15 April 2010
Calendar Hospital Collections Hit By Recession
Facilities Now Turn To Real-Time Adjudication of Bills
April 26-27 A new report by credit reporting giant the first quarter of 2009 and 2010,
TransUnion concluded that hospitals according to TransUnion, which
'(</)4<!N(9)<&!B(4(5)C)4<!N&+<)C+@! around the country are not only being hit handles nearly 70% of all such
T4/.)*+/<&!-9!N-1<3)*4!8(2/9-*4/(!U/<)*%/! hard by the recession, but California’s transactions statewide. Such
N;3--2!-9!V45/4))*/45@!IR##WIJ##@ facilities may be faring worse than others. transactions are sometimes a precursor
As a result, TransUnion officials say at to hospital admissions.
least two hospital
3<<>LGGC(>>@1+;@)01G chains in the state •The overall credit
>*-9)++/-4(2>*-5*(C+GN3-*<8-1*+)+G have turned to California U.S. worthiness of
'NBN@3<C presenting bills to Californians –
patients before they which was
leave the hospital to significantly better
May 4 enhance their chances 140 than the national
of receiving payment. average at the start
According to 130 of the recession –
N)*./;)+GM-+>/<(2!:++-;/(</-4!-9!N-1<3)*4! Chicago-based is now worse than
8(2/9-*4/(@!D/+(+<)*!B(4(5)C)4<!O*(/4/45@! TransUnion’s survey, the national
E(4;3-!7-+!:C/5-+!P(</-4(2!E)3(%/2/<(</-4! 96% of hospitals have average. According
8)4<)*6!D-F4)&@!IQR@ been hit by having to to TransUnion,
treat uninsured and 110 Californians were
underinsured patients. 2% less
3<<>LGGFFF@3(+;@-*5G).)4<+@;9CS But some factors in 100 creditworthy than
California may be 2007 2008 2009 the rest of the
exacerbating the nation at the end
phenomenon for of 2009. That
Credit Risk Index, 4Q 2007 to 4Q2009 (Lower
hospitals. They compares to being
Number Equals Better Risk).
May 13-16 include:
• The number of payments by private the national average at the end of
8(2/9-*4/(!:++-;/(</-4!-9!'3&+/;/(4!=*-1>+6! payers –health plans and patients – to 2007.
:441(2!8-49)*)4;)6!?@A@!B(**/-<<6!'(2C! independent practice associations
D)+)*<@!E)4-F4!(1<3-*G+1*5)-4!:<12! declined about 6% in California between
=(F(40)6!B@D@6!/+!<3)!H)&4-<)!+>)(H)*@! Continued on Next Page
THE EMERGENCE OF MEDICAL HOMES
A PAYERS & PROVIDERS Exclusive White Paper
the details of your event, or call
(877) 248-2360, ext. 3. It will be
published in the Calendar section,
space permitting. Call (877) 248-2360, ext. 2 to order (all major credit cards
Payers & Providers NEWS Page 2
Payers (Continued from Page One)
five or six years ago. “(Virtually all) of the
• A strong regulatory environment. cases are resolved when we suggest the
Advertise With the passage of AB 774 in 2006, patients apply for charity care,” Forbes
(877) 248-2360, ext. 2 California has some of the strictest said.
regulations regarding how hospitals With fewer paying patients and
proceed with collecting on patient bills. narrowed alternatives for collections, that
puts California’s hospitals in the position of
In Brief “This all goes hand in hand with
hospitals having difficulty with patient
finding new ways to collect revenue
without violating AB 774. Bohnsack noted
revenue,” said Jim Bohnsack, that some facilities are turning to real-time
TransUnion’s vice president of product adjudication, using an on-site point-of-sale
Healthcare M&A development for its healthcare division. system to produce a bill for the patient
Activity Waned In First “California is more heavily regulated than before they leave the facility. TransUnion
other states, and it makes it more difficult offers such a product to its healthcare
Quarter or them to collect.” clients.
