The Healthcare environment in the United States is evolving rapidly due to the pressures to reduce costs. The Affordable Card Act (ACA) has provisions that expand coverage via Health Exchanges as well as expansions of the Medicaid program. Due to budget pressures, states are migrating from State run Medicaid to Medicaid being managed by Managed Health Care Plans. Coventry has a significant presence in the Managed Medicaid market. Aetna significantly increases their presence in Managed Medicaid and lower priced insurance plan options with the recently announced acquisition of Coventry. Given the migration of new patients to lower priced insurance plans (via the future Health Exchanges) as well as expanded Medicaid coverage, this is a potential growth opportunity for Aetna. Appears that Aetna believes in this potential opportunity due to the premium they paid for Coventry (over $5.0B).
For your Pediatric practice, it is critical to monitor the reimbursement trends by plan as these changes in the Healthcare system continue to occur. Pediatric offices usually provide one of the lowest costs of Healthcare delivery from the perspective of plans and employers. Leveraging the facilities of a Pediatric Office is in alignment with the interest of the Healthcare system by promoting wellness versus ‘sick care’. Also, services in pediatric offices are more cost effective than in hospital settings. Small Pediatric Practices can effectively manage this complex environment by adding new patients, providing quality care, and by implementing strong management of the practice revenue cycle. If a practice is unable to grow patients as well as manage their Pediatric Practice Revenue cycle effectively, they will eventually dissolve or merge with a Hospital System or large Medical Group.
Health insurers identify how to save money by lowering reimbursements – unfortunately, many use the ‘squeaky wheel’ type of rewards/evaluation. For example, a Health Insurer will not increase rates on all providers on their ‘independent products’ while negotiating high single digit rates with the Hospital System that uses their size as leverage. If the small Pediatric office does not have solid IT systems that allows them to evaluate their reimbursements, they might be underpaid compared to the Hospital System located in the same area. If your Pediatric practice provides high-quality and consistent medical care, the practice show be rewarded on the care provided. The Health Insurance companies prefer that practices are managed like the average Pediatric practice country versus Pediatric practices that consistently achieve collection rates above 99% of the contract amount. This is a good time to benchmark the collection rate and check the controls and systems in place that optimize not only the collection rate but also the Accounts Receivable (AR) days. Through good benchmarking and management of the revenue cycle, your practice can be confident on how to manage the changes in the Healthcare market like the Aetna acquisition of Coventry.
electronic health record program
Is there a Potential Impact on Pediatric Practice Revenue due to Aetna Acquisition of Coventry?
The Cost of Maintaining a Server in a Pediatric Practice
I enjoy speaking with customers, potential customers, vendors and suppliers to obtain feedback as well as perspective. Recently, I was made aware of the actual costs that a practice incurs for appropriately maintaining a server. The ‘old’ method of establishing Electronic Health Records in an office was to install and operate a server with an internal network. Although this is still an option today, there are many expenses such as initial and continued operating costs that cloud computing provides a better choice. The winners of practices that choose client-server E.H.R. Systems are server companies, software companies that supply software for client-server applications and technology/server consultants that maintain servers.
I continue to be made aware by physicians of the cost of operating a server. The range in cost really concerns me and surprises me. For example, I know of a one-physician practice that was spending over $700/month just on an IT consultant to maintain his servers/network. When the Internet was ‘dial-up’ there was not another option for a physician practice. Businesses of all sizes began moving from client-server applications to cloud-based applications for many reasons. Some of these reasons include: most up to date software, lower operating costs and easier establishment of additional computers/users.
Evaluate the total cost of the option when deciding to choose client-server vs. cloud computing. Here are some items to obtain cost ranges when comparing a cloud-based option to a client server option:
-Cost of the servers, network gear and estimates of how often this equipment needs to be replaced.
-Cost of installing the network
-Cost of maintaining optimal up time of the network as well as maintenance
-Cost of software for the server (initial and yearly cost).
