TheBenchmarkinHospitalReceivablesnews.wolterskluwerlb.com/media/HARASpecialReport.pdfHealth Care Reform Has Become a Reality! ISBN: 9780808022879, $149; Two Volume Softcover Call 1-800-638-8437

The Benchmark in Hospital Receivables

REPORT ON SECOND QUARTER 2010

Volume 24 • Number 3

Health Care Reform Has Become a Reality!

ISBN: 9780808022879, $149; Two Volume Softcover

Call 1-800-638-8437 or visit www.aspenpublishers.com today to order your 30-Day RISK-FREE copy! (Refer to Priority Code AB35)

CCH's Law, Explanation and Analysis of the Patient Protection and Affordable Care Act, Including Reconciliation Act Impact provides employers, legal, legislative, health, and insurance professionals with comprehensive explanation and analysis of every aspect of health care reform legislation.

Law, Explanation and Analysis of the Patient Protection and Affordable Care Act contains almost 500 explanations telling you what all the law changes mean, plus includes:

• Expert explanations of all provisions • Text of available congressional committee reports that provide significant background information on the law

• Finding devices to help navigate between analysis and official text

• Text of both the Patient Protection and Affordable Care Act and the Reconciliation Act of 2010

• Caution Notes

EXPLANATION AND LAW

1. Insurance Market Reforms

2. Coverage Choices

3. Affordability of Coverage

4. Coverage Responsibilities

5. Role of Public Programs: Medicaid & Children’s Health Insurance Program

6. Maternal and Child Health Services

7. Health Care Quality Improvement

8. Medicare Improvements for Patients and Providers

9. Rural Protections

10. Payment Accuracy Improvements

11. Provisions Relating to Medicare Part C

12. Medicare Part D Improvements

13. Medicare Sustainability

14. Disease Prevention and Wellness

15. Healthcare Workforce Improvements

16. Transparency and Program Integrity

17. Patient-Centered Outcomes Research

18. Medicare, Medicaid, and Chip Program Integrity

19. Elder Justice Act

20. Access to Innovative Medical Therapies

21. Class Act

22. Revenue Provisions

23. Indian Healthcare Improvement

24. Miscellaneous Provisions

Law• Complete Text of the Patient Protection andAffordable Care Act

• Complete Text of the Health Care and Education Reconciliation Act of 2010

COMMITTEE REPORTS

SPECIAL TABLES

Effective Dates Table• Social Security Act Sections• Employee Retirement Income Security Act Sections

• Internal Revenue Code Sections

Other Tables

• Social Security Act Sections to CCH Explanations

• Employee Retirement Income Security Act Sections to CCH Explanations

• Internal Revenue Code Sections to CCH Explanations

• Social Security Act Sections Added, Amended or Repealed

• Employee Retirement Income Security Act Sections Added, Amended or Repealed

• Internal Revenue Code Sections Added, Amended or Repealed

• Act Sections Amending Social Security Act Sections

• Act Sections Amending Employee Retirement Income Security Act Sections

• Act Sections Amending Internal Revenue Code Sections

Highlight of Contents

Including theImpact of theReconciliation

Act!

EXCLUSIVE ONLINE BENEFIT!With your purchase of the book, you’ll receive online access to an editoriallyenhanced version of the Patient Protection and Affordable Care Act that integrates in place changes made to it by the Reconciliation Act of 2010. A special website has been created to expand your access to key legislativematerials. You’ll receive access to SSA, ERISA, and IRC provisions amended bythe Patient Protection and Affordable Care Act and the Reconciliation Act of2010, as well as other valuable Health Care Reform information and resources.

Hospital Accounts Receivable Analysis

REPORT ONSECOND QUARTER 2010VOLUME 24 • NUMBER 3

JOANN PETASCHNICK, SENIOR EDITOR

ii • HARA REPORT ON SECOND QUARTER 2010

EDITORIALADVISORYBOARD

Peter J. AvellinoHealth Care Business

SolutionsNew York, [email protected]

Steve ChraplaRevenue CyclePartners, LLCBillings, MT

[email protected]

Rob BorchertPresident

Best PracticeAssociates, LLCFredericksburg, VA

[email protected]

Allan P. DeKayeDeKaye

Consulting Inc.Oceanside, NY

[email protected]

James Grigsby,CPAM

Jim GrigsbyConsultingSebastian, FL

Deborah ShapiroWFS Services, Inc.Secaucus, NJdshapiro@

wfs-services.com

Ted M. SmithAmerican Collectors

AssociationMinneapolis, MN

HOSPITAL ADVISORY BOARD

#ORTHEAST

Jeffrey Shutak

The Memorial Hospital, North Conway, NH

Doug Rosien

New London Hospital, New London, NH

SOUTHEAST

Pete Kraus

Emory University Hospital, Atlanta, GA

Philip M. Miller

White County Medical Center, Searcy, AR

MIDWEST

Todd Cole

TriHealth, Cincinnati, OH

John Kivimaki

Mary Rutan Hospital, Bellefontaine, OH

Toni Shamblin

Summa Health System, Akron, OH

Liz Shurson

Kishwaunee Community Hospital, Dekalb, IL

#ORTHWEST

Dick Gaspari

North Lincoln Hospital, Lincoln City, OR

Kevin McAndrews

PeaceHeath, Eugene, OR

SOUTHWEST

Toni Upton

Saddleback Memorial Medical Center, Laguna Beach, CA

HARA REPORT ON SECOND QUARTER 2010 • iii

VOLUME 24, Number 3

CO

NT

EN

TS

Letter from the Editor • iv

Contribute Your Organization’s Data to HARA • 1

HARA Survey Enrollment Form • 3

Regional Breakout • 4

Source of Data • 5

Major Indicators • 6

Gross Days Revenue Outstanding • 8

Uncollectibles • 16

Denials • 19

Aging of Accounts Receivable • 20

Medicare, Managed Care, & Other Sources of Revenue • 21

Billing Information • 24

Key Ratios • 33

CBO Spotlight • 41

Key Questions • 46

HARA Statistics • 53

Summary Comparison of Superior-Performing Hospitals • 54

Recap Report—By Bed Size • 56

Recap Report—By Geographic Location • 58

Recap Report—By Geographic Setting • 60

Summary Comparison of CBOs • 62

HARA Calculations • 64

Sample Survey Spreadsheet • 65

Glossary • 68

Dear Subscribers:Welcome to the HARA Report on Second Quarter 2010. The second quar-

ter of the year brought a decline in uncollectibles, after an upward trend. Infact, we have discovered by talking with some patient finance directors thatthey are experiencing a drop in bad debt, in part due to their extra efforts towork with patients.

To be more specific, during the second quarter of the year, the key per-formance indicators revealed the following:• Average gross days revenue outstanding (GDRO) is on a downward trend.It fell once again in the second quarter to 40.31 days, from 42.39 days inthe first quarter. Both of these figures are well below the 50-day bench-mark.

• Total uncollectible write-offs as a percentage of gross revenue wasreported at 4.54 percent, which was down substantially from the first quar-ter, as noted. Previously, the figure was 5.60 in the first quarter, up from5.29 percent in the fourth quarter, and 4.92 percent in the third quarter.

• Outstanding accounts receivable (A/R) greater than 90 days old was down,as well. It fell to 22.18 percent in the second quarter from 23.22 percent inthe first.

• Days from discharge to bill (DTB) for all payers were on the rise. It in-creased to 9.00 overall in the second quarter, from 8.91 in the first quarter.Do you have an effective collection policy? This is the topic of the Key

Questions in this issue of HARA. The vast majority of HARA survey respon-dents (94 percent) say that they do have an effective policy. And, the majority(78 percent) indicates that they have a patient finance program in place. Formore details, see inside.

Once again, I would like to thank those hospitals that send in their surveydata each quarter. We understand that it takes time to gather this informationand we sincerely appreciate it. We urge all subscribers to consider sending intheir own data. These data are valuable to all subscribers.

We recently added some new hospitals in the past quarter. We encourageall HARA subscribers to contribute their data.If you are interested in submitting quarterly data, we welcome your

participation! Simply fill out the Survey Enrollment Form on page 3 ofthis issue and fax it to me at 414-545-1150. Alternatively, contact me [email protected] and I will forward materials to you.

Please note: Following are upcoming due dates for yourHARA datasurveys. Please add these dates to your calendar:Data for third quarter 2010 October 31, 2010Data for fourth quarter 2010 January 31, 2011Data for first quarter 2011 April 30, 2011Data for second quarter 2011 July 31, 2011

Best regards,

JoAnn PetaschnickSr. Editor

iv • HARA REPORT ON SECOND QUARTER 2010

PUBLISHERPaul Gibson

SENIOR MANAGINGEDITOR

Joanne Mitchell-GeorgeMANAGING EDITORElizabeth Venturo

MARKETING DIRECTORDom Cervi

SENIOR EDITORJoAnn Petaschnick

CONTRIBUTING EDITORLaura Merisalo

PRODUCTION EDITORKathleen Isaksen

HARA (Hospital AccountsReceivable Analysis)(USPS 001-7749)(ISSN 1078-8123) is publishedquarterly for $759 by AspenPublishers, 76 Ninth Avenue,7th Floor, New York,NY 10011.

© 2010 Aspen Publishers.All Rights Reserved. Thismaterial may not be used,published, broadcast, rewrit-ten, copied, redistributed orused to create any derivativeworks without prior writtenpermission from the publisher.

