Using Lean Six Sigma to Optimize the Revenue Cycle in Pediatric Practices

June 1, 2012 in Uncategorized by support Team  |  Comments Off on 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.

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