Consider conducting some ‘basic’ research by calling a local IT consultant to obtain a price quote. Also remember that you or an office manager will need to be the project manager/coordinator of the people and vendors once the practice decides to choose either cloud-based application or a server-based application. With a cloud-based application, the practice will need to maintain an internet connection as well as a wireless network. If there is not a person in the office whom is comfortable setting up a wireless network, usually a lower cost group such as the Geek Squad can set this up for the office. With a client-server application, the office will need to purchase servers, network gear, software for servers (in addition to their E.H.R. software) as well as incur an expert to install the system and maintain the system. The practice will also need to install battery back-up and a maintenance plan with all the components. These are examples of some of the hardware maintenance costs of a server.
There are many articles on the economic benefits of cloud-computing. For instance, see the April 30, 2012 article in Forbes Magazine titled “Cloud Could Cut $12 Billion from US Government Annual Deficit”. The study quoted in this article states that the US Government could reduce the annual IT Spend from about $80 B to $68 B. The winner would be the cloud-computing companies while other groups would either lose their contract or have reduction in services. Do not under estimate the amount of lobbying, PR and Marketing that the groups impacted by this migration to cloud computing will exhibit. Remember, the practice is ‘on the hook’ for the short term and long-term cost of a decision of client-server vs. cloud computing (not an external consultant whom might have minimal to no experience optimizing revenue for a practice). Internet speeds continue to increase dramatically which further enhances the positive aspects of cloud-computing.
Using Lean Six Sigma to Optimize the Revenue Cycle in Pediatric Practices
I enjoyed meeting with clients and potential clients in their Pediatric office. Pediatricians have such a challenging and rewarding career to treat the children of our future. Children should not be treated medically as “small adults” and have special needs and treatments based on a variety of factors including family history, their environment, social economic status, etc. Similar to the special needs of treating children, Pediatric Practices have specific needs to optimize the operation from a revenue cycle perspective. Unfortunately, I have seen too many Pediatric Practices where the practice is operating at a level that reduces the effectiveness of the practice as well as reduces the revenue cycle for the practice. When I walk in these practices I see money flowing out the door without the partners/owners knowing (usually because they do not have time as well as the training to see these gaps as well as the complexity of the revenue cycle). In many of these practices the missing revenue is thousands of dollars a month! There are many tools to help practices optimize there effectiveness including LEAN Six Sigma.
Lean Six Sigma is a quality tool that gained much fame via manufacturing processes (e.g. Toyota – quality focus) before being leveraged in other areas such as business processes and systems. One of the principles of lean six Sigma is continuous improvement in the operation and processes. So how can Lean Six Sigma be leveraged related to Pediatric Practice Management? Some examples include:
• Using LEAN principles to improve the Pediatric Revenue Cycle each month by identifying billing processes on the front end and back end of the revenue cycle that slow down the payment stream to the practice. One objective measure is Accounts Receivable (AR) Days. The AR days are simply the amount of Revenue Outstanding to be collected for the practice divided by the average revenue collected per day. An optimal practice should be below 30 (which means about a month of Accounts Receivable is pending at any one time). We are able to move some practices into the low 20s.
• Holding a Kaizen event to evaluate the front end and back-end of the revenue cycle for your practice. By involving the appropriate individuals to this event, practices can identify ‘pain points’ of the revenue cycle and some potential solutions/ideas on how to improve this pain point.
• Request the physicians and providers in the practice to evaluate and determine the amount of time spent documenting in the EMR system as well as the quality of the clinical documentation. Usually, one physician leader from the practice should be the point for this effort. The time invested should be to identify the most common as well as least common clinical conditions in the office, the time for needed for the visit and charting the visit as well as the consistency of the clinical documentation.
These are a few examples of how a Pediatric Practice can apply LEAN six Sigma principles to improve the practice. For the practice to appropriately apply a recommended improvement, it is critical that the practice leverages a Pediatric Electronic Health Record and Practice Management system that can be customized for the practice (Make sure and speak with your E.M.R./practice management system vendor to discuss if/how the system can be modified/customized based on practice process flow changes). Using LEAN Six Sigma can help improve the operation, the revenue as well as improve patient and provider satisfaction.
