The California Sutter Health Approach
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The California Sutter Health Approach
In 2006, Sutter Health, one of Northern Californias largest providers, committed to giving its patient financial services (PFS) staff the necessary tools to improve patient collections. After reading the details of the financial approach, it showed that the staff began working towards the registration staff with its aim at transferring back end functions to the front end so they would make the norm. This paper will show the reasons, discussions, meetings, steps taken, and the results that ended successfully in making the Sutter Health Approach one of the most effective in the United States of America.
Sutter Health is a non- for-profit community based healthcare and hospital system based in Sacramento, CA. Sutter Health faced several problems, but the key problem was, “Within our Sutter Health family, 48,000 physicians, employees and volunteers care for patients in more than 100 Northern California cities and towns” (The Sutter Health Story, 20). Souza and McCarty wrote an article, “From Bottom to Top: How One Provider Retooled its Collections,” that provided data from research indicating how this healthcare system reputed to be on the list of the largest health care providers in Northern California maneuvered into implementing a whole new strategy on how to increase collections. When collecting payments from new patients, services provided, comes from the need to implement new strategies on how and when to collect the payments. The successful program used by Sutter Health has aided the accounts receivable (AR) department in developing solutions to their problems and allowed them to recognize that even though the program is successful, the need to ensure the program remains open to better improvement (Souza, & McCarty, href=”
The following paragraphs of this paper show the research done by Souza, and McCarty in order to write an article entitled, From bottom to top: how one provider retooled its collections, on the strategy taken by Sutter Health. This organization started a project in 2006 to work on the problem of “island” information with intentions to conclude with a solution with the patient account representatives, collectors, and other members of the central business office of its Sacramento/Sierra region. Sutters health system worked forward to the registration staff, ultimately reduced accounts receivable (A/R days) for the nine hospitals in the region from 65 to 59. Given that each one of those days equals $13 million that means the health system collected an additional $78 million. Sutter Health identified the following problems that occurred when analyzing its revenue management cycle prior to implementing the new program:
1. ” PFS staff could not access real-time information on key financial and operational indicators such as A/It days and cash collections. As a result, managers and staff often had to wait until the end of the month to set benchmarks, track progress, or make important business decisions.
2. The hospitals accounting system did not allow managers to isolate and analyze select data or generate reports on demand to the level of detail required. Instead, the region relied on a specially trained programmer to develop these reports, often leading to costly delays in identifying and correcting problems.
3. The central business office (CBO) staff also suffered from the lack of real-time information. With access to only a list of the outstanding accounts assigned to them, account representatives could not prioritize effectively or monitor their progress. In turning this situation around, Sutter decided to focus on a handful of primary benchmarks:
* Gross A/R days (less capitation and credit balance accounts)
* Cash collections
* Unbilled A/R days
* Billed A/R days
* Percentage of A/R over 90, 180, and 360 days
* Major payer A/R days
Empowering PFS Staff used Sutters strategy for increasing collections and reducing A/R days focused on empowering individual PFS staff members to assume responsibility for each account they deal with. In effect, each person in the CBO owns his or her own business, complete with a customized dashboard to track progress in meeting individual and team targets. To help PFS staff manage their businesses effectively, Sutter has provided them with a set of tools that allows them to:
* Prioritize and automate account work lists
* Sort accounts in various ways, such as by dollar amounts, oldest previous work date, and payer
* See at a glance their ranking within their work group and office wide, based on their performance as a percentage of the target achieved.
The tools tell staff members not only how they are doing, but also where and how they could improve, pointing out which accounts, if worked successfully, will have the greatest impact on their A/R days and cash collection goals. Managers have their own receivables dashboard and tools, enabling them to:
* Query all aspects of receivables for trending purposes and identify problem areas
* Drill down to the patient account level
* Monitor revenue, payments, adjustments, receivables, and days for periods from the previous day and week to the previous 18 months
* Calculate average daily revenue by day and 30-day period
* Assess their performance for the month to date, and estimate likely results at the month end
* View all receivables or select any segment for quick analysis
* Generate timely reports on demand, including aging analysis, A/R stratification, discharged not final billed (DNFB) analysis, credit balance analysis, and analysis of problem payers” (Souza, & McCarty, 2007).
“A denials management component was implemented in late summer. When registration staff went online at the end of the year, the cycle was complete, with all parts having access to all the data