This article will address how to reduce hospital and healthcare operating costs by working with your physicians.
Physicians were traditionally relegated to clinical settings to care for patients and management to oversee and manage operations. This ‘separation’ has been a disservice to both. The reason is simple: not everything that makes ‘clinical sense’ makes ‘operational sense’ and not everything that makes ‘operational sense’ makes ‘clinical sense.’
A classic example is documentation of the patient’s condition through the history/physical, progress notes, and discharge summary. This makes ‘clinical sense’ as it is the physician who has the primary responsibility to care for patients; but does it make ‘operational sense?’
Many argue that the physician is required under federal and state law to perform these functions and this is not true. The relevant Centers for Medicare and Medicaid Services Condition of Participation (CoP) states that:
§482.22(c)(5) — The medical history and physical examination must be completed and documented by a physician, an oro-maxillofacial surgeon, or other qualified licensed individual in accordance with State law and hospital policy.
Thus, an advanced practice nurse (APN), a physician assistant (PA), or others may perform this function consistent with state law and hospital policy.
Many argue that it makes operational and financial sense for the physician to perform these functions and this usually isn’t true for the following reasons:
• The opportunity cost of a physician spending up to 50% of her time performing documentation functions usually exceeds the potential net operating revenue that can be generated by the additional volume. Most physicians generate an average of $1.7 M annually in operating revenue and this comes out to approximately $6,500/hour. Thus, it may cost up to $3,250/hour in opportunity costs for a physician to perform documentation functions.
• There is an additional opportunity cost of having clinicians perform documentation procedures who do not understand (or care to understand) the ICD9-CM codes. There are currently approximately 16,500 inpatient codes with over 500 clinical modifiers (making up approximately 20% of total reimbursement) in each clinical specialty. The introduction of ICD10-CM in October, 2015 will add an additional 132,000 new codes. How many physicians are able to document a case so that they and the organization receive optimal reimbursement? It is conservatively estimated that physicians may leave approximately 15%-25% of the potential reimbursement ‘on the table’ due to a lack of interest in learning or mastering these codes.
• There are a small number of physicians who resist completing documentation in a reasonable or timely way and this places the organization at risk financially through undermined revenue cycle performance and legally through the increase use of recovery auditor contractor (RAC) audits under the false claims act (FCA).
• Most physicians have neither the patience nor temperament to create a documentation record that optimally communicates all of the necessary clinical information to other care givers to permit optimal hand offs and this may potential undermine optimal quality, safety, or service outcomes.
Thus, the traditional approach may not only be inefficient, costly, and place the organization at risk for corporate compliance issues but may not be the best clinical or operational approach from a purely business perspective.
Many organizations benefit from an interdisciplinary collaborative approach that enables physicians to work with management to devise creative solutions that enable patients to receive better care and generate a better margin. An excellent clinical documentation improvement (CDI) example is the University of Pittsburgh, Hamot in Erie, Pennsylvania that worked with a vendor (BCE) to provide 24/7 documentation support for inpatients with professional certified coder scribes and software support to optimize clinical documentation. The case mix index went from 1.4 to 2.2 and netted the organization an additional million dollars in incremental net revenue per quarter while creating an enormous physician satisfier as they were freed to perform more clinical and fewer documentation functions.
Organizations can find significant opportunities for physicians and management to work together and reduce operating costs through innovative operating solutions that make both ‘clinical’ and ‘operating’ sense. These cost saving initiatives energize both physicians and management and create a deeper understanding of the interdependent nature of the work they do while driving improved clinical and operating performance throughout.