Permission requests:For information on how toobtain permission to repro-duce content, please go to theAspen Publishers Web site atwww.aspenpublishers.com/permissions.

Purchasing reprints:For customized articlereprints, please contactWright’s Reprints at 877/652-5295 or go to theWright’s ReprintsWeb site atwww.wrightsreprints.com.

Postmaster: Send addresschanges to HARA (HospitalAccounts ReceivableAnalysis), 7201 McKinneyCircle, Frederick, MD 21704.Telephone: 800/234-1660.

For editorial inquiries:Call 414/545-1150.

To subscribe:Call 800/638-8437.

For customer service:Call 800/234-1660.

Business and circulation:Fulfillment Operations, AspenPublishers, 7201 McKinneyCircle, Frederick, MD 21704.

Contribute your organization’sdata to HARA, the industrybenchmarking tool!*

Submityourquarterlydata viaExcel®spreadsheet.A sample spreadsheetappears on page 65.

What couldbe easier?

What’s in it for you?Your quarterly data, combined with your colleagues’ data from hospitals across the UnitedStates, will be tabulated, reviewed, and analyzed by editors and expert industry advisors.It becomes part of a nationally recognized tool that is invaluable to hospital financeprofessionals nationwide.

HARA data help you:• Compare financial performance with other hospitals of similar size in your region• Identify areas for performance improvement• Project trends and set goals

*All submitted data remains confidential. The identities of participating hospitals are never released.

HARA REPORT ON SECOND QUARTER 2010 • 1

Dear Health Care Professionals:

Benchmarking helps you better understand your owndata. You can pinpoint issues you face and developstrategies for a more successful future. You will gainthe most from benchmarking if you think of it as acontinuous process. That is where HARA comes in.

HARA has been the industry’s standard forbenchmarking quarterly patient accounts statisticssince it was first published in the mid-1980s. Sincethen, it has gone through several changes, fromcreating an editorial advisory board consisting of

nationally known experts to incorporating data fromcentralized business offices.

Here’s How It Works:

• We provide you with the HARA survey onan Excel® spreadsheet, which you canuse on your desktop computer.

• Every three months, all you have to dois email the Excel® file with yourquarterly data to us. We’ll notify you ofsurvey deadlines.

NO PAPER SURVEY TO FILL OUT!

For your convenience, on the next page is anenrollment form. There is no cost to you oryour organization. Just submit your data(most of which is automatically tallied by ourspreadsheet) each quarter by the due date.

We’re very excited about what this yearhas in store for HARA. We’re sure you’llagree HARA has never been better, and itcontinues to be the industry’s top source forbench-marking information acrossthe country.

Sincerely,

JoAnn Petaschnick, Editor

Excel®-based survey makes it easy to submit your dataand benchmark against others!

#ote: All submitted data remain confidential. The identities of participatinghospitals are never released.

What you get in HARA:� Complete statistical analysis by region, bed size, and GDRO, as well as comparisons ofcentralized business offices, by quarter—including:• Days revenue outstanding • Medical record delay time• Billing turnaround time • Collector-to-open account ratio• Aging of A/R • Bad debt/charity• Payer mix • Staffing ratios

� A comprehensive review of trends and a graphic analysis of hospital receivables majorperformance indicators

� An exclusive interpretation and analysis of the data, providing insights on relationshipsto economic trends

� Annual personnel salary survey including average years of service and FTE complements

2 • HARA REPORT ON SECOND QUARTER 2010

Please fill out this form completely, as all of this information is needed to process your future data and provide read-ers with data analysis each quarter. Please sign below to grant us permission to quote you in future issues of HARA.

1. Respondent’s name:

2. Title:

3.Organization/facility name:

4. Street address:

5.City: State: Zip code:

6. Phone number: 7. Fax:

8. Email:

PARTICIPATION AGREEMENTBy submitting this form, I agree to provide HARA with data from my organization. In return, I will be sent by emaila copy of the HARA desktop spreadsheet analysis tool.

_________________________________________ ________________________________________Signature Date

� Yes, please quote me in future issues. � No, do not quote me in future issues.

Thanks for enrolling in the new HARA survey.Please detach this form and fax to JoAnn Petaschnick at 414/545-1150.


THE HOSPITAL ACCOUNTS RECEIVABLE ANALYSIS

SURVEYENROLLMENT FORM

9. Facility type:� Hospital� Centralized business office(if CBO, please indicatenumber of facilities served):� 0–3 � 4–9 � 10+

10.Hospital type:� Community� Academic medical center� Government (county, state,or federal)

� Other________________11.Hospital ownership:

� Private� Public

12.Hospital tax status:� Not-for-profit� For-profit

16. Account volume: (number ofinpatient and outpatientadmissions per month)� 0–4,999� 5,000–9,999� 10,000–19,999� 20,000–49,999� 50,000+

17. Average monthly billing vol-ume: (number of bills sent)� 0–19,999� 20,000–39,999� 40,000–69,999� 70,000–99,999� 100,000+

13. Hospital bed size:� 0–99� 100–199� 200–399� 400–699� 700+

14. Geographic setting:� Urban� Suburban� Rural

15. Region: (see map on p. 4)� Northeast� Mid-Atlantic� Southeast� Midwest� Southwest� Northwest


REGIONALBREAKOUT NORTHWEST

SOUTHWEST

NORTHEAST

SOUTHEAST

MIDWEST

Northwest RegionAlaskaIdahoMontanaOregonWashingtonWyoming

Southwest RegionArizonaCaliforniaColoradoHawaiiNevadaNew MexicoOklahomaTexasUtah

Southeast RegionAlabamaArkansasFloridaGeorgiaKentuckyLouisianaMississippiNorth CarolinaSouth CarolinaTennessee

Mid-Atlantic RegionDelawareMarylandNew JerseyPennsylvaniaVirginiaWest VirginiaWashington, DC

Midwest RegionIllinoisIndianaIowaKansasMichiganMinnesotaMissouriNebraskaNorth DakotaOhioSouth DakotaWisconsin

Northeast RegionConnecticutMaineMassachusettsNew HampshireNew YorkRhode IslandVermont

MID-ATLANTIC


SOURCE

OF

DATA

Respondents by Hospital TypeCommunity • 83.90%Academic Medical Center • 3.20%Government • 6.50%Other • 6.50%

Hospital OwnershipPrivate Ownership • 46.70%Public Ownership • 53.30%

Hospital Tax StatusNot-for-Profit Hospitals • 100.00%For-Profit Hospitals • 0.00%#ote: Some facilities may fall into morethan one facility-type category.

Respondents byGeographic RegionNortheast • 16.10%Mid-Atlantic • 3.20%Southeast • 16.10%Midwest • 22.60%Southwest • 19.40%Northwest • 22.60%

Account Volume0–4,999 • 20.70%5,000–9,999 • 44.80%10,000–19,999 • 10.30%20,000–49,999 • 20.70%50,000+ • 3.40%

Average MonthlyBilling Volume0–19,999 • 62.10%20,000–39,999 • 27.60%40,000–69,999 • 10.30%70,000–99,999 • 0.00%100,000+ • 0.00%

Gross Days RevenueOutstanding<60 Days • 40.18%60–90 Days • 42.60%90+ Days • n/aAverage This Quarter • 40.31 days#ote: Some percentages throughout thisreport may not equal 100 percent due torounding of figures.

Respondents by Hospital Bed Size700 or

More Beds:16.10%

0–99 Beds:19.40%

400–699Beds:

25.80%200–

399 Beds:19.40%

100–199 Beds:19.40%

Respondents by Geographic Setting

Rural:23.30%

Urban:46.70%

Suburban:30.00%

GDRO ImprovesThe nation’s hospitalssliced slightly more thantwo days from the sec-ond quarter 2010 grossdays revenue outstand-ing (GDRO) average,reporting a second quar-ter GDRO average of40.31 days. This 2.08-day improvement in the second quarter GDRO average, down from afirst quarter GDRO average of 42.39 days, marks the third consecutivequarter of improved GDRO performance.With second quarter 2010 GDRO data in the mix, US hospitals

achieved a four-quarter GDRO average, which spans third quarter 2009through second quarter 2010, of 45.45 days. The benchmark for thismajor financial indicator is a GDRO average of fewer than 60 days,which the nation’s hospitals handily achieved in second quarter 2010 andwith the GDRO average for the past 12 months.

Write-Offs ReducedIn second quarter 2010,US hospitals recoveredfrom a first quarter spikein uncollectible write-offs and achievedbenchmark-level uncol-lectibles performance inthe process. The nation’shospitals reduced secondquarter bad debt and charity write-offs to 4.54 percent of total gross rev-enue, down from 5.60 percent of total first quarter 2010 gross revenuewritten off as uncollectible. The benchmark for this major financial indi-cator is to hold total write-offs to 5 percent or less of total gross revenue.The overall improvement in uncollectible write-offs was achieved by par-

ing bad debt and charity write-offs in second quarter. Nationally, hospitalsreported 2.36 percent of second quarter gross revenue was written off as baddebt, down from 2.85 percent in first quarter. Charity write-offs were reducedto 2.18 percent of total gross revenue in second quarter 2010, down from2.75 percent of total gross revenue written off as charity in the first quarter.


