2015 Eide Bailly CAH Conference

Transcription

1 Experience the Eide Bailly Difference Critical Access Hospital Financial Trends Ralph Llewellyn, CPA, CHFP Partner Introduction 58 rural hospitals out of 2,322 rural hospitals have closed their doors since 2010 (not all CAH). 2% sequestration Bad debt payment reductions Rural Hospitals represent: 20% of local income 195 jobs on average $8.4 million in payroll Access is at risk 2 Introduction 3 1

2 Introduction Profitability and overall performance varies from one Critical Access Hospital to another Critical Access Hospital Two factors seem to be critical in determining overall performance Location Adoption/demonstration of best practices 4 Introduction Location Not much can be done about your general location Payor contracts Marketplace penetration Medicaid expansion 5 Introduction Adoption/demonstration of best practices Board of Directors Community Needs Leadership Team Providers Innovators develop and adopt best practices that can be adopted by others 6 2

3 Board of Directors Best organizations have strong boards that understand and fulfill their role Establish vision/direction Are educated about the health care industry and are engaged Compliance Trends Are not a rubberstamp Understand they are not management - let management manage 7 Board of Directors Best organizations have strong boards that understand and fulfill their role These boards avoid local politics Set vision/direction Assign accountability 8 Community Needs Service Line Expansion Service Line Retraction Bricks and Mortar 9 3

4 Service Line Programming A. Education and Preparation Ensure alignment of the strategic plan with the quality program Educate key leaders (e.g., Board, physicians, department heads) Ensure a patient centered focus Determine a value proposition that is different and more desirable than competitor s offering 10 Service Line Programming B. Analysis Assess the market need: Selected clinical area Total market demand Current volumes among identified specialists Determine direction (protect, grow, monitor, disinvest, etc.) Prioritization (which specialty area is programmed first/why) Secure/understand existing key data and volumes 11 Service Line Programming C. Program design for selected strategy Team consists of both physicians and organizational staff Develop FOUR components: 1. Market position: correct service Access Reputation Service Quality metrics Define patient/customer value proposition Discuss market data, competitor profiles, and own medical staff capabilities 12 4

5 Service Line Programming 2. Alignment strategy What is the best legal structure that allows physicians to participate; Employment Professional Service Agreement (PSA), administrative processes Medical Services Agreement (MSA), clinical processes Co-management Equity joint venture(s) Medical directorship (compensated) Quicker through-put and/or OR room turnover 13 Service Line Programming 3. Patient experiences and processes Every patient experience must meet brand promise Coordinate desired patient and referring physician expectations Identify and improve key processes to deliver market promise Typical examples: Improved patient flow Enhanced (clarify) communications among patients and referring physicians Eliminate barriers to enhanced quality care 4. Investments to support key processes or desired capacity Determine and fix gaps Missing skill sets Needed technology Upgraded facilities 14 Adding Services and Growth Continually challenge the work around the work being done by doctors and measure the opportunity coefficient With capacity in hand, focus on quality and standardize when applicable Understand supplier-customer relationships within the care organization Safely add work and grow the practice and service line without adding any harm Understand and measure your leading indicators to impact lagging and reportable indicators as your grow the service line 15 5

6 Other Service Line Considerations Service line retraction Recent report said a Hospital has eliminated physicians and nurses from doing work in a certain area if they drop below a certain volume. What about a service that continually loses money? 16 Other Service Line Considerations Heavy capital investment bricks and mortar Capital market considerations Community fundraising/support 17 Other Service Line Considerations Delivery of Care Choices CAHs need to carefully evaluate the needs of their community, their total cost of patient care, their affiliations, and all factors influencing their ability to deliver services and make choices about what services they can and should provide. Community Health Needs Assessment Results As a current requirement of non-profit CAHs today, the data in this assessment is a crucial starting point to determine how your facility currently provides services and what the gaps are for care. As the ACA moves care to a predict and prevent standard, CAHs will also be responsible for the health of populations and not just individual patients. 18 6

7 Leadership Team 19 Knowledgeable Leadership Best practice facilities understand the value of investing in education for their staff and leadership The environment is changing quickly Yesterday s strategies are yesterday s strategies Updated strategies necessary for the future 20 Knowledgeable Leadership Freezes on education are a short term fix to a long range problem Create more problems than solutions Goal Have the most educated team. 21 7

8 Proactive versus Reactive Leadership Continual improvement Proper planning and preparation Identifying risks/trends Team-oriented Problem-solving/decisions 22 Monitoring of Operations (Quality/Value) How many know your Quality/HCAPS scores? Readmission Rates HACs Patients who reported YES, they would definitely recommend the hospital. Value = Patient Outcomes Cost per Patient More importantly What are you doing to improve these scores? 23 Monitoring of Operations (Budgets) Capital and operating budgets Team approach to development Department leaders Finance Administration Accountability for budget Monthly monitoring at departmental level Explanation of variances Solutions to resolve variances 24 8

9 Monitoring of Operations (Revenue Cycle) Increased challenges in Revenue Cycle Best Practice Establishment of policies and procedures Assignment of accountability Must manage the revenue cycle process Not just lip service 25 Monitoring of Operations (Revenue Cycle) Revenue Recognition Charge Capture/Coding Best practice facilities capture the revenues for services they are rendering Significant area of opportunity for most facilities Common areas of confusion/lost revenues Outpatient Nursing Procedures Pharmacy 26 Monitoring of Operations (Revenue Cycle) Timely Filing Why capture the charges and then not file them timely? All Medicare claims must be filed within 1 year of service Other payors may vary 90 days 30 days? Many facilities still missing the deadlines! Monitor write-off s Separate account for tracking 27 9

