The California Sutter Health Approach

The California Sutter Health Approach

            Sutter Health is recognized as being one of the biggest providers in Northern California in 2006. The system was established in providing necessary tools for improving patient collections to its patient financial services (PFS) staff. The system added a user interface intended at facilitating in collecting the facilities’ revenue receipts from the self-paying patients. The system discovered that the old payment processing method had shortcomings that prevented the efficient collection of funds. Those constraints were connected with restrained accessibility to correct data by the record representatives, incompetent achievement measures, and fragmentized hubs of services provision. The program created a system model that contained resolutions equipped towards overwhelming those barriers. This article will examine the new system developed by Sutter Health and the effects that enhanced success in making its approach identified as one of the most useful in the U.S.

Sutter Health is a medical group providing healthcare services to over 100 Northern Californian communities such as San  Modesto, Stockton, Sacramento, Francisco. Souza and McCarty drafted an article entitled “From Bottom to Top: How One Provider Retooled its Collections,” that rendered researched data showing how this healthcare practice which is considered and listed among the greatest providers in healthcare services in Northern California managed in realizing a completely new plan on how to boost collections. When receiving fees from new patients, the services rendered arise from the necessity to implement new plans on how and when to collect the cash. The flourishing application employed by Sutter Health has supported the accounts receivable section in advancing solutions to their obstacles and enabled them to understand that even if the program is thriving, the obligation to warrant the program will remain welcoming to greater improvement (Souza & McCarty, 2007).

The healthcare system in the U.S. is acknowledged to get an abundance of cash upfront of revenue from the attended patients. The circumstance is realized by a healthcare insurance policy that involves highly deductible pay health plans and a co-payments plan (Souza & McCarty, 2007). The downside of the situation is that it has not incorporated a substantial portion of the community that has no healthcare cover. The insurance plan forced the healthcare centers to only address the substantial amount of upfront collection. The old healthcare payment methods have had a lot of difficulties in reaching their targets in terms of money collected. This is due to the many difficulties associated with th

at method.

Contrary to the normal way of collecting fees from the patients after receiving medical care, those paying via an insurance policy, are required to pay for their services before the customers could get them (Souza & McCarty, 2007). The PFS staff completes a piece of accurate information on the client, or otherwise, it will result in undercharging or overcharging them. The platform relieved the staff from struggling situations of processing information from the back end as experienced from the previous old system. In addition, the system is developed in such a way it accommodates the self-pay client, which was not there before. The PFS staff again experienced the same, too, in relying on the back end desk to process clients’ data and providing their payment details breakdown. Previously, the task was tedious and slow for a healthcare facility’s accounting staff going hand in hand in making patients wait for a long time before getting assistance. The incompetence of the old established method produced not only inferior quality services but also in meager money accumulations.

Sutter also noticed that PFS staff were not in a position to have real-time data in both operational and financial such as collected revenue and accounts receivable (Souza & McCarty, 2007). So the administrators, together with the staff, would abide till the end month to reconcile and make benchmark identification. Sutter further found that the previous system neither offered options for analyzing the picked data nor generated needed comprehensive reports when demanded. During this era, hospitals incurred extra expense to hire programmers that generated those reports. Lack of real-time data strained front desk staff in an effort to avail the clients having not consulted back end staff. Moreover, they failed in monitoring the clients’ improvement since the system could not provide the platform (Souza & McCarty, 2007). The accountability among PFS staff was diminished since they were not fully empowered to be liable to each patient’s account they handle. These major hurdles prompted the Sutter to develop a system to address them. In an attempt to subdue the mentioned above problems, Sutter healthcare implemented several reforms so that the system would operate efficiently to their expectations. The tactics identified included assigning front end desk with major tasks of the back end, rendering a correct and exhaustive report to the respective personnel. It also laid out measures of increasing effectiveness, both in evaluating performance and integration of all data related components to the system (Souza & McCarty, 2007). In addition, designating the front desk staff with the responsibilities to manage much of the payment process was considered to impact on the efficiency of the processes greatly. Several approaches were applied to ensuring that much-awaited success has been achieved. To make this succeed, they had to bring on boardaaaa One of these solutions entailed using benchmarks to measure performance by the Patient Service Staff (PFS). Sutter identified a handful of primary benchmarks which included; Unbilled A/R days, Gross A/R days, Major payer A/R days, Cash Collection, Billed A/R days and Percentage of A/R over 90, 180 and 360 days (Souza & McCarty, 2007). This benchmark introduced shorter periods with which staff performance could be evaluated. This move was timely especially when considering that the industry has changed and things happen in terms of hours and days but not months.

