HELP WHERE HOSPITALS NEED IT ®
HELP WHERE HOSPITALS NEED IT ®
Community Hospital Blog
Guest blog by Chuck Green, Principal, Healthcare Reimbursement Partners
Ever-expanding in complexity, cost reports influence current and future reimbursement levels for your hospital. Think of a cost report as an annual report with numbers instead of words. Far-reaching in scope, mistakes can result in lost revenue that may profoundly affect your hospital’s sustainability and ability to effectively serve patients.
The Center for Medicare and Medicaid Services (CMS) requires Medicare certified hospitals and other Medicare reimbursable provider facilities to file cost reports annually that identify the costs and charges related to facility Medicare reimbursable activities. Acting as annual reconciliations, these financial reports disclose whether a facility has been underpaid or overpaid for reimbursable services.
Cost reports are filed with one of 12 third-party CMS-approved claims processors known as Medicare Administrative Contractors or MACS. It must be submitted 150 days after the hospital’s Medicare year concludes. Late and/or inaccurate filings can result in penalties.
Service Line Considerations
A cost report almost microscopically examines a facility’s service line and cost center charges throughout the care continuum. When compared with Medicare reimbursement, the hospital can determine a service line’s financial impact versus its community need and/or desirability.
From a business planning perspective, the cost report helps determine the financial consequence of offering a new service, continuing or expanding an existing one, or discontinuing one that is underused and/or unprofitable. Meanwhile, assigning a less profitable service to another hospital area allowing greater reimbursement may be a profitable option, whereas instituting an uncommonly large service increase could trigger a payment penalty.
Preparing an Accurate Report
The comprehensive patient treatment and financial data contained in the annual cost report, collected from multiple hospital-specific financial and operational reporting systems, must accurately mirror the hospital’s current performance. Cost reports are only as accurate as the information provided by each hospital’s system.
Who Should Prepare your Cost Report?
You may need expertise beyond your in-house financial team or CPA. Experienced consultants monitor ongoing changes in government reimbursement, keep your hospital on a timeline, assist with appeals and help ensure your hospital receives the most advantageous allowable Medicare reimbursement.
Example: In one instance, a cost report consultant enabled a hospital to recoup a $2 million MAC underpayment because he spotted a .02 percent rather than a .2 percent reimbursement calculation in the MAC’s compensation system.
Successful Steps to Gainful Cost Reporting
These pro-active, best-practices could help ensure a hassle-free and profitable process and gainful Medicare reimbursement.
by Stephanie Hobson, CHC Director of Physician Recruitment
Community hospitals can strengthen bonds with physicians through proactive engagement that is genuine and mutually beneficial. Foremost, it’s optimal to consider the physician point of view, from their clinical practice and other commitments, to perks that may drive growth strategies long-term for all parties.
When physicians understand how working together with the hospital can help them provide better care for their patients, it’s a win-win. Among the benefits cited by physicians and healthcare system leaders in a HealthLeaders survey on physician alignment, positive outcomes can be:
Physician engagement recommendations
Here are some fundamental ideas on how to create a physician-friendly environment leading to quantifiable results.
First, take every opportunity to educate your providers on the hospital’s strategic initiatives. Secondly, diversify the group of physician champions that support your hospital. Whether they are independent practitioners or employed physicians, virtually every healthcare organization can name their “physician champions,” individuals who are positive supporters of the hospital and routinely take on a variety of roles even as they strive to manage their own clinical and personal responsibilities. Consider expanding the number of providers on your medical staff as supporters and advocates; recruit untapped physicians to committees, task forces, and strategic planning teams. Their perspectives and involvement can enhance buy-in to shared goals – the very initiatives they help create.
Reinforce the significance of physician-hospital collaboration in strategy development with data. Provide market-specific information, statistics and facts to support SMART goal setting. Communicate progress and results regularly. Actionable data creates behavioral change. As always, respect everyone’s time and priorities.
Another key to facilitating physician alignment and hospital engagement is to recognize the role of physicians in planning efforts, being mindful of their demanding schedules. Consider meetings outside of clinical time. Develop and schedule a retreat to accomplish objectives. Offer complimentary lunch-and-learn programs. Perhaps send a gift basket to physicians as a thank-you for taking part in discussions and meetings. Physician engagement and alignment enhances the symbiotic relationship between the hospital and provider, achieving positive outcomes that benefit the community they serve.
