HFMA WEBINAR. Sponsored By: The 4 Biggest Cost-Accounting Mistakes You Don t Even Know You re Making

Transcription

1 HFMA WEBINAR Sponsored By: The 4 Biggest Cost-Accounting Mistakes You Don t Even Know You re Making Date: Tuesday, March 17, 2015 Time: 2:00 3:00 p.m. Central (12:00 1:00 pm Pacific/1:00 2:00 pm Mountain/3:00 4:00 pm Eastern) Follow this link (or paste it into a browser) to connect: Please log in 10 minutes early and test your computer connection: Enter platform where it says guest type in your full name first and last name only it is very important especially if you need CPE credit so that your attendance is accounted for You will Not be using your telephone, but will hear the audio via your computer speaker Online live seminars are broadcast over the web via Adobe Connect. You'll need a computer with a browser, Adobe Flash Player 11.2, and Internet connection. Test your connection to Adobe Connect: Login issues to check first: Are you connected to the Internet? Disable popup blocker software. Clear the browser's cache. Try connecting from another computer. Are you accessing the correct URL? Audio Issues: Close all Microsoft Applications, especially Outlook and Messenger. Having Outlook open absorbs almost 50% of the bandwidth which may cause intermittent audio interruptions. If you have questions regarding registration or connection please call HFMA Member Services at ( , ext 2). CPE Information: To receive CPE Credits for this webinar you must participate in online polling during the webinar and complete the online program evaluation within 2 working days. After 2 working days online programs will be inactive and you will not receive CPE Credit. The URL below will take you to our on-line evaluation form. You will need to enter your HFMA I.D. # (found in your confirmation ) You will also need to enter this Meeting Code: 15AT15 URL: You may also connect directly from the last slide of the live webinar Your comments are very important and enable us to bring you the highest quality Programs! To review your CPE information, please visit the HFMA web site at log into your profile, and retrieve all CPE information (by date) within your "CPE Center.

2 Sponsored By: The 4 Biggest Cost Accounting Mistakes You Don t Even Know You re Making Tuesday, March 17, 2015 (12:00 1:00 pm Pacific/1:00 2:00 pm Mountain/2:00 3:00 p.m. Central/3:00 4:00 pm Eastern) Tushar Pandey Director of Decision Support Strata Decision Technology Marjorie Whittier Manager of Decision Support Fairview Health Services

3 A Major Shift HIGH MOM MARGIN & OUTCOMES MANAGEMENT % OF INSURED COVERED BY PAYMENT APPROACH RCM REVENUE CYCLE MANAGEMENT LOW

4 Hospitals and Health Systems Must Cut Costs to Survive Facing reimbursement pressure, hospitals must dramatically lower their cost structure and reduce waste while delivering outstanding care in order to remain viable. HIGHEST PRIORITY FOR HEALTHCARE PROVIDERS 1 As revenue shrinks and margins tighten, providers have identified cost reduction as their #1 priority Cost Reduction Improve Patient Satisfaction Improve Knowledge Sharing & Management Medical Error Reduction Better Manage Risk and Value-Based Payments Hospital Readmission Reduction Service Expansion to New Markets / Populations 65% 64% 54% 52% 51% 46% 40% New Patient Acquisition 26% 1 HIMSS Innovation Survey (2013) 3

5 Everyone has a target $330M $1B $150M $220M $200M $100M $300M $40M 4

6 Linking Clinical and Financial Outcomes Will be Critical 5

7 The Absence of Accurate Cost Information Astounding While hospitals and health systems understand the need to dramatically cut their cost structure, they cannot make informed decisions due to a lack of information. SIGNIFICANT MARKET OPPORTUNITY FOR COST ANALYTICS SOLUTIONS The absence of accurate cost information in health care is nothing short of astounding The existing systems are wholly inadequate Decision Support Market Penetration Less than 10% of health systems have an advanced cost accounting solution 10% Healthcare organizations are flying blind in deciding how to improve processes and redesign care 30% Michael Porter Professor Harvard Business School Understanding true costs will finally allow clinicians to work with administrators to improve the value of care 9% Advanced Decision Support 51% Legacy Decision Support Self-Developed No System Source: Harvard Business Review, The Strategy That Will Fix Healthcare (October 2013) 6 Source: HIMSS Analytics, Company Analysis

