BENTON—There’s an abacus in Larry Alford’s office, and even though the Saline Memorial Hospital CFO doesn’t use it in his day-to-day job, it’s still a reminder that in healthcare as in every other business, the numbers must add up.

 

That’s a concept Alford has had to keep in mind since coming to the hospital last January, first as a consultant to look at issues of revenue management and then as chief financial officer.

 

The economic recession and the challenging national healthcare environment have hit Benton’s Saline Memorial hard. The hospital collects only 32 cents of gross billing and had $1.4 million more in bad debt through November 2009 than it did for the same time period the year before.

 

Even at a nonprofit hospital like Saline Memorial, expenses cannot exceed revenues for long. It’s been Alford’s job to make the numbers add up–with or without his abacus.

 

Alford has been leading a revenue cycle task force that has been turning over every seat cushion finding areas where the hospital wasn’t getting the funds it was due. Comprised of members of the business office, physicians’ offices, and other personnel, the group used recommendations from a prior consultant and considered 60 areas of revenue management.

 

It was Alford’s third such task force after undertaking similar processes at St. Bernards Medical Center in Jonesboro and St. Joseph’s Mercy Health Center in Hot Springs. He said that communication is the key to bringing different groups together. Clinicians were educated in the basics of the revenue cycle, such as how a bill leaves a hospital. Business managers have been made to see why clinicians do what they do. “What you see at most places is you’ve got two silos–one is the finance side and one is the clinical side–and the twain shall never meet,” he said.

 

The task force’s work led to updated managed care contracts, some of which had been paying less than Medicare and Medicaid, and the hospital’s first-ever database that tracked reasons for insurance denials – information it used to challenge those denials. The task force’s work also led to changes that were easy to implement, such as improving its methods of collecting patients’ current home addresses so efforts would not be wasted sending bills to the wrong addresses.

 

Meanwhile, the hospital has implemented an upfront collections program, a billing policy growing more common throughout Arkansas but one that was new to Saline Memorial. The collection process now begins before patients walk in the door, with admissions staff reminding them over the phone that payment will be expected up front at the same time they confirm their scheduled appointments. The hospital checks patients’ insurance information, including deductibles and co-pays, during registration and then asks for payment. Inpatients who claim they can’t pay that day receive a visit the next day from an admissions staff member who explains that the hospital is a business and that payment is expected for services rendered.

 

Training and preparation have been important parts of the process. The hospital met with clinic managers every other month to talk about the transition and to remind them of the need to communicate to patients that the hospital would expect to be paid up front for tests and inpatient work. Scripts were written for admissions officers who thought they would struggle with explaining the policy to patients.

 

So far, the system is working well, and the hospital doesn’t refuse services if the patient can’t pay. “They’re still here for healthcare, and we’re not going to be hard core,” Alford said. “It’s just we’re starting that practice and as small a community as this is, the doctors’ offices, the churches, the restaurants, people know that we’re starting to ask for funds.”

 

The collections policy, which began March 1 for outpatient services and a few months ago for inpatient services, has allowed the hospital to collect about $300,000 more than it would have. That’s a drop in the bucket for a hospital that bills out $12-$14 million a month in charges, but it helps. And according to Rebecca Jones, marketing and communications director, the policy hasn’t hurt the hospital’s standing in the community. “I thought I might, but I haven’t heard a negative thing about upfront collections,” she said.

 

More important than any one change was a change in a hospital culture that didn’t always focus enough on the business of healthcare. According to Alford, some business managers didn’t even know if their department was profitable. Now, he shares monthly financials by service line. “It’s been fun,” he said. “They’ve gotten competitive with each other. … What I’ve had is managers come in and say, ‘All right, what do I need to do? I can’t believe I’m losing money? How can that happen? What am I not doing right? What do I need to do?’”

 

According to Alford, even though revenue management is important, ultimately, a hospital’s job is still patient care. That’s a lesson he learned while working in Jonesboro, and one he keeps in mind now that he’s making the numbers add up in Benton. “Start with the patient and end with the patient,” he said. “Do that, you’ll always do right by everybody in the community, and you’ll always be able to make a profit.”