Hospital officials concur with the “If a hospital tries and collects before
Healthcare-related merger and TransUnion survey. “It’s a balancing act. If the patient leaves, 90% of them will get
acquisition activity dropped 21% in we go after patients too aggressively, we something,” Bohnsack said. “If they leave
the rst quarter of 2010 compared to get criticized by advocates,” said Jan without a bill, the payment rate goes down
the fourth quarter of 2009, according Emerson, vice president of external to about 10%.”
to a new report by Irving Levin According to TransUnion officials, San
relations for the California Hospital
The Norwalk, CT-based Levin said Association. Francisco-based hospital chain Catholic
only 211 deals were consummated K.B. Forbes, executive director of the Healthcare West and Burbank-based
during the rst quarter, compared to Consejo de Latinos Unidos, a Los Angeles- Providence Health & Services have
268 in 2009. based advocacy group that pushed installed such systems or are in the process
“The decrease in deal and dollar
volume from previous quarters may be hospitals throughout the state earlier in of doing so at several of their hospitals.
attributed in large part to the attention the decade to modify their collection The official in charge of the CHW
focused on national politics leading up practices, said that AB 774 has initiative did not return a phone call
to the passage of health care reform in dramatically cut down on patient seeking comment. Providence officials
early March. Deal makers appeared
complaints his organization has received. were not able to immediately provide
reluctant to announce new
transactions until the outcome of this He estimated that Consejo has received comment.
erce debate became clear,” the about 50 cases so far in California this
company said. year – compared to 300 to 400 a month
Hospital m&a activity accounted for
just 9% of all activity during the rst
CDPH: Surgical Mishaps Still On Rise
quarter of this year. Most of the activity
focused on pharmaceuticals and
medical technology rms.
Linked to Greater Transparency; Southwest Fights
Los Angeles DME
Business Owner Pleads After levying six administrative penalties for said CDPH spokesman Ralph Montano. He
In Medicare Fraud surgery-related mishaps against hospitals this pointed to SB 1301, a law enacted in 2006 that
Case week, the California Department of Public required hospitals to report any event that
Health acknowledged that there has been a leaves patients in immediate jeopardy within
signicant rise in such violations. But agency ve days of its occurrence. “At some point, we
The owner of a Los Angeles-based
durable medical equipment firm ofcials say it has more to do with an expect to see these adverse events plateau, and
pleaded guilty this week to increase in hospital transparency than an begin to decrease as we see hospitals increase
submitting nearly $500,000 in false actual elevation of risk at facilities statewide. their vigilance,” he added.
claims to the Centers for Medicare Payers & Providers rst reported a Montano noted that medication mishaps
and Medicaid Services.
Sylvester Ijewere, 49, submitted dramatic rise in surgical-related penalties last were still the leading cause of the 146
the guilty plea to one count of year. In September 2009, the CDPH levied penalties levied to date, with 42 such
healthcare fraud on Monday in the 12 administrative penalties against hospitals violations. Retained surgical objects is the
Central District Court in Los whose surgical staffs had left objects in second-leading violation, with 28 levied to
Angeles. He faces up to 10 years in
patients. Prior to that, only nine such date.
violations had been levied since early 2007.
“At this point, it is largely because Continued on Next Page
Continued on Page 3 hospitals are getting better at self-reporting,”
Payers & Providers NEWS Page 3
Longer ALOS!* Penalties (Continued from Page Two)
Advertise This week’s penalties, which were levied after an instrument ash sterilized during the
against seven hospitals for 10 separate procedure was not allowed to cool properly
(877) 248-2360, ext. 2 incidents, have elicited diametrically before being redeployed. The patient later
opposite reactions from some of its required skin grafts. Its second penalty, for
*For our ads, not your hospital recipients. $50,000, was for leaving a sponge in a patient
Southwest Healthcare System in in early 2009 during a cesarean section. The
Murrieta issued a strong statement that it sponge was subsequently removed.
In Brief would appeal the three penalties totaling
$225,000 it received this week. It was twice
Special bags are now used to collect
surgical sponges, which are used to reconcile
penalized for failing to follow procedures for sponge counts, according to Kaiser.
treating newborns with high concentrations Instruments that are ash sterilized are now
prison and a $250,000 fine when of bilirubin in their bloodstream – a treated with sterilized cool water before being
he’s sentenced on Aug. 16. condition that can lead to brain damage or redeployed.