8 10 Reasons Hospitals are Shifting to Advanced Cost Accounting 10. To Understand True Margins 9. To Identify Opportunities to Reduce Cost 8. To Understand Total Cost of Care from Both Inpatient and Outpatient Costs 7. To Bring Together Financial + Clinical Data 6. To Integrate with Organization s EHR, ERP and EDW 5. To Integrate Cost Accounting with Overall Financial Management 4. To Understand How to Price Right 3. To Run Costing Quickly/Frequently 2. To Improve Accuracy of Costing Data 1. To Make Cost Data More Actionable via Dashboards Source: Becker s Hospital Review,

9 Today s Topic 4 Biggest Cost Accounting Mistakes Mistake #1: Cost data is not accurate Mistake #2: Cost data is limited to hospital only Mistake #3: Cost data is not accessible Mistake #4: Data is not actionable to help drive out costs 8

10 The Costing Process Clean-up Data Clinical & Financial EHR ERP EDW Decision Support Allocate overhead expenses Allocate total expenses to activities Attribute supplychain costs Allocate costs to patient encounters Report 9

11 What Costing Methodology Should You Use? 1. Standard Cost: hard coded based on charge code 2. RCC: ratio of cost to charge 3. RVU: relative value unit 4. CCR: ratio of cost to charge at the test level (encounter level) 5. % Markup: reverse markup charge schedule (encounter level) 6. Supply Cost: acquisition cost (encounter level) 7. Activity Based Costing (ABC) allocation to chargeable and nonchargeable activities 8. Time Driven Activity Based Costing (TDABC) identify max capacity 10

12 Cost Accounting is Not One Thing (e.g. TD-ABC) RELATIVE VALUE UNIT (RVU) ACCURATE FLEXIBLE TDABC IDENTIFIES EFFICIENCY BASED COST SAVINGS VERY LABOR INTENSIVE TO IMPLEMENT APPLICABLE TO LABOR ONLY COVERS MOST COST TYPES REQUIRES SOME MAINTENANCE SUPPLY/INVOICE BASED VERY ACCURATE TRACKS PREFERENCES TIMELY TRENDING OF COSTS REQUIRES ADDITIONAL INTEGRATION ABC EASY TO UNDERSTAND IN CLINICAL SETTINGS COMPLEX TO IMPLEMENT RCC EASY TO UNDERSTAND & MAINTAIN ASSUMES COSTS ARE PROPORTIONAL TO CHARGES OUTDATED % MARKUPS ALLOWS ACCURATE COSTING OF BUNDLED SUPPLIES FOR SUPPLIES ONLY DEPENDENT ON ACCURACY OF CHARGES AND MARKUP SCHEDULE 11

13 The RVU approach Determine RVU s for each charge for each cost category Charge Direct Labor Indirect Labor Physician Labor Supplies Asset Cost Contracted Services Other CHEST X-RAY (2 VIEWS) CHEST X-RAY (4 OR MORE VIEWS) HIP (1 VIEW) HIP (2 VIEWS)

14 Every patient is different so why is their cost the same? Traditional Data Elements GENERAL LEDGER & PAYROLL PRACTICE MANAGEMENT PATIENT ACCOUNTING & MEDICAL RECORDS OR SUPPLIES/IMPLANT D E C I S I O N S U P P O R T COSTS FROM SURGICAL SYSTEMS 13

15 Would You Grow This Service? Variable Cost Per Case ABC + Supply Acquisition Cost TRUE COST $17,960 Medicare Payment $15,200 Margin -$2,760 RVU + Average Supply Cost $14,840 $3,120 $15,200 $360 RCC Labor & Supplies $13,800 $1,040 $15,200 $1,400 14

16 Would You Take 110% of Medicare in Exchange for More Volume? Variable Cost Per Case ABC + Acquisition Cost TRUE COST $17,960 Medicare Payment $16,720 Margin -$1,240 RVU + Average Cost $14,840 $3,120 $16,720 $1,880 RCC $13,800 $1,040 $16,720 $2,920 15

