February 24, 2014

The Many Faces of Healthcare Analytics: Time to Look Them Square in the Eye

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Before the October 1 ICD-10 implementation date, hospital leaders need to answer a lot of questions about their facility’s healthcare analytics.

By now, most have answered the questions related to how ICD-10 will affect coding, billing and reimbursement—but these are just a part of the big picture that must be considered.

Greg Adams, former president of the Healthcare Financial Management Association (HFMA) and former hospital chief financial officer (CFO), joined the February 18 broadcast of Talk Ten Tuesday to review several other areas of data analytics.

 

Adams, currently division president, consulting services, Panacea Healthcare Solutions, Inc., urged those hospitals that haven’t analyzed the effect ICD-10 will have on coding, billing and reimbursement to “get moving.” It’s also important to understand the impact that these areas will have on VBP [value-based purchasing], quality scores, and participation in payer networks, said Adams.

Providers must analyze—and analyze soon—several other types of data to prepare for ICD-10 implementation, starting with a broad look at the hospital’s overall financial picture. Adams posed several questions for providers to answer related to three key areas of analytics: financial or business, operational, and external.

Financial or Business Analytics:

“The goal here should be to build a cash reserve for ICD-10 before Oct. 1,” he said. “We all expect I-10 to produce short-term cash-flow problems and no matter how much we do to prepare we know it will happen.”

To prepare, begin with an analysis of the typical financial indicators. Adams provided several questions, including those below, to jumpstart the process. Even though these questions are not specific to I-10, knowing the answers can really help if there are billing and coding delays or increased denials.

It’s important, he said, to “take a “proactive approach to negate the impact of what will happen with I-10 implementation.”

  • What are your days in accounts receivable (AR), and how does your hospital compare to industry benchmarks? Can you decrease your AR now and build cash reserves to offset the negative impact of I-10?
  • What about your bank lines of credit? What do you have in place now? Should the hospital get an increase now in its working capital in preparation for I-10? As Adams pointed out, “We all realize it’s easier to get money from banks when we don’t need it.”
  • What is the hospital’s current level of debt? Does it have bank or other loans outstanding? Can these be restructured to reduce some of the annual payments and the pressure on cash reserves?

Operational Analytics:

Effective operations management, particularly in the billing department, requires being on top of what’s going on, not just once in a while but always. By knowing and reviewing the data in this area, leaders can improve financial outcomes, even under ICD-10.

Do you know your number of bill-hold days? Can you decrease the time it takes to drop a bill after discharge?

“Oftentimes, hospitals have four to six days after service when they drop a bill. If hospital can shorten this by one day, all things being equal, you can increase your cash by the equivalent of one day’s worth of billing,” Adams pointed out.

What is your current DNFB (discharged, not final billed), and how does it compare to industry benchmarks? Can you decrease your DNFB before October 1?

External Analytics:

No matter how efficient hospitals and other providers are in preparing for ICD-10 implementation, the readiness, or lack thereof, of external partners—such as billing vendors and payers—remains out of their control. The reality is that if these partners are not prepared, payment for claims will be delayed.

Taking a proactive approach to external partners, and establishing open—and frequent—communication with them, is necessary, and Adams advises that hospital leaders determine the following.

  • How many touch-points do you have?
  • Have you discussed your internal issues and concerns with your payers and vendors?

All of “the above are necessary to make sure everyone is ready on October 1,” Adams told listeners.

 

Janis Oppelt

Janis keeps the wheel of words rolling for Panacea®'s publishing division. Her roles include researching, writing, and editing newsletters, special reports, and articles for RACMonitor.com and ICD10Monitor.com; coordinating the compliance question of the week; and contributing to the annual book-update process. She has 20 years of experience in topics related to Medicare regulations and compliance.