MAJOR

INDIC

ATORS

Gross Days

1st Qtr.2010

G R O S S D A Y S R E V E N U E O U T S T A N D I N G

2nd Qtr.2010

3rd Qtr.2009

4th Qtr.2009

4 Qtr.Average

60

55

50

45

40

35

51.18

Uncollectibles as aPercentage of Revenue

1st Qtr.2010

UNCOLLECTIBLES AS A PERCENTAGE OF REVENUE

2nd Qtr.2010

3rd Qtr.2009

4th Qtr.2009

4 Qtr.Average

8

6

4

2

0

2.852.362.66 2.92 2.70

2.752.182.26 2.37 2.39

Bad debtCharity

42.39

4.54

47.92

40.31

45.45

5.29 5.095.60

4.92

A/RAging Again ImprovesUS hospitals again pared the percent of accountsreceivable (A/R) aged greater than 90 days in sec-ond quarter 2010, reducing A/R aged more than 90days to 22.18 percent of total A/R. The benchmarkfor this major financial indicator is to hold A/Raged greater than 90 days to 25 percent or less oftotal A/R.In achieving benchmark-level performance for

this major financial indicator in second quarter2010, US hospitals hit the A/R aging benchmark in three of the four mostrecent quarterly financial reporting periods. In doing so, the nation’s hos-pitals secured a four-quarter A/R aging average that also hit the bench-mark, at 24.17 percent.

Bill Time up SlightlyThe nation’s hospitals took more time to bill insecond quarter 2010, but still remained within thebenchmark for this major financial indicator,which is to bill claims within ten business days orfewer. The second quarter 2010 discharge-to-bill(DTB) time average was 9.00 days, up from 8.91days in first quarter 2010.Although US hospitals achieved benchmark-

level DTB performance in the second quarter, thefour-quarter average, which spans third quarter2009 through second quarter 2010, remained beyond benchmark range.The four-quarter DTB average was 10.23 days.


Days from Discharge to Bill

2nd Qtr.2010

D A Y S F R O M D I S C H A R G E - T O - B I L L

3rd Qtr.2009

4th Qtr.2009

1st Qtr.2010

4 Qtr.Average

14

13

12

11

10

9

8

Percentage of Discharge A/R over 90 Days

PERCENTAGE OF DISCHARGE A /R OVER 90 DAYS

2nd Qtr.2010

3rd Qtr.2009

4th Qtr.2009

4 Qtr.Average

34

30

26

22

The improved uncollectibles performance in second quarter 2010 isthe first quarterly financial reporting period since third quarter 2009 thathospitals secured benchmark-level uncollectibles performance. Uncol-lectible write-offs pushed past benchmark level in fourth quarter 2009and first quarter 2010, to 5.29 percent and 5.60 percent of total gross rev-enue, respectively.The improved second quarter 2010 uncollectibles performance still

was not enough for hospitals to achieve benchmark-level uncollectiblesperformance for the four-quarter period spanning third quarter 2009through second quarter 2010. The four-quarter uncollectibles average forthe most recent 12-month period was 5.09 percent.

8.91

27.09

1st Qtr.2010

23.2222.18

12.81

24.17

10.20

24.17

9.00

10.23


GROSSDAY

SREVENUE

OUTS

TANDING

S E C O N D Q U A R T E R G D R O

Five-Year Comparisons—GDRO

60

55

50

45

40

20102005 2006 2007 2008 2009

41.35

(Four-Quarter Average)

What HappenedIn second quarter 2010, the nation’s hospitals delivered the best secondquarter GDRO performance since 2002. Nationally, the second quarter2010 GDRO average was 40.31 days, an eight-day improvement fromthe second quarter GDRO average reported for the same period a yearago and nearly five days better than the prior GDRO second quarter bestachieved in 2004, which was 45.03 days.The second quarter GDRO average has been nearly ten days or more

below the benchmark cutoff for this major financial indicator, which is aGDRO average of fewer than 60 days, since second quarter 2004. UShospitals pushed past 50 days only three times during the second quar-terly financial reporting period since 2002—in second quarter 2002, witha 56.70-day second quarter GDRO average; in 2003, with a 53.40-daysecond quarter GDRO average; and in second quarter 2008, when thenational GDRO average was 50.39 days. With the exceptions of secondquarter 2002, 2003, and 2008, US hospitals’ second quarter GDRO aver-ages have been fewer than 50 days for nearly a decade.

48.36 49.96 47.9250.4052.65

National Average GDRO Since 2002(Comparison of 2nd Quarter Findings Only)

2008

49.78

2009 201065

60

55

50

45

40

35

48.87 48.3050.39

48.36

2002 2003 2004 2005 2006 2007

45.03

53.4056.70

40.31

(1st & 2nd Qtr.)


Major Indicators—Prior Quarter vs. Current

60

50

40

30

20

10

0

GDRO A/R AgingUncollectibles Billing Time

1st Qtr. 20102nd Qtr. 2010

for all payer types in second quarter 2010 was9.00 days, up less than a tenth of day from an8.91-day DTB average in first quarter 2010.A slight increase in bill time average did not

hamper hospitals from reducing the percent ofA/R aged greater than 90 days in second quar-ter 2010. Nationally, hospitals reported A/Raged greater than 90 days made up 22.18 per-cent of total A/R in second quarter 2010, downfrom 23.22 percent of total A/R aged morethan 90 days in first quarter 2010. The secondquarter 2010 A/R aging performance marks thesecond consecutive quarter of improvement forthis major financial indicator.Of significant note in second quarter 2010

was US hospitals’ achievement in the area ofuncollectible write-offs. In second quarter2010, the nation’s hospitals reduced uncol-lectible bad debt or charity write-offs to 4.54percent of total gross revenue. The benchmarkfor this major financial indicator is to holduncollectible write-offs to 5 percent or less oftotal gross revenue, a feat hospitals wereunable to achieve in first quarter 2010, whentotal write-offs pushed to 5.60 percent.

In securing a new low for second quarterGDRO performance in 2010, the nation’s hos-pitals are on track for establishing a newGDRO low for the year if this high level ofGDRO performance continues in the third andfourth quarters of 2010. The four-quarterGDRO average in 2009 was 47.92 days, thebest four-quarter GDRO average within thepast five years. To date in 2010, based on firstand second quarter GDRO performance, UShospitals have achieved a 41.35-day GDROaverage for the first six months of the year.The nation’s hospitals in second quarter 2010

went three for four in securing improved per-formance in three of four major financial indi-cators. US hospitals nicked 2.08 days from thefirst quarter GDRO average of 42.39 days,reduced the percent of gross revenue written offas uncollectible bad debt or charity, andreduced the percent of A/R aged greater than 90days. The only decline in performance amongthe four major financial indicators was inbilling time, although that decline was minimal.US hospitals took more time to bill claims in

second quarter 2010. The DTB time average

42.39

23.22

40.31

4.545.60

22.18

8.91

SM A L L H O S P I TA L S , N O R T H E A S T R E P E AT A S MO S T I M P R O V E D

Two hospital categories earned most-improvedby GDRO status for the second consecutive

quarter in 2010. Small hospitals, with 100 to199 beds, and hospitals in the Northeast region

9.00

Most Improved—By GDRO

US HOSPITALS WITH NORTHEAST CBOTOTAL 100–199 BEDS HOSPITALS HOSPITALS

1st 2nd 1st 2nd 1st 2nd 1st 2ndQtr. Qtr. Qtr. Qtr. Qtr. Qtr. Qtr. Qtr.2010 2010 2010 2010 2010 2010 2010 2010

GDRO 42.39 40.31 41.05 29.47 32.60 27.60 48.80 43.31Total Uncollectibles 5.60 4.54 3.05 3.10 4.54 3.67 4.52 4.82Bad Debt 2.85 2.36 2.25 2.10 3.37 2.60 1.83 1.75Charity 2.75 2.18 0.80 1.00 1.17 1.07 2.69 3.07


repeated as most improved by GDRO amongthe 18 hospital categories examined in HARA.The third hospital category earning a spotamong the three most-improved by GDRO—and doing so for the first time—was the cate-gory of hospitals that operate with a centralbusiness office (CBO).Hospitals in the Northeast region achieved

most-improved by GDRO status in secondquarter 2010 while also reducing the percentof total gross revenue written off as uncol-lectible bad debt or charity. Northeast hospi-tals were the only hospitals among the threemost-improved by GDRO to reduce uncol-lectible write-offs while also improving theGDRO average. Northeast hospitals reported asecond quarter GDRO average of 27.60 days,a five-day improvement from a first quarterGDRO average of 32.60 days. Facilities in thisregion also reduced uncollectible write-offs to3.67 percent of total second quarter gross rev-enue, an improvement from writing off 4.54percent of total gross revenue as uncollectiblebad debt or charity in first quarter 2010.Small hospitals, those with 100 to 199

beds, again made significant strides in reduc-ing the GDRO average. In second quarter2010, small hospitals lopped 11.58 days fromthe first quarter GDRO average of 41.05days, achieving a 29.47-day second quarterGDRO average. Uncollectible write-offs

were on the rise among these small facilitiesin the second quarter, albeit only slightly.Hospitals with 100 to 199 beds reported 3.10percent of total second quarter gross revenuewas written off as bad debt or charity, upfrom 3.05 percent of first quarter gross rev-enue written off as uncollectible.CBO hospitals made their first appearance

on the most-improved by GDRO list in secondquarter 2010. CBO hospitals reported a secondquarter GDRO average of 43.31 days, or a5.49-day improvement from the first quarter.CBO hospitals, however, reported an increasein the percent of total gross revenue written offas uncollectible in second quarter 2010. Uncol-lectible write-offs among CBO facilitiesincreased to 4.82 percent of total second quar-ter gross revenue, up from 4.52 percent ofgross revenue written off as uncollectible baddebt or charity in first quarter 2010.Although two of the three most-improved by

GDRO hospitals reported an increase in thepercent of total gross revenue written off asuncollectible, hospitals in all three categoriesdid achieve benchmark-level uncollectiblesperformance. Pushing up uncollectible write-offs among small hospitals and CBO facilitieswere increases in charity write-offs, whichwere up from the prior quarter by 25 percentamong small hospitals and by 14.13 percentamong CBO facilities.

