Palomar Pomerado Health

The revenue cycle journey for San Diego-based Palomar Pomerado Health entered the implementation phase at the beginning of the fiscal year that started in July 2008. This revenue initiative, called HealthWoRx, faced many challenges at the very start despite a couple years of planning.

Hindered by budget constraints, the creation of the revenue cycle department never materialized. Capital allocation for HealthWoRx was frozen. The initiative was lacking an executive director. The health information management department was being restructured to separate electronic health-record functions from coding. Case management just hired a new director. The health system was going through a reduction in force due to economic conditions. And the list went on.

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Undaunted by these obstacles, we marched forward and put a team together to form a revenue optimization committee. The ROC is operational in nature with a simple mission of improving the business office billing and collection efforts by fixing the processes upstream. Realizing the silo mentality must be removed in order to ensure the revenue strategy's effectiveness, we integrated the matrix management approach to our process. This approach basically pooled together cross-functional, multidepartments, i.e. pillars, to obtain consistency and standardization within the healthcare system. There are five pillars that made up the ROC's foundation: patient access, charge services, coding services, case management and patient financial services. To complete the committee, we also invited directors from IT, managed care and internal audit, as well as a physician adviser, to participate. When appropriate, we would request assistance from ancillary departments and nursing.

Two identified initiatives for the fiscal year were to improve charge capture and clinical documentation integrity. These initiatives further illustrate the collaboration between the ROC, revenue centers and the quality department. The ROC team meets every week for about three hours to discuss and resolve operational issues. Our team members are empowered to challenge the current processes, try different approaches and make timely changes. We created an environment that welcomes constructive criticism and values differences in opinion. In addition, we also created a sense of urgency to solve current crises and change processes toward future application. Visibility and support from the executive management team and board level were keys to the success of the program. Although each pillar is responsible for tracking and reporting on their key performance indicators, the overall performance metric for the ROC was our cash-collection goal.

Our collaborative efforts resulted in a cash collection that exceeded the goal by $3.5 million (or 100.9% of net patient revenue) for the fiscal year ended in 2009 and $21 million better than budget (or 104.7% of net patient revenue) for the fiscal year ended in 2010. This achievement was realized despite the deterioration of the economy compounded by an increase in bad debt and charity care of $9.2 million and $7.2 million compared with budget for fiscal 2009 and fiscal 2010, respectively.

The ROC's other accomplishments included improvement of clean claim percentage from 23% to 49% (fiscal 2009) and 70% (fiscal 2010). Billing edits reduced dramatically from $26 million down to $9 million (fiscal 2009) and $2.3 million (fiscal 2010). Coding backlog went from $2.5 million down to almost zero.

The clinical documentation integrity initiative was implemented in March 2009, went live in May and produced a return of more than 300% for fiscal 2009; a great return on investment for only one quarter post-implementation. The return on investment for this initiative was even more impressive for fiscal 2010, when reimbursement improved by $4.5 million vs. the total cost of staff, software and consultant's fee of about $600,000. Medicare one-day stay cases went from “not being looked at” to about 100% being reviewed on the same day.

The charge ticket was developed and captured more than $1 million in additional revenue at the ambulatory surgery center. The amount of “no authorization on the date of services” was almost eliminated, from $500,000 down to $30,000. With the modest successes that the ROC has achieved to date, we were able to turn our net operating income from a loss of $9.4 million in fiscal 2008 to realizing $9.5 million in fiscal 2009 (a $19 million turnaround), and $17 million in fiscal 2010.

The ROC's achievement really has an extra-special meaning these past few years. Palomar Pomerado is facing the height of the economic recession and subsequent mounting of bad debt burden, reduction in force systemwide, capital freeze, weak census and other statistics that are below budgeted numbers. However, the ROC's past year's performance is just the first step in a very long journey. The ROC will continue to evolve and adapt to the changes of the organization, regulatory and reimbursement changes both at state and federal levels and the economy as a whole.

Palomar Pomerado, California's largest public health system, is north San Diego County's most comprehensive healthcare delivery system, and is the only public health system in the state recognized as a Magnet hospital by the American Nurses Credentialing Center. It is nationally recognized for clinical excellence in cardiac care, women's services, cancer, orthopedics, trauma, rehabilitation and behavioral health services. Palomar Pomerado was named by Modern Healthcare as one of the Top 100 Places to Work in Healthcare, and has more than 3,600 employees and 700 physicians. Facilities include Palomar Medical Center and Pomerado Hospital.

Tim Nguyen is corporate controller and chair of the Revenue Optimization Committee at Palomar Pomerado Health, San Diego.