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November 27, 2006
Before sending coding operations elsewhere, healthcare organizations must take stock of their situation by asking the tough questions—both of themselves and potential vendors. When faced with the potential to reduce costs and focus efforts on core competencies, healthcare facilities may turn to outsourcing to cure their ills. According to the business information gurus at Dun and Bradstreet, outsourcing has become a $4 trillion per year venture. Many administrators and HIM directors find they can outsource various functions without affecting their core competencies. Coding outsourcing has become commonplace in an environment where outsourcing was originally relegated to non–healthcare-related environs such as housekeeping, dietary, and on-site security. Outsourcing of medical billing or coding is typically done to address a “pain point”— a way to either relieve the burden of backlog from on-site personnel or when qualified personnel cannot be found to fill open positions. Before making a determination about whether to outsource
some or all functions of a particular department, the organization’s
powers-that-be need to perform an assessment to determine which functions
could be outsourced to optimize personnel. A major benefit of outsourcing
can be on the bottom line—the savings realized from reducing in-house,
full-time staff or the costs of training temporary staff. Before making
the leap into outsourcing, the healthcare organization must be assured
that the vendor is providing credentialed, properly trained, knowledgeable
staff. “Will you outsource an entire department? Are you going to send your current coding staff home or keep them on site and augment them with off-site coding staff that could either be employees of the facility or of the vendor?” she asks. HIM directors need to get a handle on what their needs are prior to pursuing outsourcing. Questions to be answered are: • What is the scope of the project you need outsourced? • Is it a short-term event that is causing you to consider outsourcing? • What is your current staffing level? • How stable is your staff? Do you have a lot of turnover or job openings you can’t fill with qualified personnel? “If you have had a job opening that has been sitting open for a year because you can’t find qualified personnel, you might need to find a way to get the task completed remotely,” Stegman says. “If a director is facing difficulties finding a coding manager or if they want to eliminate the oversight involved in the coding department, it could be culled down to one or two on-site personnel and the rest outsourced. The cost savings in that scenario are self-evident.” Bonnie Purdy, RHIA, East region vice president at Precyse Solutions, says, “Our clients typically outsource coding either when they simply cannot recruit the staff they need or they are not experiencing the level of stability they need within the department to keep the discharge not final billed at consistent expected levels. Cash flow is dependent on a consistent, short turnaround time to drop the bills and this requires the coding to be completed timely and accurately. In addition, there needs to be a level of consistency within the coding department staff.” Lack of qualified staff can occur in both rural settings,
where qualified coders could be few and far between, and in settings
where there is a competitive job market and coders have abundant employment. “Ask the vendor if the coders have references, ask to see their resumes, ask what their level of ongoing training is and if any of the coders specialize. I would specify in my contract that under no circumstances do I want anyone doing my coding unless I see his or her resume beforehand,” she stresses, adding that the off-site coders could indeed be credentialed but they may not be “as credentialed” as you may like. Tarrant Moses, Western region account executive at Maxim Health Information Services, says, “You need to look at the type of quality assurance plan the vendor has in place—How do they measure production and guarantee accuracy? Is there a dedicated management team available 24/7?” Moses also says that at Maxim, they only bring coders on board that have three or more years of experience and are graduates of nationally recognized credentialing programs. Mona Calhoun, MS, RHIA, lead outsource director with Precyse Solutions, says from an HIM director standpoint, he or she needs to determine exactly what would be expected from a change to outsourcing. “What are your expectations and which vendor can help you meet those needs?” Calhoun asks. “Once the needs of the department are determined, the process of going out to solicit vendors can be undertaken.” Purdy says a vendor should likely come equipped with its own assessment tool to help a facility pinpoint which parts or whether the whole department should be outsourced. “Outsourcing is a catch-all term that could encompass anything from one person to a whole department or somewhere in between. Outsourcing doesn’t necessarily mean the removal of ones’ colleagues, depending on the situation,” she says. “When investigating a vendor, make certain they have coders on staff that not only are qualified and experienced but that are well-versed in the areas of expertise your department needs.” Stegman recommends on-site vendor visits and suggests that references from the vendors’ other clients should also be part of the investigation process. When visiting with other organizations that use the vendors’ services, ask what issues came up during the transition. “It’s always nice to learn from other’s mistakes, particularly when they could be expensive,” Stegman says. How do you know whether the transition was successful? Stegman says to ask for benchmarks to gauge success prior to making a switch. “I’d ask how they know their customers are satisfied; what are the benchmarks for success; what are some examples of glitches that have occurred in the past, and how were they resolved,” Stegman says. “You also need to know who is going to do the scanning. Some systems are set up so that different sections in a record are cleanly delineated and those records give the coder the ability to quickly and efficiently move