DeKaye Consulting, Inc. Volume II Number 2

July 1996

The Newsletter of

DEKAYE Consulting, Inc.

231 Oakview Avenue
Oceanside, New York 11572
Phone / Fax: (516) 678-2754

On Target

Hazy Days of Summer

Vital Signs

Goal: Lower Your Days to Collect !

In our last issue, we studied the need to lower the days to bill. Now with bills being issued on a more timely basis, we can look at the "targets of opportunity" we can take advantage of in the area of reducing collection time frames.

It's not been uncommon for Accounts Receivable Managers to discuss the automatic dunning and follow-up efforts that leads to the ultimate resolution of an open account at the 90 day level with a pre-collection write-off process. Ninety days is too late to begin contemplating write-off actions. If we agree that the best collection occurs at the time service is rendered, then most will agree that the thirty day period immediately following discharge (for inpatient or outpatient services) is critical. If we are to be attaining the national average of days in the 60's, or to better that by achieving the 50's or less, then we need to consider the following more aggressive steps.

Target Trial Balances - should be requested and examined that look at open accounts by payor that meet these exception criteria:
Inpatients: >$5,000 and >30 days from discharge
Outpatients: >$700 and >30 days from discharge

Any accounts that are in these categories should be addressed. Where possible "page break" and sub-total the report by payor and list in declining balance order with the aging prominently displayed. Each of these payor reports can be used to trigger direct follow-up by either a senior collector or assistant department director/manager.

Establish High Level Payor Contact - There are many collection managers and staff that have developed good contacts at the various major payors that an institution does business with. However, based on the value of the open accounts identified in the above referenced "target trial balance" reports, you may need to escalate the level of your payor contact as well as involve more senior financial managers. Pay Particular attention to:

Managed Care Contractual terms that may not be adhered to (e.g., payments for "clean claims" in thirty (30) days.)
Payment lags exceeding the mandated Medicare and, in some states, Medicaid time frames.
Delays associated with "third party plan administrators" especially if they are acting on behalf of a major employer in your area; chances are there may be senior executives of both the healthcare facility and the employer who may be more than acquaintances, and oftentimes board members.

Assigning Workload and Measuring Productivity - Take a closer look at the number of accounts and the dollar value. There will of course be a disparity between inpatient and outpatient amounts. Here's where it will be necessary to determine where you will put your resources to gain optimum, if not maximum effective productivity. Instinctively, and by the numbers, most if not all staff might be assigned to the higher valued inpatient accounts. But there is a threshold for both inpatient and outpatient accounts where it becomes cost-prohibitive to work accounts. In these instances, it may be necessary to consider outsourcing (see companion article in this issue on this topic).

You should also consider having an active pre-discharge collection function, if one doesn't already exist. With effective pre-admission screening (Express Admission), a patient's insurance is verified and any out-of-pocket payments are paid at or before the time service is rendered. Some hospitals are able to effect this by performing bedside financial counseling, especially when patients are admitted through the E.R., or if family and friends might be able to assist an inpatient satisfy their financial liability. By instituting a Financially Cleared Discharged program requirement, all patients must present to the cashier to satisfy any unpaid balance or make satisfactory arrangements. Those who can satisfy this requirement at admission, are granted a Courtesy Discharge and need not stop at the cashier.

Many of these same analytic techniques can also be applied to self pay balances. In addition to the automated dunning letter sequences, which need to be shortened, automated telephone dialing systems that work in conjunction with your A/R system, can be used to improve productivity and performance.

is the Way to GO!

There has been much discussion and debate about whether outsourcing is the right decision. With continued pressure on healthcare facilities to further reduce administrative costs, the likely target areas continue to be hospital access, patient financial services and health information management departments. With the continued advances in technology, these areas, considered the core of healthcare's cash flow cycle, now face a further transformation as senior management weighs the option of turning over the day-to-day controls to those not directly employed by the facility.

Historical Precedents
Housekeeping, Dietary and Transportation. These departments were "outsourced" some 10-15 years ago in many facilities. Then the jargon was "management service agreements." The logic, outsiders hired with incentives could perform better than employed staff and at less cost. The watchword then was savings--pure and simple. These changes have been generally viewed as successful, with the trade-off being the shift to many semi- or unskilled labor positions at pay grades lower than what the facility was paying. While this change was fought more in urban areas where organized labor had stronger constituencies, the trend continued and the results seem to have been satisfactory.

Given these precedents, it is not too hard to find similarities in services (including but not limited to computer/systems expenses and supplies, seminars, etc.) In addition the contractor may also be compensated (or penalized) based on performance. For PGS areas these measures may include cash flow and outstanding days in accounts receivable. Depending whether it is an on- or off-site arrangement, the indirect expenses such as office space, HVAC, electricity, etc., also add to the equation.

