April 23, 2018

Maintaining a Healthy Facility

By Gary Smith, Director, Assurance Services

Maintaining a Healthy Facility

In today’s constantly changing skilled nursing facility (“SNF”) environment, nursing homes must find efficient and effective ways to manage the patient process, from admissions to discharge, in order to maximize shrinking reimbursements from Medicaid and Medicare and the complex managed care contracts. The problem is, SNF owners and operators are focusing their efforts on constantly changing regulations, reimbursement rules, complex contracts with insurance companies, and filling beds with quality patients. With all these issues requiring attention, owners often overlook a very important component of the business – their financial position. Without quality, accurate information, owners can often become delayed in their decision-making or, even worse, make wrong decisions based on inaccurate or incomplete data.

It is most important to start with the revenue cycle. All too often, we see clients acting more like banks than healthcare providers, effectively lending monies to their patients and third-party payers, by failing to observe best practices for timely payment of services delivered. The revenue they earn is all too often caught up in the complex reimbursement system, leading to unnecessary revenue adjustments and collection problems and, ultimately, lost earnings.

The most important step in preventing this scenario is to ensure your revenue cycle includes more than just your patient billing. The revenue cycle really begins prior to admitting patients. It is critically important that your staff understand all of the administrative requirements of each payer contract. This makes it much easier to establish the appropriate set of procedures to meet these requirements and ensure your valid claims are collected timely. Just ask yourself how many times a simple billing error has led to payers holding onto your money. Correcting these errors can divert employees’ valuable time from other important aspects of their jobs.

If you read no further than this, I challenge you ask your revenue cycle team: “How did all the revenue that we earned go uncollected for 90, 180 and over 360 days?” I can almost assure you it starts with understanding the administrative requirements of the admissions process.

Invest in Standardizing Procedures

It’s been my experience over the years that the books and records of the average skilled nursing facility are not all that complex (outside of the revenue process); however, I am often surprised at how difficult it is for some to close their books. It is important to understand that the closing is not just an annual process when the auditors come to town, but an ongoing process. Not taking that process seriously enough only leads to surprises with unexpected adjustments required to “fairly state” the financial position of the company.

Having well-documented standard procedures and checklists for closing the books is key to the accuracy and speed of receiving good financial information. It is also important that everyone on the team understand their roles within the process and take pride and ownership in the work. Often, a significant amount of information comes from outside the accounting department, so it is important to keep good lines of communication between all areas of the organization.

In today’s environment, most SNF’s have invested in quality software capable of providing fast, accurate data that can speed up the closing process. Most of these systems require initial setup and ongoing maintenance to ensure quality output. If the system is set up correctly and proper procedures are in place to feed the system, the output can be quick and reliable. Whenever you can, look to the software to see if it can solve your problems, rather than looking to create spreadsheets that can take time and are prone to mistakes.

Keep Getting Better

Better data leads to better decision-making. If you spend the time to put the right policies and procedures together, don’t let them sit on the shelf and collect dust. Empower your people to help find better, more efficient ways to streamline the process without diminishing the quality. For example, analyzing a chart of accounts may be a good place to start. Perhaps something as simple as including additional information in the chart of accounts can produce more detailed output that provides valuable feedback. You may be surprised at how much additional overtime you might be paying and not even realize it.

Know What You Want in the End

The most important point of all is to know what your end game is. What is it that we need to do our jobs better and to make more informed financial and operational decisions? If you know the answer to this question, you can build better systems by reverse-engineering. This will allow you to know what processes to put in place to get exactly what you need out of your people, your systems and your business.

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