M I D - R A N G E H O S P I T A L S O U T P E R F O R M T O P - P E R F O R M E R S

In second quarter 2010, mid-range performersoutperformed top-performers in GDRO anduncollectibles performance. Mid-range per-forming hospitals reduced the second quarterGDRO average by more than two weeks fromthe first quarter GDRO average, while top-per-formers reported a slight uptick in GDROaverage in second quarter 2010. Mid-rangeperformers also reduced the percent of secondquarter gross revenue written off as uncol-lectible by nearly 65 percent, while top per-formers reduced second quarter write-offs byabout 5 percent.

With a significantly improved second quar-ter GDRO performance, mid-range performersachieved a GDRO average that was less thanthree days distant from top-performing hospi-tals' second quarter GDRO average. Mid-rangeperformers reported a second quarter GDROaverage of 42.60 days, or an 18.20-dayimprovement from the prior quarter. Top-per-forming hospitals reported a 40.18-day secondquarter GDRO average, up only slightly from afirst quarter GDRO average of 39.88 days.

In terms of uncollectibles performance,hospitals in these GDRO categories performed

well in reducing the percent of gross revenuewritten off as uncollectible. Hospitals withbenchmark and mid-range GDRO performancereported reduced write-offs in second quarter2010 that were significant enough to allowhospitals in each of these GDRO categories tohit the uncollectibles benchmark.

Top-performing hospitals reduced the per-cent of second quarter gross revenue writtenoff as bad debt or charity to 4.60 percent, ornearly a quarter of a percentage point betterthan first quarter write-offs. These benchmarkfacilities achieved this improved second quar-ter uncollectibles performed by reducing baddebt write-offs to 2.42 percent of total grossrevenue, down from 2.68 percent of first quar-ter gross revenue written off as bad debt. Char-ity write-offs remained at the same level insecond quarter 2010 as that reported by top-performing hospitals in the first quarter—at2.16 percent of total gross revenue.

Mid-range performing hospitals, on theother hand, secured benchmark-level uncol-lectibles performance in the second quarter bysignificantly slashing bad debt and charitywrite-offs. Hospitals with GDRO averages


Comparisons of Uncollectibles—By GDRO PerformancePercentage of Gross Revenue Written Off as Bad Debt or Charity

3RD QTR. 4TH QTR. 1ST QTR. 2ND QTR. 4-QTR.2009 2009 2010 2010 AVG.

Hospitals with GDRO < 60 days 4.44 5.27 4.84 4.60 4.79Hospitals with GDRO from 60–90 days 8.60 5.22 10.63 3.80 7.06

Comparisons of Hospitals—By GDRO Performance3RD QTR. 4TH QTR. 1ST QTR. 2ND QTR. 4-QTR.2009 2009 2010 2010 AVG.

Hospitals with GDRO < 60 days 45.08 39.31 39.88 40.18 41.11Hospitals with GDRO from 60–90 days 69.25 67.14 60.80 42.60 59.95

A L L B U T S O U T H W E S T I M P R O V E G D R O

All hospitals by region achieved benchmark-level GDRO performance in second quarter 2010,with one hospital category by region achievingthe GDRO benchmark without improving thesecond quarter GDRO average. In contrast, allhospitals by region improved uncollectibles per-formance in the second quarter, with only onehospital category by region failing to achieve thebenchmark for uncollectibles performance.Southwest hospitals were the only hospitals

by region to report a higher second quarterGDRO average than the prior quarter. Thebump in GDRO average among Southwestfacilities was held to just shy of a day, withfacilities in this region reporting a second quar-ter GDRO average of 44.86 days, up from a43.90-day first quarter GDRO average.

Despite this slight increase in GDRO aver-age, Southwest hospitals joined their hospitalcounterparts by region in securing benchmark-level GDRO performance in the second quar-ter. Northeast hospitals reported the bestGDRO average by region, with a 27.60-daysecond quarter GDRO average, or five daysbetter than the prior quarter. Southeast hospi-tals nearly notched a five-day GDRO improve-ment, reporting a second quarter GDROaverage of 39.72 days, or 4.82 days better thanthe 44.54-day GDRO average reported in thefirst quarter. Midwest hospitals reported a1.29-day improvement in GDRO average, witha 43.16-day second quarter GDRO average,down from a first quarter GDRO average of44.45 days.


GDRO—By Region

US MID-TOTAL NORTHEAST ATLANTIC SOUTHEAST MIDWEST SOUTHWEST NORTHWEST

1st 2nd 1st 2nd 1st 2nd 1st 2nd 1st 2nd 1st 2nd 1st 2ndQtr. Qtr. Qtr. Qtr. Qtr. Qtr. Qtr. Qtr. Qtr. Qtr. Qtr. Qtr. Qtr. Qtr.2009 2010 2009 2010 2009 2010 2009 2010 2009 2010 2009 2010 2009 2010

42.39 40.31 32.60 27.60 46.56 43.80 44.54 39.72 44.45 43.16 43.90 44.86 n/a n/a

Uncollectibles—By Region

US MID-TOTAL NORTHEAST ATLANTIC SOUTHEAST MIDWEST SOUTHWEST NORTHWEST

1st 2nd 1st 2nd 1st 2nd 1st 2nd 1st 2nd 1st 2nd 1st 2ndQtr. Qtr. Qtr. Qtr. Qtr. Qtr. Qtr. Qtr. Qtr. Qtr. Qtr. Qtr. Qtr. Qtr.2009 2010 2009 2010 2009 2010 2009 2010 2009 2010 2009 2010 2009 2010

5.60 4.54 4.54 3.67 6.76 1.50 7.46 6.92 4.73 4.70 4.20 3.60 n/a n/a

between 60 to 90 days reduced bad debt write-offs to 1.40 percent of total second quartergross revenue, down from 4.00 percent in thefirst quarter. Charity write-offs were reduced to

2.40 percent of total second quarter gross rev-enue among mid-range performers, down from6.63 percent of total gross revenue written offas charity in first quarter 2010.


All hospitals by region reduced the percentof total second quarter gross revenue writtenoff as uncollectible bad debt or charity, and allbut one hospital category by region securedbenchmark-level uncollectibles performance insecond quarter 2010. Hospitals in the South-east region reduced second quarter uncol-lectible write-offs by slightly more than half apercentage point, to 6.92 percent of total grossrevenue. Facilities in the Southeast, however,remained nearly two full percentage pointsbeyond the benchmark for this major financialindicator, which is to hold uncollectible write-offs to 5 percent or less of total gross revenue.Hospitals in all other regions reduced the per-

cent of total gross revenue written off as uncol-lectible in second quarter 2010. The hospitals byregion that reduced uncollectible write-offs inthe second quarter also achieved benchmark-level uncollectibles performance for this secondquarterly financial reporting period.

Midwest hospitals retained benchmark-leveluncollectibles performance by reducing baddebt write-offs enough to offset a second quar-ter spike in charity write-offs. Midwest facili-ties reported 2.68 percent of second quartergross revenue was written off as bad debt,down from 2.85 percent in the first quarter.Charity write-offs swelled to 2.02 percent oftotal gross revenue in the second quarter, upfrom 1.88 percent in the prior quarter. Still,Midwest hospitals held total write-offs to 4.70percent of total second quarter gross revenue,down from 4.73 percent in the prior quarter.Northeast and Southwest hospitals reduced

write-offs by less than a percentage point in sec-ond quarter 2010, and also shared a similar write-offs total. Northeast hospitals reported 3.67percent of total second quarter gross revenue waswritten off as bad debt or charity, and Southwesthospitals reported 3.60 percent of second quartergross revenue was written off as uncollectible.

G D R O B Y B E D S I Z E

Hospitals with 200 to 399 beds were the onlyhospitals by bed-size category to report ahigher GDRO average in second quarter 2010than in the first quarter. Hospitals in this mid-size bed-size category, however, retained aGDRO average of fewer than 60 days in thesecond quarter, which is the benchmark for thismajor financial indicator. Thus, mid-size hos-pitals retained the same distinction as theircounterparts in all other bed-size categories—that of a top-performing facility by GDRO.By bed size, the nation’s smallest hospitals,

those with fewer than 100 beds, reported thehighest second quarter GDRO average, at49.97 days, a nearly half-day improvementfrom the first quarter. Hospitals with 100 to199 beds notched the best GDRO improvementby bed size, with the second quarter GDROaverage of 29.47 days reflecting an 11.58-day

improvement from the prior quarter. Largerhospitals, those with 400 to 600 beds, reporteda 2.62-day improvement in GDRO average inthe second quarter, to 38.18 days. As noted,only mid-size hospitals reported a second quar-ter bump in GDRO average, up by 0.77 days,to a 41.64-day second quarter GDRO average.

