Rescuing Colorado River Medical Center 

Situation Analysis:

For the past several years, Colorado River Medical Center, a Critical Access Hospital located in Needles, CA, had been experiencing most of the typical problems which were seriously impacting the hospital’s financial stability. Cash, or lack of cash, was about to bury this hospital. They were actually on the verge of closing their doors!

They had tried all of the traditional improvement processes: hiring consultants to develop internal improvement programs, and temporary staff to help reduce the growing aged AR. They even purchased a new accounting system thinking it was the existing system that was responsible, only to find out that it wasn’t the system at all, but their people’s lack of knowledge of the system and how to maximize its potential. Management turnover delayed the inevitable because new managers who came in were convinced that they alone could fix the problem. In reality this was not a one-person fix. They needed a whole new team!

The Board was frustrated and becoming impatient with failed improvement processes of the past. Recognizing the severity of the problem, hospital management decided it was time to take some unique positive actions--actions that might not have been popular, but had the capacity to save the hospital from potentially closing their doors… The solution….. Outsource the Business Office billing functions to Healthcare Resource Group’s OutpartneringTM Center.

The concept of Outsourcing had been discussed over the previous four years with HRG. The hospital always appeared to be intrigued with the idea but had never really considered what they perceived as drastic change due to concerns such as: What would the community think? What would they do with their employees? What if it failed? How could they find a company they could trust and, most importantly, who could do the job and not drive them deeper into a financial abyss?

After some honest discussion and a dose of reality they concluded they had nothing to lose and everything to gain. HRG’s existing client references were very positive, and the concept of a CBO began to make all the sense in the world, financially as well as from a performance perspective.

The HRG Response:

We at Healthcare Resource Group have been specializing in rural hospitals for over 15 years and are well aware of the unique challenges these hospitals face every day.

We completed an analysis of patient mix, AR, revenue, and worked with the hospital to develop a transition timetable and an understanding of responsibilities and expectations.

We were confident our team could correct most of the problems, improve billing and follow-up productivity, create patient satisfaction, and increase cash flow. So the hospital moved ahead and hired HRG to help them with their improvement process. We jumped right in and within weeks, were collecting that much-needed cash! What Colorado River Medical Center had once considered to be a wild dream, has amazingly become a reality.

Results:

It has been one year since HRG took over and the results have been far better than expected. Once a hospital in despair, with low collections, no cash, and an AP of over $1,000,000, Colorado River Medical Center has evolved into a financially-viable hospital that now has a partner who can help them maximize their revenue, cash and, most importantly, their reputation in the community.

• AR decreased by 65%.

• Days in AR dropped over 73%.

• Monthly cash collections increased over 10%.

• AP down 60%.

• No longer on C.O.D.

• Continue to make improvements weekly.

Here are just a few of the problems that HRG’s professional team has helped the hospital correct:

• Identified and corrected root cause of no inpatient Medi-Cal claims payment and received approximately $2M in reimbursement for old and current claims

• Added Medi-Cal specific HCPC codes in ChargeMaster on payable items for additional reimbursement

• Resolved the National Drug Coding issue for both Medicare and Medi-Cal so all drugs report the NDC for appropriate reimbursement – where none were captured prior to HRG’s involvement

• Updated revenue codes and CPT-4 codes in the ChargeMaster along with correcting invalid bill types to reduce and/or eliminate denials, and increase reimbursement

• Created edits in the billing software to appropriately scrub claims to eliminate denials and increase line item reimbursement

• Implemented reporting system to verify claim receipt by payers and take immediate action on rejected claims or batches

After six months working with Colorado River Medical Center, their CEO wrote the following observation:

“Today, with the help of HRG, we have eliminated many of our internal issues that were causing most of our problems. We have a partner that understands our patient accounting system, can get problems resolved quickly, and implements sustainable solutions. They have an incredible knowledge of all financial classes and all third-party payers’ nuances and are able to accomplish what we would never be able to work through. They have found money that we would never have had the time to find and which, ultimately, would have been written off. They provide reports for our board and have been willing to attend board meetings to report on progress and identify problems that require attention. Our board has confidence in their work and people who are so knowledgeable and professional. And… all of this has been done for about the same budget that we were spending internally!”