In the past and for most of healthcare today, inventory has been managed independently from the rest of the business of providing healthcare. Recent articles ( 7 Reasons to Merge Revenue Cycle and Supply Chain Management ) have suggested the benefits of combining supply chain and revenue cycle.
When you step back and look at how supplies impact the business of providing healthcare, you’ll see that hospitals can benefit more from extending the visibility of supplies to clinical documentation and billing.
Our iRISupply solution does just this. We help hospitals increase surgical revenue in 3 ways.
- Maximize Charge Capture
- Improve Surgical Documentation
- Improve a hospital’s Case Mix Index (CMI) score.
In this 3 part discussion we will explore in detail each item above. Part 1 (this article) discusses how we maximize charge capture in surgical areas.
Before you say, “For inpatient cases we get paid by the DRG, and we get paid the same amount no matter what items are used.” A procedure may start off in one way, but during surgery the type of procedure could change. For example a CATH procedure may start off as single vessel procedure, but after the surgeon gets a better look at the arteries could come to the conclusion that multiple stents are needed. If the change in procedure type is not updated in the procedure notes, then this can lead to loss revenue. In addition, we get paid the same amount for a DRG isn’t entirely true. The next discussion (part 2) provides more information on this.
Before we start, there is a fundamental concept that you have to understand and also believe. In today’s healthcare, not every item that gets used in surgery gets documented. As a result, this cause a revenue leak. Why does this happen? First, it’s nobody’s fault. If you work inside surgical areas, then you already know that some of the best talent can be found here. So why does this happen? In short, it’s the nature of the beast. The talented nurses and techs within healthcare do their absolute best to follow proper protocols and document every item, but inside a surgical room distractions can arise that shifts the focus on proper protocols to life saving procedures. Other distractions like staff shortage, longer work hours for staff, or even a longer complicated case can also add into the mix and as a result sometimes item usage doesn’t get documented.
Signs this could be happening at your facility:
- When you look at one procedure type, take a look at the average cost of supplies that are used for procedures over a period of time and determine an average cost of supplies for the procedure type. Next look for procedures where the total cost of supplies is less than the average. Procedures where the total cost of supplies falls under the average, could be a sign that something didn’t get documented.
- At some hospitals, as items get documented for a procedure, inventory levels are also decremented. If an item doesn’t get documented, then the inventory counts become out of sync with what’s on the shelf. If you need to do a physical count (aka cycle count) before reordering items, then this could be an indicator that not every item is being documented in a procedure.
How to measure how frequently items may not be getting documented? Great question. You would need to analyze what’s on the shelf and what’s been documented and evaluate what’s different. As you can imagine, this is a tedious process that would need to be done each day, each week, or each month. This could take up resources and time on hospital resources.
How do we help? Our system doesn’t require staff to scan barcodes or push buttons when surgical staff take an item or return an item. We eliminate steps and simplify work flow. When distractions arise during procedures, surgical departments can rest assure that our system is capturing activity and sealing up revenue leaks. Every item that is removed from our system is automatically captured and electronically documented through the use of an RFID tracking tag. Electronic documentation includes: who (which staff member), took what items (catalog #, serial #, Lot #), and for which patient. Charge capture is maximized and documentation is improved.
Generally hospitals can agree that there is some level of non-compliance in staff not documenting item usage, but how much varies and is often under estimated. In 2011, the Journal of American College of Radiology (JACR) did a study on the impact that our system had inside 2 surgical rooms within 10 months. What JACR discovered was an increase in charge capture of 20%. This means that they were only getting 80% compliance from surgical staff with a barcode based solution. The JACR study continued that this 20% increase in charge capture resulted in an additional $2.1 million in charge capture which led to an additional $750,000 in revenue.
How frequent are items not getting documented? 20%? We increased surgical revenue for 2 surgical suites in 10 months by $750,000. That’s a significant increase in revenue by extending the visibility of supply usage to clinical documentation and billing.
Part 2 & 3 of this article can be found here: