Comprehensive Revenue Cycle Partnership Stabilizes and Optimizes Key Performance Metrics
McKinnis Consulting Services, LLC, (McKinnis) was acquired by Guidehouse Inc. (Guidehouse), effective December 31, 2015. The results detailed in this case study were derived through an engagement McKinnis conducted with the University of Michigan Health System prior to its acquisition by Guidehouse.
Many healthcare organizations are pursuing next-generation health information systems solutions to expand their ability to cope with meaningful use, reductions in reimbursement rates, and increasing market competition – all while improving the quality of care delivered to patients. In February 2012, University of Michigan Health System (UMHS) completed their migration to Epic; however, UMHS experienced complications with the implementation leading to a post-conversion period of decreasing gross patient revenues, increasing accounts receivable, and diminishing cash flow.
These post-conversion challenges, coupled with the existing organization structure within the revenue cycle, represented critical financial risks to UMHS that needed to be addressed quickly.
McKinnis performed a comprehensive revenue cycle assessment that revealed key revenue cycle components were lacking in structure and performing below industry best-practice metrics at UMHS. The revenue cycle assessment identified areas of risk, such as: self-pay collections, call abandonment rates, revenue integrity/analytics, underpayment recovery, denial management, strategic pricing, and charge capture. Further, in early December of 2012, UMHS’s candidate for bill days (unbilled AR held past the suspense period) had spiked above 20 days.
UMHS leadership engaged McKinnis to manage the large scope of technical and operational issues contributing to the system’s post-live performance. The resulting partnership stabilized and optimized targeted areas of UMHS revenue cycle, as well as improved key performance metrics. The key revenue cycle initiatives include:
CFB AR day metric reduced from 20 days at project inception to 5.8 days
Outstanding CFB dollars reduced to $89 million
Candidate for Bill AR Days
Developed customized underpayment workflow within the Epic system
Implemented a dedicated internal underpayment team and facilitated implementation of external vendor; projected first-year benefit is $1.76 million
Self-Pay Collections Optimization
Generated net benefit of over $12.5 million by increasing the global self-pay yield
Reduced all abandonment rate from a metric high of 72.6% to a best-practice metric of 4%
Reduced patient correspondence backlog from a high of 3,300 to a low of 23
Call Abandonment Rate - Percent
University of Michigan Health System increased their net benefit by $6.5 million using strategic pricing rather than the historic across-the-board price increases
Strategic vs. Across-the-Board Pricing - Number of Charges; Dollars
Our partnership has brought great value, success, and, yes, enlightenment to UMHS revenue cycle. The knowledge and experience they bring to the table has allowed us to optimize and learn our Epic system and become more efficient with our business processes. Their contribution to our organization has resulted in an improvement of our KPIs and an increase in our net revenue. I would recommend them highly to any revenue cycle operation.
Benjie Johnson, Chief Revenue Officer, University of Michigan Health System