17 Today s Topic 4 Biggest Cost Accounting Mistakes Mistake #1: Cost data is not accurate Mistake #2: Cost data is limited to hospital only Mistake #3: Cost data is not accessible Mistake #4: Data is not actionable to help drive out costs 16

18 Why Costing Across All Settings Matters ACO, capitated payments, and other global pricing Service line profitability analysis across the enterprise Most importantly, reducing cost of care 17

19 Tracking a Patient s Entire Cost of Care 18

20 Making The Vision Reality Enterprise Profitability 19

21 Today s Topic 4 Biggest Cost Accounting Mistakes Mistake #1: Cost data is not accurate Mistake #2: Cost data is limited to hospital only Mistake #3: Cost data is not accessible Mistake #4: Data is not actionable to help drive out costs 20

22 About Fairview Health System Academic health system with 6 hospitals totaling more than 2,500 beds Employs more than 22,000 people across Minnesota. $3.6 billion in total operating revenue Fairview includes: 1 academic health center 5 community hospital 97 clinics (44 primary care and 53 specialty care) Senior housing Home healthcare Retail Pharmacies 21

23 Fairview s Journey Historically, analysts had no direct access to cost accounting data. Data was requested and pulled as directed Significant lag time in analytic process because no direct access (only 2 data administrators) Presently our analysts have direct access to all financial data. Report can be fine-tuned and revised as needs change Data is accessible at least 28 days per month, 24/7 Expanded user community 22

24 Why Take This Journey? GL Costs are not the whole picture Department Profitability Cases Total Charge Total Cost Estimated Net Revenue Department Total Cost Department Total Charge Outpatient 3,888 $7,035, $2,429,244 $2,385,578 $1,082,619 $2,791, Total Cost for entire patient care includes ancillary costs Total Cost from only the specified GL Cost Center 23

25 Asking the Right Questions How do we increase access to cost data? How do we mitigate the risks of non-subject matter experts accessing the data? The answers: Fundamental understanding of the data Fundamental understanding of the technology 24

26 How did we get here? Access to Decision Support data will only be granted once an end user has completed training. Training is provided by all DSS teams. This includes a predominant focus on data and reporting functionality, as well as overviews on the cost accounting process and contracting modeling. Currently, training classes are offered once a quarter. However, as new facilities/clinics are added, we usually have to add a few classes. Classes consist of one full day focusing on data/functionality and another 6 hour day for cost accounting and contract overviews, functionality review and mandatory competency exercises. 25

27 The Training Training Focuses On: Fundamentals It is important that the end users are comfortable with navigating within the reporting tool and can find the resources that are available to them on the End User Dashboard. Data/Functionality The majority of the first day is focused on reviewing the dimensions and fields while demonstrating various functionality. 26

28 Training Documentation Documentation provided during training and on the End User Dashboard is crucial. The more information readily and easily available, the more self sufficient the users will be. Fairview provides: A Data Dictionary A hyperlinked Word document with long definitions, tips on how to use the field, etc. A Field List Excel file containing the dimension and field names. This is used for note taking during training and is color coded to differentiate the various field types within the database. Cheat Sheets Short and concise documents regarding various field types such as, Date/Time fields, payer fields, procedure codes, etc. 27

29 Example of a Cheat Sheet 28

30 Fairview s Decision Support Community Fairview currently has 115 Decision Support users. 105 access DSS data. 89 access Financial data. Financial data includes costs and estimated net revenue. This user group is comprised of hospital finance, service line analysts, marketing, accounting, and revenue management. 11 Clinic finance users will be added in this week. 6 access Volume only data. These users are predominately Quality staff. 15 access Revenue Cycle (4 are DSS also). The Revenue Cycle cube contains all data except Estimated Net Revenue but also includes Denial and Claims data for Hospital Billing. 10 users are DSS Administrators 4 cost accounting administrators 2 database and reporting administrators 4 reimbursement administrators 29

31 The Dashboard Our Information Hub End User Dashboards Content: Data availability information Calendar of upcoming events; down time, release dates, trainings, meetings, etc. Training documentation Master tables Cheat sheets/helpful hints Report Templates 30

