At the Margins

Our latest insight into health care margin improvement efforts

Why the CFO wants to put off value-based care—but shouldn't

Eric Passon, MBA , Austin Weaver, MBA August 20, 2015

The other month, we were meeting with a health system CFO to discuss his system’s transition strategy, and he told us, "Since we’re not trying to lead the market, we are just investing the minimum in value-based care so we don’t get left behind."

There’s fear of the unknown associated with being a first mover, and that is one of many reasons CFOs give us for why they are not investing in value-based care. Their reasoning is understandable, but in most cases we believe that it’s shortsighted. At this point, putting off value-based care is going to do more damage than taking it on now, and as strategic consultants, we are often in the position of making the case for value-based care investments to skeptical CFOs.

Here are a few of the most common excuses we hear from CFOs, and the arguments we make back.

Read more »

The key to good problem solving in the revenue cycle

Jim Lazarus August 12, 2015

Not long ago, we met with a CFO discouraged by how long it takes to identify mid-revenue cycle performance issues (i.e. documentation, coding).

Most recently, her organization’s case mix index had fallen, but it was hard to pinpoint why. Had the patient mix changed? Had a cardio trauma doc been on vacation? Or was a larger documentation problem emerging?

It took her team three months to identify that a decrease in CC/MCC capture rate—caused by a handful of physicians—was the issue. And, it took another three months to engage those doctors and fix the problem. The six month lag time came with a steep price tag and, as the CFO shared her story, it was clear that the leg work to find the cause of the issue was tedious and labor intensive.

Read more »

Why self-contracting doesn't mean going it alone

Charles Moran August 10, 2015

If you feel like you’re not getting the same value from your group purchasing organization (GPO) that you used to, you aren’t alone.

Our 2013 Hospital-Supplier Alignment Survey found 54% of hospitals and suppliers are reporting less value from their GPO partnerships. This is a downward trend from the more recent heydays, when it seemed that volume, created through group purchasing, was the best strategy to drive cost savings in health care’s non-labor spend.

Read more »

Speak 'surgeon' in six simple steps

by Tim Jensen August 6, 2015

How much a hospital spends on surgical supplies can depend tremendously on physician preferences. Whether they opt for higher-priced devices, keep hospitals from achieving volume-based discounts, or use more supplies when fewer might suffice, individual surgeons can have a major impact on the operating room’s bottom line.

To achieve meaningful supply savings, hospitals must engage physicians in a constructive dialogue about their individual preferences and win their buy-in for reducing unwarranted and costly variation. Below are six steps for effectively sharing cost performance data with physicians, drawn from conversations with hospitals nationwide.

Read more »

What your peers are planning for October 1—and beyond

Ed Hock August 4, 2015

October 1 is just the beginning.

When hospitals and health systems nationwide officially switch to ICD-10 on that date, it can be tempting to think you’ve crossed the finish line. However, when I’m speaking with hospital executives, I stress that they still face three main challenges to succeed in October and beyond.

First, many organizations lack visibility into their mid-revenue cycle performance metrics and rely on rough estimates for critical success. If this sounds familiar, it’s time to find an analytics tool that will drill down into issues impacting mid-revenue cycle performance.

Second, it’s critical to fight physician fatigue around documentation improvement initiatives. On top of the general lack of engagement from physicians in this topic, medical leadership will now have to re-energize providers who have been through countless ICD-10 prep sessions.

Lastly, most hospitals and health systems will lack access to benchmarking key success metrics for a full year after October 1. With MEDPAR benchmarks under the new code set not available for a full year, organizations run the risk of flying blind with the no way to compare performance.

The Advisory Board recommends the following strategies to ensure success under the new code set.

Read more »

Adjustments ahead: Your value-based purchasing forecast

Eric Fontana July 27, 2015

“What’s the biggest thing I can do to improve my hospital’s value-based purchasing (VBP) score?”

It’s a common question this time of year, as hospitals scramble to understand Medicare’s latest proposals for distributing VBP funds.

A few years ago, I could have given you an easy answer: “Improve your process of care.” Back in 2013, the first year of VBP’s existence, process-of-care measures made up 70% of a hospital’s total performance score—so improvements on those measures paid off big. But the times have changed.

Read more »

Why CFOs should rethink their cost accounting model

John Johnston, CPA, MHA , Julie Cummings, MBA July 23, 2015

It was no surprise to us that in a recent Advisory Board survey of finance executives, nine out of 10 respondents didn’t have faith in the accuracy or usefulness of their own cost accounting data.

As operations and finance consultants, we go into health systems all the time to help them improve their margins, and often we find that our clients have been flying blind. Most of them are still using the ratio of costs to charges (RCC) to estimate costs—which only provides managers with very approximate information on the costs of specific resources or services.

The risk of cutting the wrong costs, or relying on bad data to pursue strategies, should be too high to tolerate. Then why don’t most systems seek out better options?

Read more »

Catch up on the hip and knee bundled payment news

by Natalie McGarry July 21, 2015

On July 9, CMS proposed a mandatory bundled payment program for hip and knee replacements, the Comprehensive Care for Joint Replacement (CCJR) Model. We now enter a 60-day comment period, where the public can submit feedback on the proposal through September 8, 2015, before the five-year program kicks off on January 1, 2016.

Here's the CCJR model at a glance.

Read more »

  • Manage your events
  • View your saved items
  • Manage your subscriptions
  • Update personal information
  • Invite a colleague