Hospitals with 200 to 399 beds and thosewith 400 to 699 beds were the only hospital cat-egories by bed size to report an improvement in

Mid-size hospitals retained thesame distinction as their

counterparts in all other bed-sizecategories—that of a top-performing

facility by GDRO.


Bed Size—GDRO Comparison

US 0–99 100–199 200–399 400–699 700+TOTAL BEDS BEDS BEDS BEDS BEDS

1st 2nd 1st 2nd 1st 2nd 1st 2nd 1st 2nd 1st 2ndQtr. Qtr. Qtr. Qtr. Qtr. Qtr. Qtr. Qtr. Qtr. Qtr. Qtr. Qtr.2010 2010 2010 2010 2010 2010 2010 2010 2010 2010 2010 2010

42.39 40.31 50.45 49.97 41.05 29.47 40.87 41.64 40.80 38.18 n/a n/a

Bed Size—Uncollectibles Comparison


1st 2nd 1st 2nd 1st 2nd 1st 2nd 1st 2nd 1st 2ndQtr. Qtr. Qtr. Qtr. Qtr. Qtr. Qtr. Qtr. Qtr. Qtr. Qtr. Qtr.2010 2010 2010 2010 2010 2010 2010 2010 2010 2010 2010 2010

5.60 4.54 6.08 6.10 3.05 3.10 5.00 4.74 6.67 4.05 n/a n/a

uncollectibles performance in second quarter2010. Larger hospitals reported the most sig-nificant improvement in reducing write-offs inthe second quarter. Hospitals with 400 to 699beds reduced write-offs to 4.05 percent of totalsecond quarter gross revenue, or a nearly 40percent improvement from the first quarter,when hospitals in this bed-size categoryreported 6.67 percent of total gross revenuewas written off as uncollectible. Mid-size facil-ities with 200 to 399 beds reduced write-offs to4.74 percent of total gross revenue in the sec-ond quarter, down from an even 5 percent offirst quarter gross revenue written off as baddebt or charity.Small hospitals, those with fewer than 100

beds and those with 100 to 199 beds, reportedan increase in uncollectible write-offs in sec-ond quarter 2010. Hospitals with 100 to 199beds increased total write-offs only slightly inthe second quarter, to 3.10 percent of totalgross revenue, up from 3.05 percent in theprior quarter. The nation’s smallest hospitals

also reported only a slight increase in uncol-lectible write-offs in second quarter 2010—amere 0.02 percentage point bump.

Hospitals with fewer than 100 beds, how-ever, had a high level of uncollectible write-offs in first quarter 2010. Thus, hospitals withfewer than 100 beds were the only hospitals bybed-size category unable to secure benchmark-level uncollectibles performance, reporting6.10 percent of total second quarter gross rev-enue written off as uncollectible charity or baddebt, up from 6.08 percent in the first quarter.

Hospitals with fewer than 100 bedswere the only hospitals by bed-size

category unable to securebenchmark-level uncollectibles

performance, reporting 6.10 percentof revenue written off as

uncollectible charity or bad debt.


GDRO Comparison—By Geographic Setting

US TOTAL URBAN SUBURBAN RURAL


42.39 40.31 44.01 39.44 41.55 47.47 41.46 38.38

S U B U R B A N H O S P I T A L S R E P O R T G D R O D E C L I N E

By geographic setting, all hospital categoriesbut one improved the GDRO average in secondquarter 2010, and all hospitals by geographicsetting reduced uncollectible write-offs in thesecond quarter. Even with one hospital by geo-graphic setting reporting a higher GDRO aver-age in second quarter than in the first quarter of2010, all hospitals by geographic settingachieved benchmark-level GDRO and uncol-lectibles performance in the second quarterlyfinancial reporting period of 2010.Suburban hospitals were the only hospitals

by geographic setting to report a decline inGDRO performance in second quarter 2010.Suburban hospitals reported a 5.92-day spikein GDRO average in the second quarter, to47.47 days, up from a 41.55-day first quarterGDRO average.Urban hospitals reported the best GDRO

improvement by geographic setting, reducingthe GDRO average to 39.44 days in secondquarter 2010, down from a 44.01-day firstquarter GDRO average. Rural hospitalsreported a 3.08-day GDRO improvement, with

a second quarter GDRO average of 38.38 days,down from a GDRO average of 41.46 daysreported in first quarter 2010.Hospitals in all geographic settings improved

uncollectibles performance in the second quar-ter, and, in doing so, all hospitals by geographicsetting also achieved benchmark-level uncol-lectibles performance in the second quarterlyfinancial reporting period. Suburban hospitalsreported the most significant uncollectiblesimprovement, reducing write-offs to 3.80 per-cent of total second quarter gross revenue,down from 7.55 percent of first quarter grossrevenue written off as bad debt or charity.Urban hospitals reduced second quarter

write-offs to 4.48 percent of total gross rev-enue, down from 5.28 percent of total grossrevenue written off as uncollectible in the firstquarter. Rural hospitals achieved benchmark-level uncollectibles performance in the secondquarter by reducing write-offs to 4.80 percentof total gross revenue, down from 5.12 percentof first quarter gross revenue written off ascharity or bad debt.

Uncollectibles Comparison—By Geographic Setting

US TOTAL URBAN SUBURBAN RURAL


5.60 4.54 5.28 4.48 7.55 3.80 5.12 4.80

UNCOLLECTIB

LES

The nation’s hospitals rallied to reduce uncollectible write-offs in secondquarter 2010, and did so to such an extent as to secure the benchmark forthis major financial indicator. US hospitals reported 4.54 percent of totalgross revenue was written off as uncollectible in second quarter 2010,which reflects a 1.06 percentage point improvement from the prior quar-ter. Nationally, hospitals last achieved benchmark-level uncollectiblesperformance in third quarter 2009, when US hospitals reported 4.92 per-cent of total gross revenue was written off as charity or bad debt.Benchmark-level uncollectibles performance slipped from US hospi-

tals’ collective grasp in fourth quarter 2009, when charity and bad debtwrite-offs pushed to 5.29 percent of total gross revenue. Uncollectible

write-offs pushed evenhigher in first quarter2010, when bad debt andcharity write-offs eroded5.60 percent of total grossrevenue.US hospitals achieved

benchmark-level uncol-lectibles performance insecond quarter 2010 byreducing both bad debtand charity write-offs.Bad debt write-offsimproved in the secondquarter as hospitals

reduced this uncollectible category to 2.36 percent of total gross revenue,down from 2.85 percent of first quarter gross revenue written off as baddebt. Charity write-offs were reduced to 2.18 percent of total secondquarter gross revenue, down from 2.75 percent in first quarter 2010.The margin separating bad debt and charity write-offs remains narrow.

In second quarter 2010, charity write-offs made up 48.02 percent of totaluncollectible write-offs, and bad debt write-offs made up 51.98 percentof total uncollectible write-offs. Thus, the split between bad debt andcharity continues to track at about even, sustaining the departure from the

Charity—Bad Debt SplitCharity:48.02%of Total

2.18% ofGross

Revenue

Bad Debt:51.98%of Total

2.36% ofGross

Revenue

UNCOLLECTIBLES IMPROVE FROM PRIOR QUARTER


Uncollectibles Comparisons—By Last Four Quarters3RD QTR. 2009 4TH QTR. 2009 1ST QTR. 2010 2ND QTR. 2010

Bad debt 2.66% 2.92% 2.85% 2.36%Charity 2.26 2.37 2.75 2.18Total 4.92 5.29 5.60 4.54


historical split of bad debt comprising about 60percent of total write-offs and charity compris-ing 40 percent.The charity–bad debt split remained at about

50–50 as US hospitals reduced bad debt andcharity write-offs at nearly similar rates in sec-ond quarter 2010. Overall, the total 4.54 per-cent in uncollectible write-offs reflects a 19percent improvement from the prior quarter,with the reduction in bad debt write-offs a 17percent improvement from the first quarter andthe reduction in charity write-offs a nearly 21improvement percent from the prior quarter.

With the improved uncollectibles perform-ance in second quarter 2010, US hospitalsmaintained an overall track record of achievingquarterly benchmark-level uncollectibles per-formance more often than not within the pastthree years. Specifically, the nation’s hospitalshit the uncollectibles benchmark in eight of thepast 12 quarterly financial reporting periods, ora 67 percent success rate in achieving quarterlybenchmark-level uncollectibles performancesince third quarter 2007.

By region, only hospitals in the Southeastreported a higher level of charity write-offs thanbad debt write-offs in second quarter 2010.Southeast hospitals reported 2.35 percent oftotal second quarter gross revenue was writtenoff as bad debt, while 4.57 percent of secondquarter gross revenue was written off as charity.With such a high level of charity write-offs, it isnot surprising that Southeast hospitals also werethe only facility by region to fail to capturebenchmark-level uncollectibles performance inthe second quarter of 2010. With bad debt andcharity combined, Southeast hospitals reported6.92 percent of gross revenue was written off asuncollectible in the second quarter.All other hospitals by region captured

benchmark-level uncollectibles performance insecond quarter 2010. Indeed, only Midwesthospitals came close to pushing past the bench-mark, reporting 4.70 percent of total gross rev-enue written off as uncollectible in the secondquarter. All other regions reported less than 4percent of total second quarter gross revenuewritten off as uncollectible.By bed size, the nation’s smallest hospitals,

those with fewer than 100 beds, continued tostruggle with a high level of write-offs. Hospi-tals with fewer than 100 beds reported 6.10 per-cent of total gross revenue written off as baddebt or charity in second quarter 2010, withcharity write-offs (at 3.30 percent) exceedingbad debt write-offs (at 2.80 percent). Thesesmall hospitals paired a high uncollectibles per-centage with a GDRO average of 49.97 days.

