Giving Financial First Aid to an Ailing Health Care Company
In this podcast, Steven Bisciello, Senior Manager in EisnerAmper’s Health Care Services Group, talks about the many challenges a health care organization faces that could adversely impact its bottom line. Steven gives a real-life example of how using the proper accounting and financial triage can nurse a health care organization back to fiscal health.
Dave Plaskow: Hello and welcome to EisnerAmper’s podcast series where we try to dig a little deeper on accounting and finance issues facing business professionals and their clients. Today’s topic is giving financial first aid to an ailing health care company. I’m your host Dave Plaskow. With us today is Steven Bisciello, Senior Manager in EisnerAmper’s Health Care Services Group. Steven, welcome, and thanks for being here.
Steven Bisciello: Great to be here. Thank you.
DP: First off Steven, tell us what you do.
SB: I’m the operations specialist in the group. A lot of my work includes performing revenue cycle and operational assessments. From these assessments we typically uncover opportunities for improvement throughout the revenue cycle, and then we’ll work directly with the client to implement those changes to what we want to get to achieve “best practices.” These opportunities and subsequent implementations are there to optimize the revenue cycle, optimize the client’s operations and overall improve collections and increase cash flow.
DP:What types of health care organizations do you work with?
SB: We work with many kinds – hospitals of all sizes, physician groups both large and small, home health care providers, ambulatory surgery centers, as well as others.
DP: Steven, what do you find are the major challenges that these health care organizations are facing today?
SB: It can vary, depending upon each one’s situation, but we’re definitely seeing some common denominators. Some examples include industry consolidation, government regulation, and as well as managing the technology learning curve, just to name a few.
DP:Steven, when it comes to the health care marketplace, how significant is industry consolidation and government regulation?
SB: This is impacting the health care marketplace, period. So not only home health care agencies but as well as the hospitals, physician groups. I think the best way to look at it is home health care agencies are the latest group that now have to comply and actually bill and collect as if they were a physician group or a hospital billing department. So they’re following the same revenue cycle processes as well as pitfalls.
DP:What are some of the challenges that these companies have in dealing with insurance companies? Is it getting harder as we go forward because of rules and regulations or is technology making the process easier? You know, give us a little bit of insight on that.
SB: They do because as the streamlining continues it’s still – while some might think it’s still archaic – it’s still a very common and in some cases the better practice to get on the phone and speak to the representatives and their supervisors if needed. However, what makes it difficult is a bunch of things – you experience long wait times, certain insurance companies will only allow you to go over three to five accounts while you’re on the phone. So, a lot of this goes in what I was saying before in being proactive and making sure you’re setting up the correct operational and process flows and throughputs for your staff to be as productive as possible, having them multitask where available, being able to do online follow up as well as interpersonal via the phone. So a lot of these things you can build as you either increase your accounts receivable department or add to, to avoid falling into any pitfalls.
DP:How important is it to have strong staffing in these areas?
SB: I think it’s very strong. One of the things we always like to tell our clients is that the accounts receivable department – amongst other positions – but the accounts receivable department are revenue driving employees. So, a good accounts receivable rep can easily pay for themselves, you know, within the first one to two quarters during the fiscal year. So, similar to how doctors and/or providers are generating income, these accounts receivable staff are doing the same thing – they’re following up and making sure you’re being compensated for the services you provided and you’re being compensated both correctly and timely.
DP:Steven, tell us a little bit about the decision that a health care company might make regarding outsourcing. You know, when would they pull the trigger on something like that? Would it be as they grow in the number of staff they have, revenue size, you know, when do they start to think about that, or when should they start to think about that?
SB: Sure. Depending on the size of the company we’ve seen everywhere from they outsource their revenue cycle management completely via medical billing companies, and also too, again, depending on the size, we’ve noticed that a lot of our larger clients like to keep everything in house and keep total control of it. So, you know, we see positive and negatives in both areas.
DP: What are some of the compliance challenges health care companies are facing with today and what do you see maybe down the road in the next five to ten years?
SB: Yes, I think one of the big things that’s been out there and it’s becoming more prevalent is these high deductible health plans. So a lot of the balance, so to speak, is being pushed upon the patient. So your typical follow up with the insurance companies, a lot of that focus now has to go towards the self-pay side – the patient side. So the respective health care organization has to be prepared for that, have quality policies and procedures in place in order to both collect from now and not only the insurance side but put a greater effect outside on the patient and self-pay buckets.
DP:Can you walk us through a real life client case study – of course without mentioning any names – of a health care group in financial distress and how you were able to help?
SB: Sure. A recent example would be a large home health care agency. This specific agency was located in the Northeast and was experiencing an increase in unpaid accounts receivable, as well as a subsequent reduction in collections. There was also inordinate employee turnover in the accounts receivable department. Basically their fear was that their AR would continue to swell and collections dipped even further during the training and on-boarding of these new representatives. So what we did, our health care consulting group first performed an accounts receivable assessment, as well as a tutorial for the new employees. We reprioritized their receivables, we implemented the department productivity threshold and dissected the greater than 120-day accounts receivable bucket. We then identified high level contacts at each insurance company and worked with them to review and expedite account reconciliation. We also assigned each new hire a senior account receivables rep as a mentor, and held weekly meetings with the new hires to review their productivity as well as offer further assistance. Overall, the result was a more than a $500,000 reduction in outstanding accounts receivable, we saw an increase in collections and the implementation of streamlined process for both new hires, as well as existing accounts receivable personnel.
DP:So Steven, these practices where you had saved them a considerable amount of money, what were some of the things that you, based on your expertise and your training, that you saw on the horizon, that you were able to take a, you know, a fifty thousand foot view of in order to help them, you know, remedy their situation?
SB: Sure, I think in this case the firm was… kind of got hit with the perfect storm of a big change in how home health care was billing and collecting, with specifically Medicaid and Medicaid commercial plans. So my advice here would be obviously to be proactive versus reactive, keeping a tight eye, noticing tracks and trends, and trying to develop and implement internal workflows, productivity thresholds, as well as I would definitely recommend trying to establish, if possible, some tight relationships with your payer contacts – your high level contacts – at the insurance companies that you contract with.
DP:And why did they use EisnerAmper and not some other firm?
SB: Well, our healthcare group has over fifty years combined experience in the industry. What sets us apart is that all of our group members have worked and come directly from the industry prior to becoming consultants. We have sat in the chairs and performed the functions of our clients, and can easily relate to their needs and goals. Also, another reason is that through the assessments that we just discussed, we typically uncover annual, uncollected cash flow that is three to five times the professional fees we charge.
DP: Steven, thanks for your expertise and great insight. And thank you for listening to the EisnerAmper podcast series. Visit EisnerAmper.com for more information on this and a host of other topics. And join us for our next EisnerAmper podcast when we get down to business.