June 11, 2012

Checking in on Hospital Performance and Profitability

by Molly Gamble

At the Becker’s Hospital Review Annual Meeting on Friday, May 18, in Chicago, John McDaniel, MHA, president and CEO of Peak Performance Physicians spoke on various ways hospitals can assess their performance and profitability.

“The first thing we look at is coding,” said Mr. McDaniel. “We take coding pretty seriously. The first is to look at how your physicians utilize coding. According to Mr. McDaniel, physicians undercode 80-plus percent of the time. Electronic medical records aren’t foolproof. “Eighty percent might get you through college, but a 20 percent error rate won’t get you through a government audit. We encourage 95-plus percent accuracy rate,” said Mr. McDaniel. If hospitals have less than a 95 percent error rate, Mr. McDaniel said they should improve that rate within six months.

He also clarified a question from the audience that government audits go after the group if there are coding errors, not just specific physicians. When it comes to billing and collections, Mr. McDaniel suggested providers develop claim denial and rejection follow up reporting on a monthly basis. “If 20 percent of your income came from one place, wouldn’t you pay attention to it? That’s why it’s imperative we focus on getting those over-the-counter collections,” he said.

For accounts receivable management, providers should increase surveillance as to the charge/collection and adjustment ratios by payor, according to Mr. McDaniel. Also, if outsourcing to a third party, they should quarterly monitor the collection agency’s performance. Providers should also compare the cost of employees to what they bring into the organization. “I should be able to quantify every person in the practice. they should be returning more than one-times their salary. If they’re not, then we don’t need them,” said Mr. McDaniel.

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