Another solution involved empowering the PFS members to have full responsibility over the accounts they are dealing with. This move was meant to increase a sense of responsibility and accountability and as each individual member will be responsible for his or her own account (Souza & McCarty, 2007). This also gave the PFS members more autonomy to act as the see fit and this improved the speed and efficient of service delivery by these staff. The program also provided the PFS members with tools that enable them to automate their accounts, sort out their account using various means and see their performance based on the achievement of target. PFS and other account representatives were presented with individual dashboards that helped in tracking their progress in meeting targets. This also helped in enforcing the benchmarks set by this program.

Sutter health program also introduced a front end collecting system as means of overcoming the mentioned problems. The pint of access collecting system introduced an opportunity for health care facilities to reduce claims and denials. Through this system the patients’ records are analyzed before the patient leaves the registration desk. This enables the front desk staff to identify problems such bad debt patient or invalid patient type, early enough and take the necessary corrective action.

The Sutter health program also embarked on a comprehensive training program that was designed to support the existing PFS members and registration staff. This gave these staff the necessary competence to deal with the tools provide by this system. The training program also eliminated the need to hire formally educated staff to operate the system who would demand more than the $10 – $20 an hour paid to the current registration and PFS staff. For example, registration staff who were not used to asking customers for money were trained on effective communication skills. The training was also designed to introduce autonomy and effectiveness which act as motivator to the employee. Sutter system allows staff to act with more independence which has made them to own the system. Autonomy is a critical element that enables workers to work effectively and deliver to the best of their ability. The efficiency of the system has also made the work of the hospital staff much easier acting as a further motivating factor for the staff.

Another solution involved getting patients on board this program. POS collection system is not only beneficial to hospital but also to the health care customers as well (Souza & McCarty, 2007). This system provide a patient friendly billing that ensures transparency in the way customers are asked to pay for health care services. The payment system that is in force in other parts bills the customer after he or she has already received the services and left the hospital. Sometimes patients get shocked after realizing the amount the have to pay to the hospital. However, Sutter program introduced transparency as the client gets to know what the services will cost him or her before he receives the services. It has become evident that patients would love to know how much the care they are receiving will cost them and this is what Sutter program has provided. The system also offers a simplified system of settling hospital bills thereby making things easy for customers using hospital services. Under the normal hospital system, customers are usually compelled to produce a lot of records and documentations in order to have their payment processed, which introduces a lot of inconveniences.

One of the accounting practices used by Sutter in identifying and solving the problem is accountability and transparency. Sutter was discontented with the amount of revenue being collected from the self-pay patients (Souza & McCarty, 2007). The management team understood that the self-pay patients were capable of meeting their medical expenses and therefore the problem was in their system. Sutter then resorted to evaluate the accountability and transparency in the process involved in the collection of revenue. It is through this evaluation that most of the problems were identified. It was establish that traditional system did encourage responsibility and accountability to the people handling the revenue collection.

Another accounting practice adopted was cost reduction. Accounting principles dictate that there are two major ways for increasing margin; increasing profits or reducing costs. After exhausting all the avenues they can use in increasing revenue Sutter embarked on a campaign that would reduce the cost of operation. This saw the collection process being integrated into a unified system. The method used were also cost conscious such opting for comprehensive training of existing PFS and registration staff rather than hiring specially trained professional who would have demanded for higher pay.

