Michael Taylor is vice president of revenue cycle management at Cincinnati Children’s Hospital Medical Center. The not-for-profit pediatric academic medical center has 523 registered inpatient beds, and had total operating revenues of $1,487,857 last year. Editor Richard Pizzi spoke recently with Taylor about the organization of revenue cycle operations at Cincinnati Children’s, including some steps his team has taken to boost efficient operations.
I’ve heard that all of Cincinnati Children’s physicians are employees of the hospital. How does that impact billing procedures?
Yes, that’s true, we bill for 600 physicians as well as for the hospital itself. We have 14 satellite locations, we have a comprehensive home healthcare business and we have our pharmacy business, both inpatient and outpatient. We billed over $2.2 billion in our last fiscal year. What we term the “revenue cycle” touches families from the time they call to make an appointment through the moment we close the account. All those facets of the patient encounter, including scheduling and registration, preauthorization and prior approvals, charge capture, the creation of a bill, and collections fall under our responsibility. We have about 250 employees that work in revenue cycle.
Is “revenue cycle” a relatively new concept for hospitals?
Yes, I think so. We formally called ourselves “revenue cycle” in 2007. Within the last 3-5 years you’ve seen a more integrated approach to managing hospital revenue cycle. It’s really accelerated in the last 2-3 years, as hospitals look to organize their business office operations in a more strategic way.
Who is your biggest payer?
In aggregate, Medicaid is the largest payer. For a hospital like ours, Medicaid is about 43 percent of our payer volume. That includes the state of Ohio’s Medicaid program, as well as Medicaid patients who come from Kentucky and Indiana, which are right on our state’s borders. Commercial payers account for about 45 to 50 percent of our payer mix. The remainder is a small amount of self-pay and specialty programs, which tend to be primarily international business that comes to high-end children’s hospitals. Our self-pay is only about 1.6 percent of our total volume, and that’s because programs like SCHIP [State Children’s Health Insurance Program] have been very successful at covering most children in the United States.
Are there any particular challenges to revenue cycle at a children’s hospital that would distinguish you from your colleagues at other facilities?
We have basically the same challenges. The one wrinkle we have is our employed physicians. For that reason, we are more heavily engaged in professional billing. But you still have the same mix of payer issues. One challenge that a children’s hospital has sometimes is to justify some of the things that are done clinically. There are more experimental treatments here (that payers question), although that has a lot to do with being an academic medical center as well. Because of that, medical necessity denials may be a little bit more of our volume than at an adult-oriented facility.
You recently switched to an information system that’s integrated both clinically and financially. I assume that has been a challenging process for the billing office.
Yes, in the spring of 2007 we began implementing the Epic system hospital-wide, and we’re still in the process of putting that in place. One of the areas where we began was in revenue cycle, specifically the billing and collections modules, mainly because the systems we had here were over 20 years old. Like a lot of medical centers, our billing and collections systems didn’t integrate well with our clinical systems. I knew it was going to be impractical for us to transfer all the existing legacy account data we had in our old system to the new system. You have to sunset that old system but also maintain access to information that’s usable. We had help from MediQuant [a Richfield, Ohio-based technology firm] in that. We used their relational database, called DataArk, as a repository for our old information, migrating everything over, but keeping access to historical data as well as current information in our Epic system.
But once you had this in place, you were able to completely retire the legacy billing system?
Yes. A small core of our staff focused on the old legacy A/R, while most of our team migrated over to the new Epic system. The smaller staff worked down those old accounts, about $180 million, which we transferred into DataArk.
How would you describe the impact of the recession on revenue cycle operations?
There was definitely a slowdown in payment. Publicly traded commercial health plans delayed their payment processes. Government payers, especially state Medicaid programs, had problems with state budgets, and as a result they reduced rates to providers because they simply didn’t have money in their state treasuries to pay their bills. You also saw more people switching from private coverage to self-pay status or to the Medicaid programs. We saw a fairly dramatic shift in our Medicaid mix. In June 2008, Medicaid was about 35 percent of our volume, and it jumped up to as high as 45 percent in the spring of last year.
Is there any particular aspect of revenue cycle that is most critical for maintaining a healthy bottom line?
The critical aspect that we find is touching the family early in the process and getting as much financial information as possible. This way you know who the payer is, you can verify coverage and get any necessary approvals in place. The sooner you do it, the better.
How is the IT staff integrated into revenue cycle?
We don’t, and that’s been a switch. In the “old world,” we ran our own system. we had our own IT staff. Because the new system is integrated across the medical center, the IS department has a revenue cycle team that works with our department managers. We meet as a group twice a month to discuss any issues we’re having.