32 31

33 Report Templates Use of Reporting Templates Built Templates that are stored on the End User Dashboards that contain set parameters but no fields selected. Why Templates? These ensure that the user is pulling data that we have approved for release when pulling financial data. Volume templates are set to only pull Encounters that have total charges greater than zero to ensure that volumes are not overstated. We review these templates and reinforce that the parameters set within the templates should NEVER be removed. 32

34 Cost Accounting in Action Step 1: Service Line Profitability Inpatient Profitability by Service Line Service Line Cases Length Of Stay ALOS Charge Estimated Net Revenue Variable Direct Cost Contribution Margin Fixed Direct Cost Margin Indirect Cost Net Income Service Line A 2,320 6, $34,073,641 $14,701,733 $8,358,030 $6,343,703 $1,270,830 $5,072,873 $5,689,045 $(616,207) Service Line B 1,648 3, $6,405,083 $2,483,351 $1,437,276 $1,046,076 $197,011 $849,064 $991,612 $(142,548) Service Line C 628 6, $49,671,873 $24,824,667 $8,653,745 $16,170,922 $850,589 $15,320,33 3 $6,064,768 $9,255,564 Service Line D $6,952,479 $2,914,420 $1,584,842 $1,329,579 $282,255 $1,047,323 $989,580 $57,741 Service Line E 1,844 14, $54,313,252 $16,480,118 $7,565,619 $8,914,500 $989,539 $7,924,961 $7,400,410 $524,546 Service Line F 474 1, $6,981,313 $2,643,117 $1,265,337 $1,377,780 $162,950 $1,214,830 $1,033,876 $180,954 Service Line G 1,933 6, $82,624,246 $36,738,862 $21,784,797 $14,954,065 $2,366,031 $12,588,03 4 $10,728,191 $1,859,783 Service Line H 761 2, $32,569,220 $13,295,333 $6,171,224 $7,124,110 $946,389 $6,177,721 $4,318,556 $1,859,167 Service Line I 650 3, $29,989,204 $13,359,387 $5,492,270 $7,867,117 $703,529 $7,163,589 $3,929,139 $3,234,422 Service Line J 1,637 6, $88,052,191 $32,386,670 $17,202,509 $15,184,161 $2,342,366 $12,841,79 5 $11,304,547 $1,537,245 Service Line K $923,969 $355,079 $159,730 $195,349 $23,872 $171,477 $129,859 $41,619 Service Line L $7,535,633 $2,956,728 $1,549,595 $1,407,133 $245,463 $1,161,670 $1,122,594 $39,073 Service Line M 663 2, $19,808,057 $7,481,826 $3,727,360 $3,754,466 $556,832 $3,197,634 $2,719,365 $478,269 Service Line N 4,114 16, Service Line O 1,449 9, $124,968,13 $20,634,45 9 $45,262,054 $21,869,077 $23,392,977 $2,758,525 2 $16,692,452 $3,941,987 $100,342,79 $20,734,67 1 $43,015,509 $19,740,367 $23,275,143 $2,540,464 9 $13,435,507 $7,299,156 IP TOTALS