For a hospital just beginning physician alignment efforts, think about bringing in a consultant to facilitate the planning process to ensure adoption, implementation and success the first time around, creating a roadmap for future projects. For more information, see CHC Physician Alignment Strategies.
by Wilson Weber, CHC Executive VP and COO
Hospital leaders may recognize the need for improvement but may not know where to turn. Even before a hospital shows signs of financial distress, the responsible action is to take a close look at areas of operations. Since operations span the entire hospital, a head-to-toe operational assessment may be warranted to fully address financial and performance issues.
Taking a thorough look at operations may seem daunting. Consider starting with an evaluation of outsourced contracts; some may have been in place for years and can be renegotiated or even eliminated. Below are high-level best practice tips that serve as cost-reduction and revenue enhancement strategies, and can help redirect an ailing situation toward a partial or full turnaround.
Evaluate labor and its costs.
Labor costs typically account for 50 to 60 percent of a hospital’s operating revenue, so a thorough review of productivity is critical. While a productivity tool can help to set productivity targets, it also integrates a level of accountability toward helping to control labor expenses. Productivity evaluation can also indicate the right level of staffing by shift and day. Productivity standards, manager involvement, and executive oversight will move you toward your goals of greater efficiency while reducing labor costs.
Analyze supply costs.
Second only to labor costs, supply spend represents significant expense for hospitals. Often, small hospitals don’t have the negotiating power, so look to the expertise of a group purchasing organization (GPO), or evaluate whether you have the right GPO with your interests in mind. From our experience, the right GPO relationship can mean supply savings from 10 to 14 percent.
One key area to look at is your supply inventory. Have quantities been adjusted based on volumes, or types of procedures such as those performed in orthopedics or the cath lab? It may be possible to work with vendors to be charged for supplies when they’re needed (just-in-time delivery) versus overstocking for procedures that may be scheduled; this practice helps to free up dollars for other purposes. Also examine inventory “turns,” the number of times per year that supplies are being replaced. Based on our experience, a reasonable level of inventory turn is 9 to 12 times per year. This examination could indicate unnecessary items in your inventory.
Examine revenue cycle management.
Because the revenue cycle is a complex function, points in the process may be overlooked or broken. Your hospital may also face common challenges such as keeping your chargemaster current and competitively priced, and keeping up with each payer’s unique rates and payment methodology.
Additional areas to evaluate and address:
Move ahead with greater confidence.
Your overall action plans should identify who is responsible and accountable for each area of evaluation and opportunity. The discipline of frequent review helps to ensure that you are not drifting off the plan and that progress is occurring across all areas. A new level of accountability across team members is one indication that you have arrived. Be mindful that it does take time and diligence to impact turnaround efforts.
by Mary W. Poole, Director of Public Relations, Baptist Hospitals of Southeast Texas
Proud to serve residents of Beaumont, Texas and surrounding areas, Baptist Hospitals of Southeast Texas' employees, physicians, and volunteers share a vibrant bond with our community — a heartfelt connection which became evident earlier this year in the face of Hurricane Harvey. Although hurricanes are not new to the city of Beaumont and surrounding communities on the Texas Gulf Coast, we won’t forget Harvey. We remember vividly the teamwork and community cooperation.
Hurricane Harvey roared ashore at the end of August 2017 becoming a tropical depression as it moved inland. Cities were underwater and Beaumont was no exception. Major roadways into Beaumont from Houston were virtually impassable due to rain and flooding. Disaster preparedness plans for area hospitals were put to the test including the BHSET Beaumont campus, a 483-bed facility.
This weather event crystallized the meaning of relationships in an environment where lives intersect daily, and reinforced the importance of disaster preparedness.
Key takeaways: a summary
Be prepared. The week before the hurricane’s expected arrival, BHSET’s disaster plan came into sharp focus. The plan included arrangements organizing the delivery of food, supplies, and water if needed; vendors were placed on standby. As a result, many vendors came to our aid during the storm, bringing needed supplies and support as the days passed.
Communication is key. Seventy-two hours before landfall we started setting up our incident command center. With food, fuel, medical supplies, linens and pharmaceutical supplies secured, our next focus turned to preparation of our employees. On any given day, everyone within our organization is aware if they are on the A, B or C storm teams.
