April 15, 2022 | Edward Townley CPC, CEMC, CUC, ROCC, Founder, Cogent9 Consulting
The action cycle for process improvement may be defined by the Plan-Do-Study-Act (PDSA model) (i.e., the Deming cycle or Shewhart cycle). Lean/Six Sigma process improvement processes use another acronym, DMAIC (Define, Measure, Analyze, Improve and Control). All of these processes are data driven, and measurements of critical data points can assess baselines and improvements.
For our practices, we can develop specific key performance indicators (KPIs) that assist with time and personnel management, as well as management of the revenue cycle. Let’s examine the first steps—define and measure the current state (establishment of the baseline). The KPI baseline measurements let us know the current state and identify where we may choose to investigate the process and possible defects.
These lists are not comprehensive, but are just examples of baseline measurements. I use an example from radiation oncology, but KPIs are customizable and adaptable for your specialty or practice.
Process of Care baselines may include:
- How many new/established patients per period (workday, week, month), per physician
- Number of “new starts” for therapy per period (workday, week, month), per physician
- Number of follow-up patients seen per period, which are non-billable (global period), per physician, and in the aggregate
- Number of long-term follow-up patients previously treated (monitoring or surveillance)
- Productivity, as measured by RVUs, billed per period by group, physician, division, or department
- How many new patients are referred by which referral sources
- Review current YTD, month, quarter periods to the last period
- Identify any new referral sources
- Identify previous referral sources who are no longer referring
- In larger groups, this may include internal vs. external referrals
- How many patients are treated per workday?
- Days from new patient visit to completion of treatment plan
- Days from new patient visit to start of treatments.
It is critical to define both the high-level and granular aspect of the KPIs. An example is a count of the number of patients treated; this may include patients that received a treatment plan, but never actually completed treatment. It’s important to be clear on small subtle differences that can skew numbers.
Once these baselines are defined and measured, they may be evaluated in terms of process improvement or identification of process defects. For example, if we see over a few months that a valued referral source has tapered or stopped, we can investigate and see what the reason may be. It could be that the referring physician has retired or moved, or a new staff member is referring patients elsewhere, or one of their patients may have reported some issues to the referring physician.
A delay in the number of days between the initial visit and starting treatments may be due to an external cause such as the patient finishing chemotherapy, or requiring prior hormone therapy or dental work. It may also mean that the dosimetrist is overloaded, or that there is no prescription for therapy.
Business Operations baselines may include:
- Dollar value of total claims revenue per period (work day, week, month)
- Denial rates by payor, physician and category
- Denied services written off
- Denied services still in accounts receivable (A/R) (under appeal)
- Days in A/R (that is, Daily Sales Outstanding or DSO) in total and by payor, physician and category
- Contractual allowances by payor, physician and category
- A/R over 90 days aged by payor, physician and category
- Credit balances by payor (government >60 days and non-government >90 days)
- Bad debt and charity adjustments by period by payor and referral source
- Self-pay balances as a percentage of total A/R
- Daily cash collections over the counter (point-of-service [POS] collections)
Business operations baselines also may show areas needing more attention:
- High contractual allowance rates, for example, may be a reflection of base pricing, or may mean that there are specific payor contracts that are not particularly favorable.
- High number of days in A/R may indicate slow-pay contracts or if the high volume is in self-pay after insurance, this may indicate problems in point-of-service collections or financial counseling or A/R collections processes.
- High credit balance totals can have long-term compliance implications and may result in fines. Government payors with identified overpayments must by law be refunded within 60 days, managed care payors may require that overpayments be processed in 90 days.
- Denied services may be indicative that physicians are performing services “off-label” or lacking pre-authorization. These may also be a specific payor issue and a contract review may be necessary.
Who among the management team receives which sets of KPIs may differ. A nurse manager or chief therapist may be more interested in the process of care KPIs for staffing, timing and productivity. Business office management may be more interested in the claims, denials and A/R management.
Establishment of baseline KPIs will allow for benchmarking; these measurements over time will show trends. As we determine specific and actionable process defects, we can intervene, make a process improvement, and measure the effectiveness of the “fix” to see that is working in both the short and long term. Many of the KPIs will have some overlap between departments and work areas.
Some KPIs will be monitored “forever,” while others may be for the identification of a short-term problem and may no longer be useful after an intervention has resolved the issue.
Ideally, a revenue cycle team will meet periodically to define and review KPIs, determine a strategy for identifying process defects and prioritize an action plan to correct them. Ongoing measurements show trends that may need attention. Having the clinical and administrative teams work together on this will establish better communications and enhance ongoing process improvement.
About the Author: Edward Townley is the owner of Cogent9 Consulting. Previously, he served as Revenue Cycle Manager and Reimbursement Director. He holds multiple coding certifications and has been a subject matter expert in radiation oncology documentation and coding for more than 10 years.