35 Cost Accounting in Action Step 2: Service Line Profitability by DRG Inpatient Profitability by Service Line and MS DRG Service Line MS DRG Cases Length Of Stay ALOS Charge Estimated Net Revenue Variable Direct Cost Contribution Margin Fixed Direct Cost Margin Indirect Cost Net Income Service Line G DRG $1,854,741 $1,098,839 $575,602 $523,238 $48,635 $474,603 $212,560 $262,043 Service Line G DRG $1,270,000 $784,949 $424,954 $359,995 $35,556 $324,438 $134,713 $189,725 Service Line G DRG $1,101,801 $495,536 $271,168 $224,368 $29,879 $194,488 $144,052 $50,437 Service Line G DRG $1,035,979 $387,139 $275,372 $111,766 $29,640 $82,126 $138,586 $(56,460) Service Line G DRG $259,062 $127,501 $82,143 $45,358 $7,431 $37,927 $29,977 $7,949 Service Line G DRG $324,149 $187,332 $85,959 $101,373 $10,517 $90,856 $41,348 $49,508 Service Line G DRG $6,637,197 $3,228,225 $1,993,408 $1,234,818 $190,221 $1,044,597 $773,110 $271,487 Service Line G DRG $79,157 $7,075 $19,508 $(12,433) $2,102 $(14,535) $8,123 $(22,659) Service Line G DRG $626,218 $430,153 $185,186 $244,968 $18,907 $226,061 $78,210 $147,851 Service Line G DRG $97,084 $45,907 $21,373 $24,533 $2,529 $22,004 $15,067 $6,936 Service Line G DRG $923,331 $377,363 $213,522 $163,841 $26,752 $137,090 $137,351 $(262) Service Line G DRG $238,949 $99,902 $50,744 $49,157 $7,468 $41,689 $34,928 $6,761 Service Line G DRG $951,627 $487,159 $219,462 $267,697 $11,374 $256,323 $113,454 $142,858 Service Line G DRG $2,777,651 $1,126,663 $843,624 $283,039 $78,006 $205,033 $339,434 $(134,400) Service Line G DRG $1,418,550 $660,393 $428,438 $231,955 $41,154 $190,801 $157,666 $33,135 Service Line G DRG $684,903 $324,609 $169,709 $154,900 $22,079 $132,820 $93,716 $39,105 Service Line G DRG , $27,570,737 $13,598,284 $7,761,558 $5,836,726 $849,292 $4,987,434 $3,664,679 $1,322,764 Service Line G DRG $184,352 $80,192 $46,369 $33,823 $5,062 $28,761 $23,580 $5,181 Service Line G DRG $798,538 $387,295 $230,674 $156,622 $26,692 $129,930 $104,612 $25,318 Service Line G DRG $2,642,170 $1,413,501 $785,005 $628,497 $95,261 $533,235 $335,017 $198,218 Service Line G DRG $142,512 $47,053 $27,157 $19,896 $3,774 $16,123 $18,749 $(2,626) Service Line G DRG $318,727 $93,134 $67,413 $25,721 $10,842 $14,879 $43,057 $(28,178) Service Line G DRG $99,323 $29,135 $19,852 $9,284 $3,015 $6,268 $12,605 $(6,337) Service Line G DRG $234,614 $86,281 $46,709 $39,571 $6,943 $32,629 $34,242 $(1,614) Service Line G DRG $166,647 $75,612 $39,721 $35,891 $5,092 $30,799 $26,114 $4,685 Service Line G DRG $209,474 $78,157 $40,503 $37,654 $5,286 $32,368 $32,976 $(608) Service Line G DRG $1,389,193 $415,722 $306,702 $109,020 $27,899 $81,121 $173,805 $(92,684) Service Line G DRG $2,133,927 $732,614 $503,848 $228,766 $68,269 $160,497 $285,502 $(125,005) Service Line G DRG $759,790 $329,200 $178,955 $150,246 $28,331 $121,915 $109,239 $12,676 Service Line G DRG $1,341,074 $534,612 $392,532 $142,080 $42,075 $100,004 $180,062 $(80,058) Service Line G DRG $1,192,050 $492,200 $356,046 $136,153 $39,528 $96,625 $147,879 $(51,254) Service Line G DRG $218,732 $71,679 $47,376 $24,304 $5,600 $18,704 $31,692 $(12,988) Service Line G DRG $85,638 $45,622 $17,690 $27,932 $2,588 $25,344 $10,504 $14,839 Service Line G DRG $968,146 $481,909 $233,060 $248,849 $17,580 $231,269 $124,203 $107,061 Service Line G DRG $915,349 $429,482 $259,170 $170,312 $29,366 $140,946 $124,024 $16,922 Service Line G DRG $1,262,441 $495,357 $295,778 $199,579 $49,639 $149,940 $191,478 $(41,538) Service Line G DRG $1,865,514 $952,205 $433,344 $518,861 $84,864 $433,998 $252,181 $181,817 34