between different pieces of documentation.” Purdy and Calhoun agree a vendor should supply a facility with service level agreements. “One of the benefits of outsourcing is the facility will know from a week-to-week or month-to-month basis what their rate will be and they will know what levels of service to expect,” Purdy explains. The fee is typically a fixed rate with the coder productivity and hours expected for the specified annual volumes at the facility. “With a vendor, the client automatically has access to the vendor’s coder resource base and the vendor can allocate coders as needed to maintain the level of service the client expects,” Calhoun says. The facility needs to know there is enough space on the server for its records to be quickly and efficiently transferred. “If you are counting on coders to keep up your productivity standards, the last thing you want is a system delay,” Stegman says. The chosen vendor needs to be clear about the workflow
the facility will pump out. Before a facility begins investigating outsourcing its coding, it needs to know its specific issues are. “Where do you need help and why do you need it?” Moses asks. “Is there a shortage of skilled coders—not only within your facility but within commuting and recruiting distance? Are you looking to address accounts receivable issues and are you looking to fill in spikes in coding because the facility has seen an increase in admits and discharges or has your facility been in a spiral of ever-increasing workloads?” Purdy stresses that considering outsourcing options does not exist in a vacuum. “From the standpoint of a former HIM director, the kind of detail that is critical to outsourcing success is to look at the workflow within the department and outside the HIM department and how these areas will be impacted,” she explains. “A vendor assessment tool should look at all areas of workflow.” Having questions in hand prior to going to a vendor
can help the vendor better pinpoint what areas of “pain”
need to be addressed and at what level. Purdy says outsourcing may or may not save a facility money but may be implemented to allow a facility to go from good to great. “In an HIM department with workflow issues, staffing issues, turnaround time delays, and quality issues, an organization could save money with improved productivity and stability of coding labor and improved turnaround of the billing cycle to improve cash flow,” she says. “But if you have a facility that wants to go from good to great, that may break down financially a little differently. An outsourced vendor could potentially reduce the number of errors or cut down on billing issues or could even result in a savings in space within the hospital with outsourced remote coding options.” The ways to improve processes and positively impact the bottom line will be specific to the situations unique to each individual facility. There are many ways to quantify the financial impact and, in some instances, there are obvious savings and benefits but in others, the benefits may not be there to be reaped. “A vendor should offer a cost comparison and
if the financial analysis does not show a benefit, we would not recommend
an option to outsource,” says Purdy. “We have very limited staffing for our size facility,” she says. McAlester is a 197-bed general hospital in southeastern Oklahoma. With Dallas 150 miles south and Tulsa 90 miles north, Gore says it is extremely difficult to recruit qualified and experienced coders to rural Oklahoma. “We’ve had good success in hiring recent graduates, as a university about 60 miles [away has] an HIM program,” she says. “However, it’s been our experience that these graduates get their one to two years of experience and then move on to bigger cities. I have an excellent staff, but when one is out on vacation or extended sick leave, we have to work overtime or contract out.” The decision for McAlester to outsource came when they were nearly $6 million behind on its “unbilled list.” “We were having difficulty with a coder that we were training for our E/M [evaluation and management] coding,” Gore explains. “I was already a customer of Nauvalis Healthcare Solutions for our medical record archiving and they had recently branched out into the coding consulting arena. We ended up letting go of our E/M coder and needed a quick fix, so I contracted with Nauvalis [now part of Smart Document Solutions] to get us over the hump.” She then explored the possibility of contracting this portion of the facility’s coding out to a vendor on a permanent basis, as well as contracting out the entire department. “For us, it was not cost-effective to outsource the entire department, so I made the decision to just contract out the E/M coding as well as ICD-9 coding for our [emergency department (ED)],” Gore says. “This freed up some of the duties of our [ED] coder to concentrate on working on our unbilled list more diligently.” This decision allowed McAlester to reap the following benefits: • The E/M coding bell curve almost immediately improved, with increased revenue of approximately $70,000 per month. • The staffing issue was resolved. • A consultant worked with the ED medical staff to improve documentation. • More time was available for an existing coder
to focus on old (problem) accounts. • Keep current staff informed of what is going on and the reasons why the decision is being made. • Fear of the unknown is unavoidable. • Making management decisions that affect people’s lives is tough. “It was going to be a very hard decision for me to lay off six staff members if the decision came to that,” Gore says. “These are six staff members in a small rural community making a pretty good living for their families. They probably could not have found other jobs in this town at the salary they are making here.” The biggest surprise Gore found in the transition was that the results were obtained so quickly. “Even though there were hard decisions that had to be faced, one can’t argue with the results—$70,000 a month is a sizeable contribution to our financial bottom line.” — Robbi Hess, a journalist for more than 20
years, is a writer/editor for a weekly newspaper and a monthly business
magazine in western New York.
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