How can you make sure that the inventory ordered for provider encounters (DME, hearing aids, CPAP machines, ER trays, etc) are being accounted for on the patient’s bill? If you are not reconciling inventory with patient accounting, you are losing potential revenue.
A facility’s inventory functions are usually not coordinated with patient accounting and reporting functions. They are rarely reconciled. A healthcare organization’s inventory system (usually within the finance department) and its patient accounting department may not even be in the same building, city or state.
Why is this type of reconciling important? Consider this example. A CPAP device is used to treat patients with sleep apnea conditions. Typically, your patient accounting system should be able to provide a standard month-end report indicating the total CPAP units billed for that month. If your billing total does not match your inventory report (total units issued), for that same month, you could have either a charge capture issue, where the patients insurance is not being billed, or just as worse inventory shrinkage is occurring within your organization. Inventory shrinkage is another issue and should never be taken lightly, and should be addressed by the appropriate department within your facility.
However, if your inventory can be accounted for, but you are not seeing the charges appear in your billing system or patient account, you need to deal with that charge capture issue. Isolating a potential charge capture issue should enable you to focus on those departments that dispensed the particular item being audited. It is important to review that department’s charge capture practices to determine the need for process improvements.
I bring up this example because an associate and I were at a client site many years ago where the client physically stored their CPAP inventory in a common hallway used by visitors, employees and patients. Each unit was the size of a shoebox - an easy target for pilfering. Unfortunately, that is exactly what was happening. The discovery led to thousands of dollars in missed charges and/or inventory shrinkage. Factor this into a facility with lots of different DME equipment products and the lost revenue dollars add up quickly.
This CPAP example can be applied to all DME inventories, pharmacy charges, ER trays, crutches, optical solutions and lenses, flu shots and more. It is not necessary to count every aspirin dispensed, but it is a good idea to start with larger ticket items. What you learn through discovering of your own process flows, charge capture practices, and reporting systems with one item will allow you to duplicate the experience without too much effort when focusing on the others.
Your time spent on this reconciliation and process review exercise will be well worth your time, and will help your organization claim its rightful revenue.
Paul Fox and Sou Chon Young are Principal Consultants at Hayes Management Consulting, specializing in healthcare revenue cycle management.