When Will We Get It Right...The First Time?

by Stefani Daniels, Founder and Managing Partner
Published on Dec 20, 2017

Good managers know that rework is very costly. It takes time and money to do it over and, in the end, costs a lot more than doing it right the first time. Not only does it cost more and take more time, but the poor quality of the initial work can result in compliance risk.

In my 25 years in hospital consulting, it never ceases to amaze me how much time is spent undoing, redoing and doing away with problems because something wasn't done correctly the first time. 

Perhaps I notice this more than others because much of my hospital administration experience was spent managing business operations.  Too often this area was the 'end of the line' for correcting the myriad of problems caused by inadequate, late or missing documentation, incorrect or missing data entries, erroneous dates, times, orders and charges and many other casualties of a healthcare process overburdened with paperwork, disparate information systems, and an administrative nightmare of regulations. 

Some of the basic problems stem from communication and coordination issues within the facility.  The best example of this is the avoidable delay by the patient's nurse to begin discussing post-acute plans with the care team resulting in 'just in time' discharge planning and running the risk of readmissions due to inadequate patient preparation for self-care at home. Others are the results of flawed processes with lack of accountability from those who are responsible for data entry. The best example of this stems from our informal survey taken at every client facility about the accuracy of 'facesheet' demographics. Over the past 25 years, we consistently poll at between 60% and 70% across all categories of hospitals.  It's been twenty- five years and inaccurate or missing demographic information is still a problem to downstream users.  

Problably, the most egregious example of downstream frustration is the issue of payer denials.  I simply cannot understand how hospital leaders can persist in their ignorance of denial trends and yet claim to be fiscally responsible. Over the years, its been the exception, rather than the rule, that a CFO can identify the source and amount of  first-pass payer denials.There are always excuses offered but it doesn't change the expectations that utilization review specialists will continue their efforts so that the hospital gets paid...but there is no formal evidence of their success.

Many financial officers will refer us to the utilization review team for informaiton on denials but I know that they are typically involved only if a denied claim related to a clinical reason is to be appealed. They do not have access to the 835 remittances that alert patient financial services (PFS) to a claim that is not being paid for any number of reasons.  Not long ago, our colleagues at CentraMed did a complimentary review of our client's 835 remittances for one calendar year and identified over $16 million in first-pass inpatient and outpatient denials.   I'd call that a revenue hemorrhage of gigantic proportion but there was little reaction and less action taken to remedy the problem.

Another downstream challenge is the issue of inaccurate dispositon codes. Data entry of these codes must be accurate on two levels.  First, the information provides valuable insights into the scope of post-acute services needed by a hospital's population. Armed with this information, planning and implementing a post acute resource center (PARC) is based on fact rather than assumptions. Secondly, and even more significantly, the disposition codes are a trigger for CMS scrutiny for PACT payment reductions which, according to a recent Advisory Board research report, accounts for an annual average loss of $700,000 per hospital. And if the disposition codes aren't accurate and PACT reductions aren't cited, the hospital could be at risk for fraud.  

Disposition code accuracy is not a 'sometime' issue - it is a challenge we regularly encounter.  And because it is a major compliance issue, we regularly call it to the attention of hospital executives.  But we rarely see resolution during the year we spend working with a client to facilitate transformation of its traditional case management model to a value-based, care coordination program.  

The examples go on and on and over the last 25 years, there has been little change.  From my perspective the pendulum has swung too far to the accountability side at the expense of responsibility.  Where does responsibility lie to clean up the messy corners of hospital business operations?  Accountability for outcomes is shared across hospital departments, but until responsibility is clearly defined, it will remain illusive.