National Average Uncollectibles Since 3rd Quarter 2007

8

6

4

2

0

5.16% 5.29% 5.60%

4.06%

4.21%4.44%

1st Qtr.2008

2nd Qtr.2008

3rd Qtr.2008

4th Qtr.2008

1st Qtr.2009

2nd Qtr.2009

3rd Qtr.2009

4th Qtr.2009

1st Qtr.2010

2nd Qtr.2010

3rd Qtr.2007

4th Qtr.2007

4.59%

4.79% 4.92%5.20%

The nation’s hospitals hitthe uncollectibles benchmark ineight of the past 12 quarterly

financial reporting periods, or a67 percent success rate since

third quarter 2007.

4.71% 4.54%


Uncollectibles—By RegionHOSPITAL LOCATION AVERAGE BAD DEBT AVERAGE CHARITY TOTAL UNCOLLECTIBLES

#ational Average 2.36 2.18 4.54Northeast 2.60 1.07 3.67Mid-Atlantic n/a n/a n/aSoutheast 2.35 4.57 6.92Midwest 2.68 2.02 4.70Southwest 2.26 1.34 3.60Northwest n/a n/a n/a

Comparison of Uncollectibles and GDRO—By Bed SizeUS 0–99 100–199 200–399 400–699 700+

TOTAL BEDS BEDS BEDS BEDS BEDS

Bad debt 2.36 2.80 2.10 2.40 2.17 n/aCharity 2.18 3.30 1.00 2.34 1.88 n/aTotal uncollectibles 4.54 6.10 3.10 4.74 4.05 n/aGDRO 40.31 49.97 29.47 41.64 38.18 n/a

Hospitals in all other bed-size categoriesreported total write-offs of 4.74 percent (athospitals with 200 to 399 beds) or less of totalsecond quarter gross revenue. The best secondquarter uncollectibles performance wasreported by hospitals with 100 to 199 beds,which reported 3.10 percent of total gross rev-enue written off as bad debt or charity in thesecond quarter. This solid uncollectibles per-formance among hospitals with 100 to 199beds was paired with a second quarter GDROaverage of 29.47 days.Mid-size hospitals, with 200 to 399 beds, and

larger hospitals, with 400 to 699 beds, alsopaired benchmark-level uncollectibles perform-ance with a benchmark-level GDRO average.Mid-size hospitals, as noted, reported the high-

est level of total write-offs in the second quar-ter, at 4.74 percent of total gross revenue, witha 41.64-day GDRO average. Larger hospitalsreported a 38.18-day second quarter GDROaverage, with 4.05 percent of second quartergross revenue written off as charity or bad debt.

The best second quarteruncollectibles performance

was reported by hospitals with100 to 199 beds, which reported3.10 percent of total gross revenue

written off as bad debt orcharity in the second quarter.


DE

NI

AL

S

Denials as Percentage of Gross Revenue—US Total andby Bed Size—Prior Quarter vs. Current Quarter


Gross Denials1st Qtr. ’10 0.10 0.05 0.00 0.01 0.22 n/a2nd Qtr. ’10 0.09 0.12 0.00 0.02 0.17 n/a

#et Denials1st Qtr. ’10 0.43 0.08 0.03 0.93 0.24 n/a2nd Qtr. ’10 0.24 0.10 0.03 0.32 0.37 n/a

Avoidable Gross Denials as a Percentage ofTotal Uncollectibles—Prior Quarter vs. Current Quarter


1st Qtr. ’10 1.79 0.82 0.00 0.20 3.30 n/a2nd Qtr. ’10 1.98 1.97 0.00 0.42 4.20 n/a

A V O I D A B L E D E N I A L S C L I M B

Nationally, hospitals reported fewer gross and net denials in secondquarter 2010. By bed size, it was more of a mixed bag, with some hos-pitals reporting increases in denials and others reporting reduceddenials.Although denials were on the decline, the overall result was an

increase in avoidable gross denials as a percentage of total uncol-lectibles. The reason: Avoidable gross denials as a percentage of write-offs often rise when write-offs diminish, even if denials overalldecline, as there are fewer write-offs to absorb—or mask—the per-centage of denials that could have been avoided. Avoidable denials arerevenue write-offs that could be averted if health plan or other require-ments had been met, or had been met timely.Nationally, avoidable gross denials declined to 0.09 percent of total

gross revenue, while avoidable denials increased to 1.98 percent of totaluncollectibles due to a decline in total uncollectible write-offs in secondquarter 2010. The nation’s larger hospitals, those with 400 to 699 beds,reported the greatest increase in avoidable denials as a percentage of totaluncollectibles, at 4.20 percent.

Percentage of Discharged A/R over 90 Days—Last Three Years

40

30

20

10

23.7224.89

25.78

24.42

1stQtr.

2ndQtr.

3rdQtr.

4thQtr.

1stQtr.

2ndQtr.

3rdQtr.

4thQtr.

1stQtr.

2ndQtr.

3rdQtr.

4thQtr.

2007

Discharged A/R Aging (from Date of Discharge)Percentage of Total A/R—By Bed Size


0–30 days 53.77 43.33 61.37 55.36 55.62 n/a31–60 days 15.69 20.00 13.97 14.76 14.45 n/a61–90 days 8.38 11.18 7.10 7.88 7.57 n/a91–120 days 6.03 8.23 6.47 5.50 4.78 n/a120+ days 16.15 17.33 11.07 16.52 17.60 n/a

A / R A G I N G I M P R O V E S

US hospitals again reduced the percentage of accounts receivable (A/R)aged greater than 90 days in second quarter 2010, marking two straightquarterly financial reporting periods of improved A/R aging perform-ance. Nationally, hospitals held second quarter A/R aged greater than 90days to 22.18 percent of total A/R, well within the benchmark for thismajor financial indicator, which is to hold A/R aged more than 90 days toless than 25 percent of total A/R.By bed size, only the nation’s smallest hospitals, those with fewer than

100 beds, failed to achieve benchmark-level A/R aging performance insecond quarter 2010. Small hospitals reported 8.23 percent of A/R aged91 to 120 days and 17.33 percent aged greater than 120 days, for a com-bined total of 25.56 percent of total A/R aged more than 90 days.Mid-size hospitals, those with 200 to 399 beds, and larger hospitals,

with 400 to 699 beds, reported A/R aging performance similar to that ofthe national average. Hospitals with 100 to 199 beds reported the best A/Raging performance in second quarter 2010. Hospitals in this smaller bed-size category reported 6.47 percent of total A/R was aged between 91 and120 days, and 11.07 percent was aged more than 120 days, which com-bined result in only 17.54 percent of total A/R aged greater than 90 days.

2008

27.09

22.8424.23

2009

26.46 26.33

24.17

2010

26.29

AGING

OF

ACCOUNTS

RECEIVABLE


22.18


MEDICARE,MANAGED

CARE,&

OTHERSOURCESOF

REVENUE

Medicare vs. Managed Care as a Percentageof Gross Revenue—By Bed Size

MEDICARE MANAGED CAREUS Total1st Qtr. ’10 41.31 28.542nd Qtr. ’10 40.16 29.730–99 Beds1st Qtr. ’10 33.83 28.102nd Qtr. ’10 35.30 29.00100–199 Beds1st Qtr. ’10 32.13 23.172nd Qtr. ’10 38.47 20.83200–399 Beds1st Qtr. ’10 46.46 27.522nd Qtr. ’10 42.24 30.48400–699 Beds1st Qtr. ’10 42.42 31.252nd Qtr. ’10 42.50 34.05700+ Beds1st Qtr. ’10 n/a n/a2nd Qtr. ’10 n/a n/a

M A N A G E D C A R E R E V E N U E O N T H E R I S E

Medicare as a source of gross revenue declined by a little more than apercentage point in second quarter 2010, while managed care revenuecontinued its rise. Medicare remains US hospitals’ largest payer, withhospitals reporting Medicare made up 40.16 percent of total secondquarter gross revenue,down from 41.31 per-cent in the first quarter.Managed care revenueincreased to 29.73 per-cent of total gross rev-enue in the secondquarter, up from 28.54percent in the firstquarter.The nation’s larger hospitals, those with 400 to 699 beds, reported

an increase in both Medicare and managed care revenue in secondquarter 2010. These larger facilities also reported the high level ofMedicare and managed care revenue by bed size, with Medicare mak-ing up 42.50 percent and managed care making up 34.05 percent oftotal second quarter gross revenue.

Medicare remains US hospitals’largest payer, with hospitalsreporting Medicare made up

40.16 percent of total second quartergross revenue. Managed care

revenue increased to 29.73 percent.


