4-2 Milestone Two Initiative Proposal
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Feb 20, 2024
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4-2 Milestone Two: Initiative Proposal
Business Administration, Southern New Hampshire University
IHP 430: Healthcare Quality Management
Professor Jasmine Konyek
February 4, 2024
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In Healthcare, financial stability is crucial to any organization and the efficient management of accounts receivable is directly related to financial stability. In this paper I will further discuss and propose a performance improvement plan to address prolonged Days in Accounts Receivable. This plan will also enhance the financial health of the organization. The plan will be relevant with quality standards and includes data-driven strategies for implementation and communication among all departments and the use of our health information
system or electronic medical record. The identified problem is the extended DAR, which negatively impacts cash flow and overall financial stability. The performance improvement plan will focus on aligning with the Healthcare Financial Management Association's (HFMA) Best Practices for Revenue Cycle Management to establish benchmarks and goals for reducing DAR. According to HFMA “the days in A/R metric is the average number of days it takes for a provider to be paid for a service provided. This calculation gives hospital leaders insight into how well their revenue cycle is performing.” (HFMA, 2023). HFMA best practices are for days in A/R to be in the 30-40 range and at my organization right now we are at 60. It is very important for us to develop a performance improvement plan to decrease our days in A/R and improve our financial stability. To gauge the success of the initiative, key performance indicators (KPIs) will be established. These KPIs will include HFMA best practice of Clean Claim Rate, Charge Capture, Point of Service (POS) and Cash Collections, A/R, Net-Adjusted collection rate, Initial denial rate and Bad Debt rate. We will need to also review the efficiency of billing and coding processes. Insights into the root causes of delayed payments will be obtained through regular
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tracking of metrics and feedback mechanisms from billing and coding teams during regular workflow. Communication strategies will be crucial for the successful implementation of the plan. Regular meetings, work groups, and training sessions will be conducted to educate relevant staff on the importance of days in A/R reduction and the specific strategies in place. We will not just educate and train Revenue Cycle staff but also all revenue producing departments such as Ambulatory Clincs, Radiology, Oncology, Nursing, ER, and Rehab. Billing and Coding departments will communicate the data from these KPI’s to the other departments. A centralized dashboard within the health information system will display real-time data related to A/R Days and revenue cycle performance. In our EMR, which is Meditech, most of this data is obtained easily in the Financial Status Desktop (FSD). In the FSD there is several different ways to review the data including payments, adjustments, AR Days, Denials, Receivables, and Revenue. When looking at Receivables we can slice and dice this by Aging (over time), Insurance and Financial Class, Acct Type (Patient Type), Collector (Acct Rep), Provider and Location. This information will be accessible to finance teams, administrators, and relevant stakeholders. Regular reports and presentations will be generated to facilitate data-
driven discussions in departmental meetings, ensuring transparency and collaboration. Decisions
will be discussed with leadership and clinical departments to reduce denials, increase revenue, increase collections, and decrease receivables. All of this will help with financial stability of the organization. We will also utilize our EDI claims system of Change Healthcare for clean claim rate, edit reports and denial information from payers. If implemented successfully, the performance improvement initiative is expected to have positive effects on financial outcomes. A reduction in A/R days will lead to improved cash flow,
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reduced bad debt, and increased revenue understanding. The implementation of streamlined billing and coding processes will contribute to more accurate and timely claims processing, further enhancing financial stability. Increasing our clean claim rate will help utilize staff time more effectively to reduce receivables and help the organization financially. The performance improvement plan is likely to foster a culture of financial responsibility within the organization. By emphasizing the importance of efficient revenue cycle management and individual contributions to the process, staff members will become more conscientious about
accurate billing and coding practices. As previously mentioned, we will not only focus efforts within the revenue cycle departments but also educate revenue generating departments and how their departments and workflows affect the organizations financial performance. This culture shift can lead to increased accountability and a shared commitment to the organization's financial
health.
Conclusion
In conclusion, a well-crafted performance improvement plan targeting the reduction of days in A/R in healthcare organizations is essential for ensuring financial sustainability. By aligning with industry best practices from HFMA and utilizing health information systems such as Meditech and Change Healthcare organizations can optimize their revenue cycles. Effective communication, transparent data sharing, and a cultural shift towards financial responsibility will
contribute to the successful implementation of the plan and, ultimately, improved financial outcomes for healthcare organizations.
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References:
HFMA. (2023, April 6).
7 KPIs providers should be tracking
. HFMA. https://www.hfma.org/revenue-cycle/kpis/7-kpis-providers-should-be-tracking/
Reduce AR Days: Tips for Medical Office Managers and Billing Staff
. (2022, July 20). DataSearch Inc. https://datasearchinc.com/reduce-ar-days-tips-for-medical-office-
managers-and-billing-staff/