36 Cost Accounting in Action Step 3: Drill down to Financials and Supply Costs by Physician Financials and Supply Costs by Physician Physician Cases Length Of Stay ALOS Charge Estimated Net Revenue Variable Direct Cost Contribution Margin Fixed Direct Cost Margin Indirect Cost Net Income Supply Costs Supplies per Case Physician $47,485 $12,964 $17,612 $(4,647) $1,745 $(6,392) $6,000 $(12,392) $13,792 $13,792 Physician $186,038 $116,056 $58,350 $57,706 $4,168 $53,538 $23,689 $29,850 $39,318 $13,106 Physician $89,182 $35,677 $31,444 $4,233 $3,451 $782 $11,215 $(10,433) $22,121 $11,060 Physician $489,530 $279,215 $177,016 $102,200 $15,087 $87,112 $61,774 $25,338 $136,897 $10,531 Physician $40,079 $13,329 $12,374 $955 $1,140 $(184) $4,312 $(4,496) $9,198 $9,198 Physician $43,778 $21,621 $13,985 $7,637 $1,538 $6,099 $5,436 $663 $9,025 $9,025 Physician $721,637 $292,332 $219,614 $72,719 $23,702 $49,016 $89,678 $(40,661) $131,071 $7,282 Physician $43,122 $18,938 $12,093 $6,845 $1,140 $5,706 $6,096 $(391) $6,313 $6,313 Physician $1,148,943 $580,632 $332,159 $248,474 $34,387 $214,087 $170,019 $44,068 $165,821 $6,142 Physician $4,305,438 $2,274,092 $1,220,567 $1,053,525 $100,955 $952,570 $598,392 $354,178 $644,930 $6,084 Physician $738,595 $297,261 $213,299 $83,962 $25,358 $58,604 $92,442 $(33,837) $112,247 $5,908 Physician $120,813 $62,798 $34,233 $28,565 $4,005 $24,560 $20,876 $3,684 $17,627 $5,876 Physician $672,266 $309,053 $197,440 $111,613 $23,540 $88,073 $83,578 $4,496 $105,531 $5,863 Physician $1,049,312 $540,851 $312,316 $228,534 $34,489 $194,045 $133,472 $60,574 $180,408 $5,820 Physician $63,990 $36,929 $18,902 $18,027 $1,844 $16,183 $9,673 $6,510 $11,442 $5,721 Physician $1,195,978 $487,988 $322,469 $165,519 $35,386 $130,133 $177,337 $(47,203) $136,637 $5,693 Physician $1,259,825 $529,353 $355,674 $173,679 $38,386 $135,293 $171,025 $(35,732) $180,535 $5,642 Physician $1,191,709 $611,250 $327,835 $283,415 $37,615 $245,800 $140,563 $105,237 $202,832 $5,634 Physician $1,065,348 $504,471 $297,507 $206,964 $36,832 $170,132 $133,582 $36,550 $160,868 $5,547 Physician $1,988,892 $957,576 $584,931 $372,645 $71,246 $301,399 $257,533 $43,867 $294,509 $5,454 Physician $828,302 $395,752 $219,895 $175,857 $29,378 $146,480 $99,559 $46,920 $125,064 $5,438 Physician $473,907 $161,601 $130,546 $31,055 $15,748 $15,307 $62,336 $(47,028) $59,296 $5,391 Physician $296,797 $119,817 $74,929 $44,887 $7,558 $37,330 $46,497 $(9,168) $42,768 $5,346 Physician $714,013 $382,995 $195,094 $187,900 $23,430 $164,470 $84,907 $79,563 $117,437 $5,338 Physician $479,853 $206,743 $137,353 $69,390 $15,681 $53,709 $61,447 $(7,738) $74,475 $5,320 Physician $560,490 $273,465 $161,787 $111,678 $19,282 $92,396 $71,397 $20,999 $83,948 $5,247 Physician $1,215,199 $618,642 $343,509 $275,132 $40,752 $234,380 $155,267 $79,114 $174,522 $5,133 Physician $338,288 $187,196 $95,146 $92,050 $12,033 $80,017 $45,578 $34,439 $45,755 $5,084 Physician $219,663 $98,060 $55,857 $42,203 $7,497 $34,706 $26,219 $8,487 $30,288 $5,048 Physician $621,745 $373,620 $174,146 $199,474 $18,838 $180,636 $90,981 $89,655 $74,939 $4,996 Physician $26,803 $17,329 $7,515 $9,814 $824 $8,990 $3,051 $5,939 $4,902 $4,902 Physician $869,372 $481,839 $234,457 $247,382 $29,021 $218,361 $104,004 $114,357 $135,061 $4,824 Physician $413,678 $238,935 $121,504 $117,431 $13,729 $103,702 $52,602 $51,100 $67,268 $4,805 Physician $380,520 $195,494 $98,330 $97,164 $9,470 $87,694 $58,957 $28,737 $57,431 $4,786 Physician $566,545 $255,277 $147,135 $108,142 $14,105 $94,037 $86,825 $7,212 $85,696 $4,761 Physician $35,239 $15,086 $9,472 $5,614 $1,176 $4,438 $5,460 $(1,022) $4,754 $4,754 Physician $47,833 $30,124 $15,100 $15,023 $1,630 $13,394 $5,746 $7,648 $9,427 $4,714 35