Percentage of Total Gross Revenue—By Bed SizeUS 0–99 100–199 200–399 400–699 700+


Self-pay 4.67 6.43 3.87 4.38 4.13 n/aMedicare 40.16 35.30 38.47 42.24 42.50 n/aCommercial 9.77 10.90 14.67 10.38 6.05 n/aMedicaid 13.37 16.40 19.37 10.98 10.33 n/aManaged care 29.73 29.00 20.83 30.48 34.05 n/aOther 2.96 1.97 2.80 2.08 4.43 n/a

Outstanding Receivables—By Financial Class

Medicare:29.12%

ManagedCare:

27.55%

Self-Pay:14.05%

Commercial:10.11%

Medicaid:12.87%

Other:5.77%

Managed Care Receivables—Last Three Years

40

30

20

10

23.25%

29.24%

1st Qtr.2008

2nd Qtr.2008

3rd Qtr.2008

4th Qtr.2008

1st Qtr.2009

2nd Qtr.2009

3rd Qtr.2009

4th Qtr.2009

1st Qtr.2010

2nd Qtr.2010

3rd Qtr.2007

4th Qtr.2007

27.55%

Managed care revenue was up most signifi-cantly among hospitals with 200 to 399 beds.Facilities in this bed-size category reported30.48 percent of total second quarter gross rev-enue was from managed care payers, up from27.52 percent in the first quarter. Medicareremained a significant source of revenue forthese mid-size hospitals, although Medicaremade up 42.24 percent of total gross revenuein the second quarter, down from 46.46 percentin the prior quarter.Nationally, commercial payers made up

about 10 percent of total second quarter gross

31.14%24.76%

18.67%

27.07%

22.05%

25.70%

24.76%

23.22%

revenue. That figure fluctuated significantly bybed-size category. Larger hospitals, those with400 to 699 beds, reported only 6.05 percent ofsecond quarter gross revenue was from com-mercial payer sources, while hospitals with100 to 199 beds reported commercial payers

Medicare remained a significantsource of revenue for

mid-sized hospitals, althoughMedicare was down from

46.46 percent in the prior quarter.

26.26%


made up 14.67 percent of their second quartergross revenue.

Similarly, data regarding self-pay as asource of revenue were a mixed bag in secondquarter 2010. Nationally, hospitals reported4.67 percent of total gross revenue was fromself-pay sources. The nation’s smallest hospi-tals, those with fewer than 100 beds, reportedself-pay made up 6.43 percent of their totalgross revenue in the second quarter.

When payer sources are examined in contextof A/R, Medicare dominates, which is not sur-prising given Medicare also is the largestsource of revenue. US hospitals reportedMedicare was responsible for 29.12 percent oftotal outstanding receivables in second quarter2010. Managed care receivables again were onthe rise in second quarter 2010, to 27.55 per-cent of total outstanding A/R. The level ofmanaged care receivables corresponds closelyto the level of managed care as a source of rev-enue, which was 29.73 percent in second quar-ter 2010.Self-pay A/R, however, remains a significant

concern. While all other payer types have out-standing receivables percentages at or belowtheir corresponding revenue percentages,self-pay is just the opposite. The percentage ofself-pay A/R—at 14.05 percent in second quar-ter 2010—was more than triple the percentageof self-pay when measured as a source ofrevenue.

While all other payer types haveoutstanding receivables percentagesat or below their corresponding

revenue percentages, self-pay is justthe opposite. The percent of self-pay

A/R was more than triple thepercentage of self-pay when

measured as a source of revenue.


Discharge-to-Bill Time—Last 12 Quarters

10.12

14

12

10

8

10.2010.81

9.99

10.4510.35

10.12

2ndQtr.

3rdQtr.

4thQtr.

1stQtr.

2ndQtr.

3rdQtr.

4thQtr.

1stQtr.

2ndQtr.

3rdQtr.

4thQtr.

2007

Combined Discharge to Bill and GDRO—Prior Quarter vs. Current Quarter

15

10

5

0

Average Discharge to Bill Time Average GDRO

1st Qtr. 20102nd Qtr. 2010

60

40

20

0

42.39 40.31

DAYS FROM D I SCHARGE TO B I L L R I S E S AGA IN

During the second quarter of this year, the number of days from dis-charge to bill (DTB) took an upward turn. US hospitals reported an aver-age of 9.00 days overall from DTB for all payers. This is an increase overthe first quarter when the average was 8.91 days overall.Previous to this second quarter increase, there had been an ongoing

decline in DTB time, beginning in the third quarter of 2009. DTB hit arecent all-time high of 12.81 days in the third quarter of 2009 and thendropped to 10.20 and 8.91 days in the fourth and first quarters, consecu-tively. Even though the trend had been toward lowering the DTB time, thefour-quarter average remained above the ten-day benchmark level for DTB.With this latest slight increase, the four quarter average has moved

much closer the ten-day benchmark figure. Nevertheless, it remainsslightly above that target, at 10.22 days.Continuing on a trend, the average GDRO declined. The GDRO fell

from a mean of 42.39 to 40.31 days. This figure is well below the bench-mark of excellence for hospital GDRO, which is 50.00 days.

1stQtr.

2008

12.25

9.91

2009

12.81

BILLINGINFO

RMAT

ION

2010

8.91

8.90

9.00

9.00


D T B V A R I E S B Y P A Y E R

In the second quarter of this year, hospitalsresponding to the HARA survey reported takinglonger to prepare a claim for Medicare thanthey did in the first quarter. In the first quarter,hospitals took 8.83 days from DTB on aMedicare claim. That rose to 9.56 days in thesecond reporting period.

On the other hand, there was an improve-ment among hospitals in getting claims to allother payers. Whereas it took 8.98 days in thefirst quarter to get out a claim, that wasreduced to 8.43 days in the second quarter.The change was driven in large part by hospi-tals with 200 to 399 beds.

L A R G E R H O S P I T A L S A V E R A G E B E S T

Reviewing DTB time by the size of the hospi-tals reporting data, the group with 200 to 399beds performed most efficiently, with an over-all average of 8.54 DTB for all payers. Thatbreaks down to 8.78 days for Medicare and8.30 days for all other payers.Next in line were large hospitals (400 to 699

beds) with an average of 9.11 days from DTB.This group reported 9.48 days for Medicare and8.73 days for other payers.Both of the remaining hospital groups with

zero to 99 beds and 100 to 199 beds reported an

average of 9.23 DTB overall, but the individualaverages were quite different when examined.It took the group with 100 to 199 beds 10.70days to submit a Medicare claim, while it tookthe group with zero to 99 beds 9.80 days. Thegroup with 100 to 199 beds took only 7.77 daysto submit a bill to other payers, and the groupwith zero to 99 beds reported 8.65 days.Interestingly, when reviewed individually,

all of the hospital groups by bed size had anaverage DTB time below the benchmark often days.

Average Days Discharge to BillMedicare “All Other” Payers

1st Qtr. 20102nd Qtr. 2010

15

10

5

0

8.83 8.989.568.43

Discharge to Bill—By Bed Size (Days)0–99 100–199 200–399 400–699 700+BEDS BEDS BEDS BEDS BEDS

Medicare 9.80 10.70 8.78 9.48 n/aAll others 8.65 7.77 8.30 8.73 n/a


S O U T H E A S T F A R E S W E L L

Hospitals in the Southeastern region of theUnited States performed best at getting theirclaims to Medicare quickly. This subgroupreportedly took 4.32 days to perform the task.Once again, as was the case in the first quarter,the rate was below any of the other regions.The next most efficient group was the Mid-Atlantic hospitals, which reported 6.30 daysfrom DTB. The Southwest and Northeast camein at 8.14 and 8.47 days, respectively. The other

two regions had too small a representation to bereported in this second quarter of the year.The Southeast region reported the best DTB

time for all other payer classes, too. The South-east reported 6.32 days from DTB in the sec-ond quarter of the year. The Southwestreported taking 7.62 days. Finally, the North-east reported 7.80 days, and the Mid-Atlantichospitals reported a much higher rate of11.40 days to get out a claim.

Discharge to Bill—By Region (Days)NORTH- MID- SOUTH- MID- SOUTH- NORTH-EAST ATLANTIC EAST WEST WEST WEST

Medicare 8.47 n/a 4.32 16.48 8.14 n/aAll others 7.80 n/a 6.32 10.72 7.62 n/a

H O S P I T A L S W I T H H I G H E R G D R O M O R E E F F I C I E N T

As has been the case in several recent issues ofthe HARA Report, hospitals with an averageGDRO greater than 60 days are reportinglower DTB times than their counterparts withbenchmark or lower average GDRO.Hospitals with an average GDRO of 60 to

90 days reported an average DTB forMedicare inpatient bills of 6.70 days. On theother hand, facilities with fewer than 60 days

reported an average DTB for Medicare inpa-tients of 9.73 days in the second quarter.There was more than a 30 percent differencebetween the two groups.The same situation held true for claims for

all other payers. Mid-range performing hospi-tals with a 60 to 90 day average GDROreported taking only 6.70 days from DTB—the same as their rate for Medicare bills. And,

Average Days Discharge-to-Bill Time—By GDRO (by Payer Class)

US LESS THAN 60–90 90+TOTAL 60 DAYS DAYS DAYS


Medicare 8.83 9.56 8.95 9.73 7.30 6.70 n/a n/aAll others 8.98 8.43 8.76 8.54 10.80 6.70 n/a n/a


C L A I M S P E R B I L L E R

The number of total claims per biller FTEdeclined in the second quarter of the year. Thisis a reversal of the previous two quarters inwhich claims per biller had been on theincrease. In the second quarter, hospitals indi-cated that billers were responsible for 2,790.93claims. This compares to 2,991.95 claims inthe first quarter.Looking at how the numbers break down by

hospital bed-size category, the subgroup of hos-pitals with 100 to 199 beds saw a large decline in

the number of claims per biller—from 5,055.00to 3,034.00 claims. This appears to be the driv-ing force behind the overall decline becausethere were some smaller increases as well.Hospitals in the 400 to 699-bed range

reported that their billing staff is handling3,309.67 claims per biller, the largest number ofclaims per biller. And, as one might expect, thesmallest hospitals with zero to 99 beds revealedthat their billers were working on least amountof claims at 1,857.33 claims per biller.

