Hospital administrations have battled healthcare change throughout their careers. Diagnostic related groups1, relative value units2, the costs of increasing and rapidly changing medical equipment technology, government regulations and the creation of satisfactory physician contracts3 for movement to employed models to list just a few examples.
Navigating change is part of the job of leadership. Jobs of thousands of employees, and through this the economic health of an entire community, are at risk. Successful movement through the times of change is expected of administrators by their respective boards and depended upon by the working families involved.
We are now in the era of the greatest government emphasis on cost containment ever seen.
Simultaneously, healthcare systems are being scrutinized by all third-party payers and being demanded to meet the most strict and detailed governmental rules and regulations.
Programs to determine overpayments are becoming larger due to their documented success in retrieving dollars. Economic penalties are stiff and increasing in amount and scope. The potential of losing Medicare provider privileges as a physician or hospital, contract integrity agreements and the expense of response, all can place systems in untenable business and economic positions. Alphabet groups like RAC, CERT, MAC, ZPIC and UPIC occupy time and resources of the hospital’s financial and legal arms.
The combination of electronic health records with their productivity loss4, payments tied to medical and economic outcomes, and the ultimate implementation of ICD 10, create unprecedented administrative challenges. This places the demand on leadership at new heights.
EHRs, in their efforts to reduce medical errors and increase the ease of medical information exchange, have also allowed the collection of detailed information on individual physician practices.5 This includes medical outcomes, economic outcomes and patient destinations, such as the home, nursing home and hospice. This is your footprint; the physicians’ electronic scorecard.
Adding together all of the physicians on a given hospital’s medical staff, payers now have this same medical and economic outcome data for the hospital as a whole. The scorecard specific to each physician now becomes specific to each hospital. This physician and subsequently hospital scorecard is not just created but becomes the basis of future contract pricing negotiation. The employed physician’s contract with the hospital and the hospital’s contract with the third-party payers become influenced, if not controlled by, these electronic numbers.
CFOs understand claims submitted, discounted pricing, reimbursement timing and cost of resource utilization. They follow, and often assist with, contract bidding and are an integral part of the revenue cycle.
However, CFOs do not control the numbers they follow. They are not clinicians and do not make the decisions of which tests to order (could a less expensive test have been satisfactory), what procedures to perform (could a less invasive or less risky procedure be equally beneficial), number of days in the hospital to reach maximum benefit, and what can be evaluated as an outpatient versus requiring inpatient status.
A concept completely overlooked, due to the CFO and physician training and point of view differences, is the amount of the claim submitted compared with the amount of claim that could have been submitted.
The physician uses the discharge summary as a medical tool. It is a reference for the future care of the patient. In reviewing the summary we obtain information. What was their response to a medicine? What were the results of past tests? What would be an expected response to testing and treatment for the current health concern?
But now the discharge summary has an impact on the CFO. It is now a description to third-party payers of the illness severity of patients. The illness severity reflects the amount of resources needed (and the subsequent extra costs in providing these resources) for the care of these more ill patients. Dictating the summary as a physician yields a great and useful medical document for the patient and for subsequent care of that patient. But dictating the discharge summary as a CFO would be more descriptive of the financial cost of care, an entirely different document.
Physicians are clinicians and not masters of finance. They were not educated along economic lines nor do they have significant experience in this area. But with the ease of data collection by EHRs, the creation of the physician scorecard, and the extreme economic demands currently on hospitals, physicians must learn these quality assurance and utilization review concepts. Severity of illness, length of stay, cost of stay, secondary diagnoses, diagnostic related group grouping and relative weights must become second nature to the physician. The day of physician economic credentialing has already arrived.
This places education demands on physicians never before required. Current consultant training of physicians and hospital staff has resulted in losses so routine that hospitals accept them as a normal cost of doing business. RAC reviews resulting in losses of $50,000 to $100,000 per month for even smaller hospitals are the norm. Success will be difficult to maintain if we continue these outdated training techniques.
The hospital budget may have its greatest increase in dollars and employees in the compliance and documentation area. If trained correctly, not all of this increase expense needs to be permanent. Programs must assess current status, identify higher risk areas, look at past failed education efforts and develop a new plan for improvement.
A comprehensive and successful path must include the CFOs beginning to understand how a clinician reasons and the physician beginning to understand the financial impact of clinical care. The CFO and the physician need to have a close relationship. In a successful system, the CFO and the physician are the same person.
1 Diagnosis-related group (DRG)was developed as a collaborative project by Robert B Fetter, PhD, of the Yale School of Management, and John D Thompson, MPH, of the Yale School of Public Health.
2 RVUs were part of the Resource-Based Relative Value Scale (RBRVS) adopted by Medicare in 1992.
3 Survey: number of hospital-employed physicians up 6%. Anuja Vaidya. 06/18/2013. https://www.beckershospitalreview.com/hospital-physician-relationships/survey-number-of-hospital-employed-physicians-up-6.html
4 EHRs may limit productivity. Daniel R. Verdon. 08/25/12. http://medicaleconomics.modernmedicine.com/medical-economics/news/modernmedicine/modern-medicine-feature-articles/ehrs-may-limit-productivity
5 EHRs enable data mining practices. Jeremy Duca, CorporateCommunication Specialist, 02/10/2012. http://srssoft.com/ehrs-enable-data-mining-practices.
Dr. James Dunnick is a physician, board certified in internal medicine and cardiology. He has twenty five years of clinical practice experience. He is also a certified professional medical coder and boarded by the national quality assurance and utilization group. In his career he has been medical staff president, hospital board member, and medical director of multiple departments. He can be reached at SESEDN@gmail.com.
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