37 Why Take This Journey? GL Costs are not the whole picture Department Profitability Cases Total Charge Total Cost Estimated Net Revenue Department Total Cost Department Total Charge Outpatient 3,888 $7,035, $2,429,244 $2,385,578 $1,082,619 $2,791, Total Cost for entire patient care includes ancillary costs Total Cost from only the specified GL Cost Center 36

38 Where We Are Today We have an empowered team of users who are currently using decision support data which includes: Hospital finance reporting: Includes tracking profitability of various departments, physician groups, or services. Service Line reporting: Report on overall financials but users also have the ability to produce more detailed reports. Pro Formas: Detailed Cost and Profitability reporting by department (including ancillary services which is not available in the GL) or services. Market share analysis: Primary Service Area data based on zip code. 37

39 How Do We Move Forward? On-Going Support and Education Everyday Support outlook address set up for end user questions with guaranteed prompt responses updates on issues, new fields and notifications Monthly Live Meetings monthly one hour meeting to discuss any topics, items to review, new data, etc Ad-Hoc Live Meetings scheduled when there is a big data change or new functionality we want to present as soon as possible Quarterly User Group Meetings 38

40 Today s Topic 4 Biggest Cost Accounting Mistakes Mistake #1: Cost data is not accurate Mistake #2: Cost data is limited to hospital only Mistake #3: Cost data is not accessible Mistake #4: Data is not actionable to help drive out costs 39

41 Cost Savings Initiatives are Falling Short 88% of providers have cost savings initiatives underway (Range: $50-$400M) 17% are hitting the target WHY COST SAVINGS INITIATIVES UNDER DELIVER No Staff to Lead Projects 26% Projects Don't Produce REAL savings 27% Lack of Accountability 44% Difficult to Keep Track of Projects 44% Difficult to Quantify & Track Savings 55% 40

42 Requirements MIND SET TOOL SET SKILL SET 41

43 Brainstorm, Validate, Then Operationalize Savings There is no silver bullet everything has to be on the table FLEX to Volume Adjust staffing levels to fluctuations in volume STAFF to Demand Match staffing levels to volume levels Match skill level to skill needs LEAN OUT MGT Structure Create flow within a directors span of functions Bring functions together than work together often LEVERAGE TECHNOLOGY for productivity Automate routine work Automate processes with rules based technology Identify and eliminate duplicative processes 42 PURPOSE- BUILT Org Structure Defining roles to fill distinct purpose Defining goals for roles Using data to drive accountability for results STREAMLINE Systems & Structures Benefits PTO days Capital Budget/ Depreciation Insurance/ re-insurance Outsourced Services Consulting Services Duplicate IT systems Supply Chain ELIMINATE VARIATION in Care Implants Physician preference items High cost drugs Duplicate Imaging studies High cost labs as inpt End of life care

44 If you don t make these mistakes, then you can Compare cost per case among physicians Understand the labor cost and labor requirements to care for a population of patients Negotiate favorable contracts Identify opportunities to streamline administrative processes Manage populations effectively across the continuum of care Drive accountability for measurable results 43

45 Questions and Answers 44

46 To Complete the Program Evaluation The URL below will take you to HFMA on-line evaluation form. You will need to enter your member I.D. # (can be found in your confirmation when you registered) Enter this Meeting Code: 15AT15 URL: Your comments are very important and enables us to bring you the highest quality programs! 45