Ijewere owned a firm called death. It was also penalized for failing to Other recipients of administrative
Maydads Medical Supply. Between
maintain proper humidity levels in an area penalties included St. Bernadine Medical
June 2007 and October 2009, he
procured false medical documents where cesarean sections were being Center in San Bernardino; Sutter Davis
and prescriptions in order to performed, creating a re hazard. Hospital; Scripps Mercy Medical Center in
submit bogus claims for high-end “Southwest does not agree that any of San Diego; California Pacic Medical Center's
medical equipment. the current nes assessed against Southwest Pacic Campus Hospital in San Francisco; and
Investigators were suspicious
when more than half of the claims met the criteria for ‘immediate jeopardy’ St. Joseph Medical Center in Orange.
were submitted on behalf of because they neither caused, nor were likely St. Bernardine was ned $50,000 for a
Medicare beneficiaries who lived to cause, serious injury or death to any 2009 incident where the tip of a laryngoscope
more than 100 miles from Ijewere’s patient,” the statement read in part. was left in a patient’s throat. The patient later
Southwest has received six coughed up the tip and brought it back to the
CMS officials have made it a
priority to crack down on medical administrative penalties, making it the most hospital. The hospital agreed to partially revise
equipment fraud in Southern penalized hospital in California. All the its procedures for intubations.
California after a 2006 survey penalties are being contested by the hospital, Sutter Davis was ned $25,000 for
revealed score of such businesses which is owned by Pennsylvania-based for- administering contrast dye to a patient
that had submitted claims did not
physically exist. prot operator Universal Health Services, undergoing a CT scan who had an allergy to
Inc. iodine. The patient later died.
Montano conrmed that Southwest Scripps Medical Center was ned $25,000
City of Hope Officially underwent a multi-day, “full-validation” for a 2007 incident where a sponge was left in
Launches $1B inspection in mid-January by both the CDPH a cancer patient undergoing a hysterectomy.
Campaign and the Centers for Medicare and Medicaid The sponge was not discovered until early
Services. Such inspections often lead to the 2009. It required two procedures to remove.
withdrawal of a hospital’s Medicare and California Pacic Medical Center was
City of Hope in Duarte has
announced a fundraising campaign Medicaid funding should they fail. A CMS ned $25,000 for a 2008 incident where an
it expects will raise $1 billion. spokesman said the report has not yet been orthopedic surgeon performed a knee
The campaign, known as “The released. arthroscopy on the wrong knee. The surgeon
Power of Hope,” was given a soft By contrast, Kaiser Permanente’s realized the mistake during mid-procedure,
launch in 2005 and has raised
Southern California Region issued a and peformed a second arthroscopy on the
some $500 million to date.
However, officials with the 217- statement of regret after its hospitals in correct knee.
bed hospital want to make a final Fontana received two penalties for surgical St. Joseph was ned $50,000 for a 2009
push over the next three years to mishaps. It was ned $25,000 for inicting incident where staff failed to monitor the
reach its goal. third-degree burns on a patient in late 2008 oxygen provided to a patient who later died.
Of the money raised, $750
million will be used for cancer,
diabetes, stem cell and hematology
research, and advancing cancer
treatments. The remaining $250
million will be used to improve
existing structures or build new
ones. Expert Healthcare Communications
“We are seeing tremendous
promise and opportunities in
research,” said Michael A. !White Papers !Media Campaigns !Newsletters
Friedman, M.D., City of Hope’s
chief executive officer.
The end of the campaign in (818) 848-8510 www.rfsconsult.com
2013 will mark the hospital’s 100th
Payers & Providers OPINION Page 4
9-21:)!"6!;++1)!$< Clearing Healthcare Delivery’s Clutter
Using Techniques From Manufacturing Can Cut Costs
'(&)*+!,!'*-./0)*+!'1%2/+3/456! Have you ever seen a CAT scan technician We start out by examining the overall
778?!@4!(441(2!/40/./01(2! reading a novel when the waiting room is flow. What happens to the patients as they
+1%+A*/=B/-4!/+!CDD!(!&)(*! full of patients? I’ve seen it many times. move through the system, whether for a
EC$FD!/4!%12GH?!;B!/+!0)2/.)*)0! It’s usually the result of a patient simple radiology procedure or for a complex
%&!)I:(/2!(+!(!'JK! bottleneck rather than staff laziness. surgery? Often drawing a diagram is very
(BB(A3:)4B6!-*!(+!(4!)2)AB*-4/A! Receptionists often fail to realize, or helpful in gaining a necessary level of
4)L+2)BB)*? forget, that the last patient has left and the understanding, as are discussions with the
scan room is now open. It is seemingly hospital staff. Next, like engineers always do,
@22!(0.)*B/+/456!+1%+A*/%)*!(40! mundane – but critical issues – such as we try to measure what is going on and to
)0/B-*/(2!/4M1/*/)+N these that the new healthcare reform law quantify things. How long is the patient
will likely never address. However, waiting time? How often are resources
EOPPH!"FOI"QR# providers must confront utilized, and how often do
/4S-T=(&)*+(40=*-./0)*+2?A-: them immediately. they sit idle? What is the
Good patient flow is hospital’s real capacity?
