California Sutter Health Approach
ACC 281 Accounting Concepts for Health Care Professionals
Instructor: Marquita Blackwell
February 23, 2015
Sutter Health is a non-profit community-based healthcare system. It is based in Sacramento, Northern California. The healthcare system serves patients and families where the healthcare providers join resources and share expertise to develop and advance the quality of healthcare. The non-profit network initiated an interface with the intention of developing revenue collection of the healthcare facilities that would be collected from self-pay patient (Souza & McCarty, 2007). The traditional payment processing system had disadvantages that delayed the process of effective revenue collection of the healthcare facilities. The limitations of the processing system were as a result of the lack of accessibility to precise information in the accounts. The Patient Financial Services staffs were not in a position to get real-time information that would aid in accessing the financial and operational indicators of the healthcare facility (Souza & McCarty, 2007). There was also ineffective and inefficient performance measures in the healthcare facilities. The centers of service provision were patchy. There were also issues with the upfront collections. In order to address these limitations, Sutter Healthcare initiated a system. The paper will discuss the key problems and the relevant facts. It will also discuss the new system that was created to address the problems. Summary of case study (key issues and problems, background information, and relevant facts) The healthcare systems in the United States have huge upfront collections of revenues from self-pay patients. The issues with upfront collections are as a result of the healthcare insurance (Davis, 2012). It has high deductible pay healthcare plans. The insurance system also has higher co-payment plans. Furth more, the issues have been worsened by the huge population that does not have a healthcare cover. Due to this, the healthcare facility must deal with the large numbers of the upfront collections (Souza & McCarty, 2007). The current traditional healthcare payment systems have not been able to meet the set targets for revenue collections. They are insufficient. The several disadvantages that are attached to the traditional processing system are immense. Upfront payments require the collection of payments for services to be provided before the services are actually received. It is in contrast with the insurance claim where services are provided first. It has an implication that the Patient Financial Services staff must have accurate information regarding the patients. It was a great challenge for the traditional payment system since the customer payment information had to be processed in the back end (Souza & McCarty, 2007). The Patient Financial Services staff had to wait for the end of the back session to be able to provide a breakdown of the customer payment details. The hospital accounting department found the task tedious. Patients also had to wait until their payments were processed to receive services. The delays caused by the traditional payment system led to inefficiency in operations thus resulting to low-quality services. It in turn affected the levels of revenue collections (Souza & McCarty, 2007). Sutter also had problems with the revenue management cycle. The Patient Financial Services staff could not access accurate and real-time information on the essential financial and operational indicators. Such indicators include accounts receivable (A/R) days (Souza & McCarty, 2007). Benchmarking could not be utilized until the end of the month. Lack of accurate information meant that the management along with the staff could not set benchmarks as a way of tracking progress. Important business decisions could also never be made. Due to the use of the traditional system with a...
References: Davis, R. (2012). Pursue front-end solutions to revenue cycle problems, urges Davis. Healthcare financial management: journal of the Healthcare Financial Management Association.
Holmes, G. M., & Pink, G. H. (2012). Adoption and perceived effectiveness of financial improvement strategies in critical access hospitals. The Journal of Rural Health, 28(1), 92-100.
Michalski, G. (2012). Accounts receivable management in nonprofit organizations. Zeszyty Teoretyczne Rachunkowości.
Mugdh, M., & Pilla, S. (2012). Revenue Cycle Optimization in Health Care Institutions: A Conceptual Framework for Change Management. The health care manager.
Rauscher, S., Wheeler, J. R., & Hilleary, G. (2008). Effective Hospital Revenue Cycle Management: Is There. Journal of Healthcare Management, 53, 6.
Souza, M. & McCarty, B. (2007). From bottom to top: How one provider retooled its collections [Electronic version]. Healthcare Financial Management, 61(9), 67-73.
Van Pelt, M. (2014). The unique financial management of healthcare organisations. International Journal of Economics and Accounting, 5(1), 51-61.
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