Another accounting practice used is efficiency. Efficiency refers to the ability to use the available resources to produce the optimal amount of output. Sutter was able to identify problems and develop solutions by evaluating the efficiency of the system (Souza & McCarty, 2007). It was discovered that component of the system such as performance evaluation and the record management component of the system were not operating at optimal levels.

Sutter strategy focused on improving accountability and autonomy of the staff in order to enhance revenue collection. Sutter health relied on solutions such as setting benchmarks and empowering the staff. Another alternative that could work is reducing the size of full cycle of the amount payable. Amount payable refers to money owed to the institution by other parties while full cycle refers to the amount of time it takes for the patients to settle their debt (Rauscher & Wheeler, 2008). Reducing the full cycle may help to reduce the number of bad debts that a health institution suffers from.

Traditionally a patient cycle followed procedures such as organizing schedule, registration, treatment, billing and collection (Solomon, 2011). The collection part is why the health institution is able to recover the debt owed to it by patients. This section comes long after the treatment process is concluded and therefore increases the chances for bad debt. This paper proposes a system where bill are settled on pre-service basis. The pre-service system will be enabled by developing a system that standardized services to make billing before the client receives services easier (Trans Union, 2007). A per item standardized billing is advised. This is whereby a standard price is set for each and every hospital procedure and the patient is billed by summing the cost of all the service items he or she has utilized.

The system may also involve a tool that prioritizes patients account based on the ability to settle their bills. Unlike traditional system where patient records are sorted out based on names and age, this system may classify patients according to indicators such as income and previous hospital records (Rauscher & Wheeler, 2008). Clients with high likelihood of defaulting payment will be accorded priority when billing. Collection time will also be significantly reduced. It has been observed that longer settlement period increases the chances for bad debt. Therefore shorter settlement period will be accorded to the clients based on the priority accorded to this client by the system. High risk client will be accorded shorter periods.

The approach used by Sutter Health was effective. This is because this approach was able to address the concerns raised by the network. Sutter health was concerned with the growing number of self- pay patients and the diminishing amount of revenue. The need to increase the amount of collecting from this section of market was the primary objective of developing this strategy. The success of every strategy can be evaluated by how well the strategy is able to deliver the set goals. When it comes to Sutter Health it is estimated that revenue collection from the self- pay patients increased by an additional $78 million after the implementation of the strategy (Souza & McCarty, 2007). This is a clear indicator of the program’s success.

Apart from raising revenue it is also reported that the implementation of the program translated to other additional benefits. One of these benefits is improved quality of care for the patient (Souza & McCarty, 2007). One of the solutions identified by Sutter was bringing the health customers on-board. The system did this by factoring the customer needs into the system making it customer friendly. The customers now spend less time processing payment while at the time; they get to know of the cost they will incur before receiving the services. The system has also reduced the number of patients being denied treatment as result of streamlined inventory system.

Sutter health is a non-profit network based in California and that is made up of community based health care providers. This case discusses how Sutter developed a system that was able to improve revenue collection from the self-pay patients. Sutter recognized that the number of bad debts was rising along with the rising number of self-pay patients. This network conducting an evaluation on it facilities and identified that the problem of low revenue collection was linked to a disintegrated system of collection, in adequate accurate information and poor performance indicators. Sutter Health employed solutions that entailed setting new benchmarks, empowering employees, factoring the customers’ interest and comprehensive training.

References

Rauscher S. & Wheeler J. (2008). Effective Hospital Revenue Cycle Management. Journal of

Healthcare Management

Souza, M., McCarty, B. (2007). From bottom to top: How one provider retooled its collections.

            Healthcare Financial Management, 61(9), 67-73. Retrieved from

http://search.proquest.com/docview/196385246?accountid=32521

Solomon P. (2011). The State of Health Care Revenue Cycle. Retrieved from

http://philcsolomon.com/2011/04/the-state-of-healthcare-revenue-cycle-an-insiders-            perspective-part-2/

Trans Union (2007). Healthcare Collections: How Full Cycle Improvements Reduce Bad Debt.

July 28th, 2011. Retrieved from

http://www.transunion.com/docs/healthcare/businessneeds/healthcareCollectionsWP.pdf