A/R Reducation - Knoxville Hospital & Clinics Case Study
The Case: Knoxville Hospital & Clinics, Knoxville, Iowa
The Challenge
In November 2007, Knoxville Hospital and Clinics’ gross days revenue outstanding (GDRO) was 69.8 days– significantly over the 50.7-days national average. In addition, KHC’s Patient Financial Services department was facing a number of operational issues:
- Charges were not being posted in a timely fashion.
- Charges often listed incorrect dates of service.
- Billed accounts receivable >60 days from discharge was 41 percent.
- Patients were not billed for their out-of-pocket amounts due.
- Recurring accounts were not in balance.
- There was a high registration error rate for the clinics.
- There were no written point-of-service or upfront-collection policies and procedures.
- There was no tracking mechanism for denials.
Q Solutions
A QHR Patient Financial Services Operational Assessment helped Knoxville Hospital and Clinics (KHC) recognize its PFS defi ciencies and inspired the hospital to try to reduce its GDRO by 10 days – or $780,000. QHR guided KHC through the following changes to accomplish this:
- Creation and implementation of various new PFS policies and procedures
- Development of a pre-registration process
- Implementation of admitting quality assurance software
- Creation of “patient friendly” billing process/system
- Focus on collection of clinic co-pays
- Implementation of denial management tracking/reporting process
- Focus on referring overdue accounts to collection agencies in a timely manner
- Implementation of monthly QHR “flash” report to track progress
- Reallocation of staff to focus on AR < 120 days
“We are tremendously pleased with the financial results that we have experienced since implementing the recommendations of QHR’s Patient Financial Services Operational Assessment,” said John Domansky, chief financial officer at Knoxville Hospital and Clinics. “Our QHR consultant did a fantastic job of partnering with our Business Office director and her staff to achieve this significant turnaround.”
The Conclusion
- Between July 2008 and June 2009, KHC’s average GDRO was 51.7 days outstanding – a signifi cant reduction from November 2007. This 18.1 GDRO reduction equates to more than $1.4 million in A/R reduction.
- Between September 2008 and June 2009, the hospital’s net A/R days were consistently below 50 days.
- Between October 2008 and June 2009, KHC’s billed A/R was below the QHR benchmark of 30 percent (compared with 41 percent in November 2007).
- Bad debt expense as a percentage of gross patient revenue dropped from 4.4 percent in FY 2007 to 3.6 percent in FY 2009.
“The assistance QHR provided our Revenue Cycle Management Team has really paid off , as demonstrated by our 39 days in A/R in March 2009. Most importantly, we feel secure that QHR has given us the tools we need to continue the success into the future.”
