs, and consumer driven healthcare.

During the next few years, as these changes are being unveiled, healthcare provider organizations will realize that business as usual is no longer sustainable. The selection of the change platform, be it Lean-Six Sigma or another, will need to address the organization at a fundamental cultural level to enable continuous change and rapid improvement.

Jay Herron is senior vice president and CFO of Christus Health. Mischa Dick and Marjorie Green are principles at Healthcare Excellence Institute(www.healthcare-consulting.org).

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