10 Monitoring of Operations (Revenue Cycle) Denial Management Advanced Beneficiary Notices / Medical Necessity Need to manage denials ABNs are not an option This is an issue of liability not a determination of proper care 28 Monitoring of Operations (Revenue Cycle) Denial Management Track Denials Service Physician Staff performing service Etc. Emergency Room services are not exempt Increased frequency of denials Monitor Follow up with providers 29 Monitoring of Operations (Labor Management) Best practice organizations monitor and manage productivity on an ongoing basis Gathering of data Establishing of benchmarks Monitoring of results Becoming more important Affects total cost of population health Patients becoming increasing engaged in managing their costs 30 10

11 Monitoring of Operations (Labor Management) No organization is too small Avoid core-staffing trap Acknowledge that every facility is different No benchmark is perfect Benchmarks are moving lower with adoption of tighter standards to recognize changes in the industry 31 Monitoring of Operations (Labor Management) Various data sources External Trade organizations Research studies Proprietary Internal Detailed study Historical data 32 Monitoring of Operations (Labor Management) External data Greatest benefit Externally derived Based on best practices Greatest challenge Difficult to access costly Methodology is often challenged How data is gathered We are different 33 11

12 Monitoring of Operations (Labor Management) Internal data Takes time to develop Provides historical data and trending Only includes your data Recommend 5 year trending Only use productive hours 34 Monitoring of Operations (Labor Management) Ultimately may use both internal and external data External data to manage against peers Internal data to monitor trends and reduce resistance Example Benchmark = 10 hours per statistic 35 Monitoring of Operations (Labor Management) 36 12

13 Monitoring of Operations (Labor Management) 37 Monitoring of Operations (Labor Management) Labor management is about more than completing mathematical calculations Processes are key Cannot usually reduce resource utilization without updating the processes in the organization Work smarter, not harder Most facilities would experience significantly better financial performance if they could just get the majority of their departments to operate at the best historical levels of performance 38 Monitoring of Operations (Supply Chain Management) Purchasing through GPO Sometimes direct negotiation may result in better price Drugs (340b) program Standardize products across the entity Engage and education clinicians/practitioners Quality products at lower cost 39 13

14 Physicians Successful CAHs understand the importance of the physician relationship Starts with understanding the correct number of mix of providers Moves to creating an alignment of vision and engagement of physicians 40 Physicians Demand Analysis Common trap Add providers based on perceived need Other providers Community Internal Results Too many providers to support available number of visits Too view providers in needed specialties 41 Physicians Demand Analysis Source: Community-Based Physician Need Planning Methodologies Evolve H.J. Simmons, III, MBA, CHE and John M. Harris, MBA; Healthcare Strategic Management, December

15 Physicians Demand Analysis Same process followed for specialties Demand is for all providers not just your organization! Understanding the demand analysis can help hospital and physician leadership better understand the long term needs of the organization Recruitment Succession planning 43 Physicians Alignment and Engagement Ultimately, physicians are the driver of patient relationships and services Patients chose physicians Physicians refer to hospitals and other providers Covered lives with drive reimbursement and primary care providers will control covered lives 44 Physicians Identify physician champion(s) Key physician leader Understands clinical and financial realities Influential among other physicians May or may not be the Chief of Staff/Medical Director Number of champions will vary Size of organization Skill sets of providers 45 15

16 Physicians Board involvement Board position (if possible) Gains greater appreciation of overall organizational goals and issues Facilitates discussion of physician perspective 46 Physicians Accountability Physician/hospital compact Expectations for both sides of relationship Physician input Significant issues Input does not equal decision authority Improves decision making Timeliness of decision making and communication Physicians expect timely decision making and communication 47 Physicians Accountability Employed/contracted providers Operational expectations Chart completion Citizenship Financial expectations Compensation methodology Production Panel Size Call Quality Patient satisfaction Leadership Cost control 48 16

17 Physicians Communicate Communication is key to develop strong positive relationships Failure to properly communicate leads to distrust Feedback and recognition 49 Physicians Make them more successful Professionally Financially Provide them leadership education Streamline processes Reduce barriers Improve productivity 50 Physicians Ultimate goal If they are successful, you can be successful 51 17

18 Summary Top performing facilities do not make excuses Great leaders are innovators and step outside the box Tough decisions are made and implemented Mistakes are made Long term failure is not an option Few of the strategies are complicated commitment is the key 52 Experience the Eide Bailly Difference Questions? This presentation is presented with the understanding that the information contained does not constitute legal, accounting or other professional advice. It is not intended to be responsive to any individual situation or concerns, as the contents of this presentation are intended for general informational purposes only. Viewers are urged not to act upon the information contained in this presentation without first consulting competent legal, accounting or other professional advice regarding implications of a particular factual situation. Questions and additional information can be submitted to your Eide Bailly representative, or to the presenter of this session. 53 Experience the Eide Bailly Difference Thank You! Ralph J. Llewellyn, CPA, CHFP Partner rllewellyn@eidebailly.com