represented by short waits at We also look at the data
O$O!V?!W-22&L--0!X(&6!Y1/B)!Z registration, examination, available from computer
Z1*%(4G6!8@!D$<#< diagnostic testing, surgery, systems. We generally find
placement in beds, and tremendously detailed
X)%+/B) discharge. Poor patient flow clinical data on patient
LLL?=(&)*+(40=*-./0)*+?A-: is a symptom of a poor conditions, but shockingly
K(A)%--G staffing plan, inability to use little information on how the
LLL?S(A)%--G?A-:[=(&)*+=*-./0)*+ critical resources at system is working or where
>L/BB)* maximum capacity, and a bottlenecks occur.
LLL?BL/BB)*?A-:[=(&)*+=*-./0)*+ lack of synchronization. We also look for
Hospitals are largely opportunities to make an
managed by physicians and impact, such as by
\0/B-*/(2!Z-(*0 nurses who have never eliminating delays, changing
contemplated the design of their By the work schedule for underutilized
>3)!8(:0)4!]*-1= workplaces, nor compelled to look for David staff, or changing the physical layout to
cost-cutting efficiencies. Because over Belson, eliminate unnecessary steps.
^-++!]-20%)*56!83(/*:(4!-S!B3)! 50% of funding for healthcare comes Hospitals must move toward the
Z-(*06!7-+!^-%2)+!W-+=/B(2!,! from the government and most of the Ph.D. ‘pull’ method of work flow rather than
U)0/A(2!8)4B)* remainder from insurance companies, the ‘push.’ Implementing this
health providers have found that the more innovation, first introduced as part of the
_/:!7-BB6!\`)A1B/.)!9/A)!'*)+/0)4B6! they bill, the more they are paid. Lean Method in manufacturing, encourages
W-+=/B(2!@++-A/(B/-4!-S!Y-1B3)*4! This lack of incentive to cut costs has the technician, and other hospital personnel,
8(2/S-*4/( lead to the remarkable statistic that the to ‘pull’ the patient from the waiting room
U.S. spends 2.5 times as much on rather than waiting for the front office to
U)0/A(2!aSS/A)*6!7?@?!8(*)!W)(2B3! healthcare per capita as any other ‘push’ the patient inside. It can result in a 30
'2(4! country, despite the fact that we lag way to 50% improvement in patient flow
behind all Western nations when it comes efficiency. I will discuss this in greater detail
b)/B3!^/A3:(46!U?J?6!\`)A1B/.)! to positive patient outcomes. next week.
9/A)!'*)+/0)4B6!7(G)+/0)! Simple steps can produce vast savings.
8-::14/B&!W)(2B3A(*) Working with over 20 major California David Belson is an industrial engineering
hospitals, my team of students and faculty professor at the University of Southern
W)4*&!7-1%)B6!83/)S!YB*(B)5&! from the USC Industrial Engineering
aSS/A)*6!b))4(4!,!@++-A/(B)+ California and a healthcare management
Department has found an ample supply of consultant.
low-hanging fruit when it comes to cutting
'1%2/+3)*[\0/B-*I/4I83/)S costs. Because healthcare is a service
^-4!Y3/4G:(4 industry, the first variable we generally Op-ed submissions of up to 600 words are
)0/B-*T=(&)*+(40=*-./0)*+?A-: examine is the time it takes for medical welcomed. Please e-mail proposals to
professionals in any particular hospital email@example.com, or call
department to do their jobs. (877) 248-2360, ext. 3.
Payers & Providers MARKETPLACE/EMPLOYMENT Page 5
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