Health Information Management
Despite its new moniker, the former medical records departments are also seeing newer technologies to support dictation and abstracting functions. The introduction of the electronic medical record and newer storage and retrieval services also are providing new avenues to re-engineer departments. Medical records coding has become an area that has seen the introduction of outsourcing as a means of lowering salary expense while increasing productivity and revenue optimization.

HIM departments, like PFS, and Transportation, Housekeeping and Dietary before them are finding that for some functions, paying outsiders to do it--even when the assume the role inside a facility is proving attractive. Its a little like "Invasion of the Body Snatchers" meets "Hospital Outsourcing"--you're really not sure to whom the staffer belongs. And if outsourcing is done effectively--the job gets done--and it didn't matter under what aegis the individual operates.

The expansion of managed care, and the increased emphasis on customer relations finds the Access department with more pressures and responsibilities--but somewhat untouched by the outsource phenomenon--at least for now. The importance of this initial contact, the need to act as the control point where physician's office and patient come together. However, as more and more appointment scheduling and systems technology improve and link the physician office to the hospital, there will likely be a move to off-site appointment centers staffed by hospital personnel today--by contract managers tomorrow.

A Management Failure?
If outsiders can do it better and for less, then there is an obvious question that needs to be asked. How come hospital manager's couldn't achieve the same level of improved productivity, performance and cost savings as the outside counterpart? Are policy constraints, internal policies or poor recruitment and retention to blame? Or have we created a new environment that is pressed to improve the bottom line that short term savings will be realized today, but long term damage to infra-structure will result tomorrow.

The corporate downsizing experience that has engulfed the country may also be influencing the factors that are promoting this new leaning to outsource as a next step from re-engineering. Some credited TQM with savings, albeit a long and sometimes drawn-out process. Re-engineering has produced some immediate savings--often leaving a sense of destruction in its wake. Its probable too soon to tell what impact and lasting impression outsourcing will have.

In the same way in which we have seen healthcare reimbursement go from retrospective to prospective, to DRG and now capitated schema, the movement from "Management 101" to TQM/CQI and Re-engineering to Outsourcing may still have another chapter now not written: Reconstruction?


Surfing through the vastness of the Internet for resource information can be a daunting task. The sheer size of it alone can make it an all day affair. Many visitors to our website have asked for our help in locating more information available to them on the Internet in the healthcare area. In upcoming issues of On Target we will attempt to make that job a little easier by providing our readers with Internet links of interest to all of us in the healthcare field. We will attempt to provide Finance, Managed Care, EDI, Physician Practice, Home Care, Medical Records and other interesting links.

In this issue we begin with Internet Mailing List Discussion Groups or List servers. Once subscribed to these List servers, you can access resource material and information through on-going dialogues with other healthcare professionals in your area of mutual interest. This is a great way to stay in touch with healthcare professionals all over the country and the world at large. Here are just a few to get started with:

HIM-L - Discussion group for Health Information Management professionals. Access by: send E-mail to LISTSERV@LISTS.UMSMED.EDU; in the body of your letter, type SUBSCRIBE HIM-L followed by your name.

HEALTHMGMT Discussion on various issues related to healthcare management E-Mail to:; in the body of your letter, type SUBSCRIBE HEALTHMGMT followed by your name.

CHINS Discussion of Community Health Information Networks for health care providers, medical facilities, payors, pharmacies, and other health support companies. E-mail to:; in the body of your letter, type SUBSCRIBE CHINS

FINAN-HC Discussion of Healthcare Financial matters; E-Mail to: LISTSERV@WUVMD.BITNET; in the body of the letter, type SUBSCRIBE FINAN-HC followed by your name.

CODING Coding forum for healthcare professionals; E-Mail to; in the body of your letter, type SUBSCRIBE CODING followed by your name.

HL7 A mailing list for discussion related to operational, technical and business issues using the HL7 interface protocol; Send E-Mail to MAJORDOMO@VIRGINIA.EDU; in the body of your letter, type SUBSCRIBE HL7 followed by your name.

MHCARE-L Discussion group on Managed Care related issues; Send E-Mail to; in the body of your letter, type SUBSCRIBE MHCARE-L followed by your email address.

NRCH Discussion of management, operations and technical issues related to health care information systems professionals. Send E-Mail to LISTSERV@USA.NET; in the body of your letter type SUBSCRIBE NRCH followed by your name.

PARTB-L Discussions for physician practice coders, billing managers, practice administration, and managers, coding and reimbursement consultants. Send E-Mail to LISTSERV@USA.NET; in the body of your letter, type SUBSCRIBE PARTB-L followed by your name.

This should keep your mailbox full for a while. Have fun.

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D E K A Y E Consulting, Inc.
231 Oakview Avenue, Oceanside, NY 11572  Phone: (516) 678-2754   Fax: (516) 825-4458
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