Preparing your staff is as vital as preparing your facility. As Hurricane Harvey saturated Southeast Texas with over 66 inches of rain in a three day time-frame, access to clear and concise information for our employees and medical staff was a top priority before, during and after the storm. With information outlets established via website, an employee/physician app and a 1-800 number, family members, staff and physicians had access to information that they needed and to allay fears.
To communicate with the public, we leveraged our long-standing media relationships built on transparency and trust to share critical information.
Relationships matter. BHSET leaders serve on various community boards, community participation inspired by CEO David Parmer. Groups include the Rotary Club of Beaumont, the Chamber of Commerce, United Way, and the March of Dimes along with various business and industry groups such as the Texas Hospital Association and many others.
Partnerships like these were priceless, and with strong community involvement, we were able to weather the storm. Medical organizations and neighboring communities offered a plethora of assistance. From “duck boats” for transporting waterlogged employees to the City of Nederland providing vital drinking water, our long-lasting commitment to the community proved to be our biggest asset.
Expect the unexpected. No two storms are exactly the same, so learning from each one is a key to success. During Hurricane Harvey, the water came up so fast that it covered the water treatment plant in Beaumont, immediately leaving the entire City of Beaumont without “potable” water. We did not anticipate losing city water; this was a game changer. We then faced the difficult decision to discontinue services, transferring patients to nearby acute care facilities with expert assistance from the National Guard, local and neighboring air services, Black Hawk helicopters and ambulances.
The adjacent city of Nederland was a dynamic partner and friend, delivering containers of water we so desperately needed. During and after the storm, vendors brought patient care supplies, gift cards and more.
Give thanks. As we approach the holidays, there’s no better time to give thanks. Thank you to everyone who helped us continue to provide compassionate care and services despite Hurricane Harvey, reinforcing our commitment to making a difference in our community, one patient at a time.
by Derek Murzyn, Market CEO, Carolinas ContinueCARE Hospitals
A healthy culture, local relationships, and specialty services are a winning combination for Carolinas ContinueCARE Hospitals. These distinctions are the foundation for long-term acute care hospital (LTACH) success for us locally and can help other facilities as well. LTACHs support community hospitals by extending the continuum of care, reducing acute care length of stay, and providing the best possible setting for fragile patients with complex medical needs.
LTACHs bridge the gap to recovery for patients often following an ICU or traditional acute care hospital stay. After admission to one of our LTACHs, teams of highly skilled doctors, nurses, pharmacists, therapists, and dietitians collaborate to develop and implement a customized medical and therapeutic recovery plan for each patient.
The patient is our primary focus every day at our three LTACHs in North Carolina, which include: Carolinas ContinueCARE Hospital at Kings Mountain; and two facilities in Charlotte, Carolinas ContinueCARE Hospital at Pineville and Carolinas ContinueCARE Hospital at University.
Thanks to a strong partnership with our host hospitals within the Carolinas Healthcare System as well as specialty physicians, we’re able to provide care continuity and leverage best practices for the benefit of patients.
In my leadership role, I’ve discovered that educating the medical community is paramount for an LTACH to be successful locally. Referring providers must understand the LTACH service offering and have confidence in us in order to make that referral. It’s invaluable that we share and communicate that LTACHs offer 24/7 acute care physician coverage, the availability of invasive monitoring and medical support devices, the provision of intensive and complex medical treatment, as well as our patient outcomes. Education can range from informal elevator discussions to documented communication and presentations to medical staff section meetings. We must always be flexible to the needs of our community and our host hospital in our communication and education.
Community and family education are also important. The general public may not be aware that an LTACH is not a nursing home, skilled nursing facility or hospice. We strive to change these common misperceptions by communicating our unique services and interdisciplinary care approach—always focused on the patient. As example of our inclusive culture, we invite family member participation in patient treatment planning.
We’ll continue to highlight what our LTACHs do and the services they provide — including the fact that, one-third of our LTACH patients return home. That’s a result worth sharing. And our devotion to quality is transparent and supported by key metrics documented in reports to various healthcare agencies. In April 2017, Carolinas ContinueCARE Hospital at Pineville was awarded three-year accreditation by the Center for Improvement in Healthcare Quality (CIHQ) with designation as a CIHQ Center of Excellence in long-term acute care. This achievement reflects the organization’s commitment to providing the highest level of quality healthcare to the community.
Above all else, we continue to foster a culture of caring; without it, nothing else matters.
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