Total Claims per Biller FTE—By Bed Size3RD QTR. 2009 4TH QTR. 2009 1ST QTR. 2010 2ND QTR. 2010

0–99 beds 1,905.25 1,750.60 1,685.67 1,857.33100–199 beds 2,544.25 3,608.50 5,055.00 3,034.00200–399 beds 2,252.88 2,328.80 3,101.75 2,591.50400–699 beds 4,145.67 3,370.75 3,089.70 3,309.67700+ beds n/a n/a n/a n/aNational average 2,539.89 2,568.56 2,991.95 2,790.93

benchmark hospitals with a lower averageGDRO reported taking 8.54 days to get outclaims to all other classes of payers. This wasa better rate than the timeframe for Medicareclaims, but still much higher than the ratereported by the other group.Looking back to how these groups per-

formed in the first quarter of the year, the highperformers fell behind with Medicare claims,increasing their billing time from 8.95 days to9.73 days. However, they improved their DTBtime with other payers, from 8.76 to 8.54 days.The mid-range group saw improvements in

both categories. For Medicare bills, their ratewent from 7.30 to 6.70 days. There was a

greater change for other payers, from10.80 days to 6.70 days.

Reason for DelaysCircumstances conspire to delay billing afterdischarge. Some of the HARA hospitals indi-cated the following reasons for delays:• Three-day DRG window;• Internal review by facility—charge captureintegrity;

• Case management review delays; and• External DRG review, contracted by hospitalor through a corporate office.All of these can be behind slower DTB

times.


A/R Accounts per Biller FTE—By Bed SizeUS 0–99 100–199 200–399 400–699 700+


First Qtr. 2010 6,537.64 6,340.67 8,381.00 5,749.38 7,043.00 n/aSecond Qtr. 2010 10,282.20 6,739.00 4,840.50 21,347.25 6,491.00 n/a

B I L L E R S W O R K M O R E A C C O U N T S

US hospitals responding to the HARA surveyreport indicated that their billers were workingon a greater number of accounts on average inthe second quarter of 2010. The average is10,282.20, compared to 6,537.64 claims in theprior quarter. This represents the reversal of adownward trend that had been going on for atleast two consecutive quarters.

The reversal was driven by hospitals in the200 to 399 bed group, which reported a muchlarger number of accounts per biller thanother groups. Some hospitals in this categoryreportedly handle a high number of accounts

for hospital clinics. The average in this cate-gory jumped from 5,749.38 accounts to21,347.25 accounts.Among the other groups by bed size, there

were some losses. The group with 100 to 199beds reported 4,840.50 accounts per biller full-time equivalent (FTE) in the second quarter, abig drop from the first quarter when it was8,381.00 accounts. There was a smaller declineamong hospitals with 400 to 699 beds, whichreported 6,491.00 accounts per biller FTE inthe second quarter, compared to 7,043.00accounts in the first quarter.If we break down this statistic by GDRO

category, we see that billers employed by hos-pitals with an average GDRO of 60 to 90 daysare working fewer accounts at 6,993.00accounts per biller FTE. Those hospital billersat facilities with an average GDRO of fewerthan 60 days were working on 10,517.14accounts per biller FTE.

A/R Accounts per Biller FTE

15,000

10,000

5,000

0

Fewer Than 60 DaysUS Average

10,282.20

60 to 90 Days

10,517.14

6,993.00

Billers employed by hospitals withan average GDRO of 60 to 90 daysare working fewer accounts at

6,993.00 accounts per biller FTE.


Percent of Receivables Delayed in Medical Records (Past 4 Quarters)

20

16

12

8

4

0

1st Qtr. 20104th Qtr. 2009 2nd Qtr. 20103rd Qtr. 2009

Percent of Receivables Delayed in Medical Records—By RegionNORTH- MID- SOUTH- MID- SOUTH- NORTH-EAST ATLANTIC EAST WEST WEST WEST

15.23 n/a 11.68 16.20 7.90 n/a

S O U T H W E S T P E R F O R M S B E S T

In the second quarter, hospitals in the South-west region reported the smallest percentage ofreceivables delayed in Medical Records at 7.90percent. This group must have some excellentideas to keep things moving because they areperforming much better than the others.

On the opposite end of the spectrum, theMidwest has 16.20 percent of A/R held up inMedical Records. The Northeast is not doingmuch better at 15.23 percent.The Mid-Atlantic and the Southeast both

reported numbers around 11.50 percent.

16.8214.06

12.4713.93

A / R D E L A Y E D I N M E D I C A L R E C O R D S

For the second consecutive quarter, the per-centage of A/R delayed in Medical Recordsdeclined. In the second quarter of 2010, thepercentage dropped from 13.93 percent ofreceivables to 12.47 percent. Looking backeven further to the fourth quarter of last year,the figure was 16.82 percent.Reviewing these data by hospital bed size,

facilities with 200 to 399 beds once again

reported the smallest percentage of receiv-ables delayed in the Medical Records area at8.92 percent. Small hospitals with zero to 99beds reported the highest level at 18.30 per-cent. The subgroup with 100 to 199 bedsreported 11.63 percent of receivablesdelayed in Medical Records, while the groupwith 400 to 699 beds reported a slightlyhigher 11.95 percent.

Percent of Receivables Delayed in Medical Records—By Bed Size

US TOTAL 0–99 BEDS 100–199 BEDS 200–399 BEDS 400–699 BEDS 700+ BEDS

12.47 18.30 11.63 8.92 11.95 n/a


Days Revenue Delayedin Medical Records—CBOs vs. Hospitals

CBOS HOSPITALS

4.75 days 5.14 days

Days Revenue in Medical Records—Prior Quarter vs. Current Quarter

1st Quarter 2010 5.24

2nd Quarter 2010 5.14

D A Y S R E V E N U E I N M E D I C A L R E C O R D S D O W N A G A I N

It’s a trend! For the fourth consecutive finan-cial reporting quarter, the average number ofdays of revenue in Medical Records declined.In the second quarter of this year, the averagenumber of days’ revenue held up in MedicalRecords was just 5.14 days. This compares to5.24 days in the first quarter of this year. Look-ing back to the fourth quarter of last year, thefigure was reportedly 6.39 days.

Days Revenue in Medical Records—By Bed Size

15

10

5

0

National Average

5.14

200–399 Beds0–99 Beds 100–199 Beds 400–699 Beds 700+ Beds

n/a

3.80

7.40

5.37

99 beds reported the highest amount of rev-enue at 7.40 days.Another trend held true in the second quar-

ter. As we have reported in previous issues,consolidated business offices (CBOs) havetypically been performing better than hospitalson this key performance indicator. It happenedagain in the second quarter, when CBOsreported an average of 4.75 days revenue inMedical Records.

For the fourth consecutive financialreporting quarter, the averagenumber of days of revenue inMedical Records declined.

Hospitals with 200 to 399 beds respondingto the survey indicated a mere 3.80 days ofrevenue in medical records. This was the low-est figure reported in the second quarter. Hos-pitals with 400 to 699 beds were not too farbehind with 4.63 days.On the other hand, facilities with 100 to 199

beds reported a bit higher figure of 5.37 daysof revenue tied up. And, the group with zero to

4.63


Hospitals can prevent or at least combat theproblem of revenue being held up in the Med-ical Records department. Here are someideas:Late Charges:1. Establish policies indicating that late

charges are not acceptable; all chargesneed to be posted within 24 hours of serv-ice;

2. Establish controls and monitor sources andreasons for late charges;

3. Develop corrective actions specific to eachdepartment to prevent late charges; and

4. Reverse late charges against department’srevenue.

Medical Record Delays:1. Establish policy (include medical staff in

policy development) to make sure all codingis completed within a specific timeframe;

2. Track reasons and type of delays by physi-cian;

3. Report to physicians and medical staff lead-

ership about the physicians who are non-compliant with this policy;

4. Monitor coding delays by account typeand coder backlogs;

5. Establish goals for daily coding perform-ance;

6. Ensure staffing levels of coders are suffi-cient. If they are not, get more resources;outsource if needed;

7. Provide for flextime for coders and allowthem to work remotely from home;

8. Determine when concurrent coding canbe done on inpatients;

9. Ensure all outpatient procedures havecodes prior to services being performed;and

10. Evaluate what level of chart completionis required to allow coding to be per-formed.

Work flow needs to be designed with codingas a priority.

PREVE#TI#G DELAYS

R E V E N U E I N C R E D I T B A L A N C E S U P S L I G H T L Y

The decline in revenue in credit balancesappearing in the first quarter of the year wasreversed in the second quarter. Those facilitiesresponding to the HARA survey reported anaverage of 0.93 days compared to 0.86 days ofrevenue in the first quarter. This once againmarks a backward step; however, the figurehas continued to stay below one day for morethan a year.Breaking down this figure by hospital bed

size, two groups reported increases while tworeported a decrease in the second quarter.Facilities with zero to 99 beds saw an increase

from 0.95 days to 1.58 days of revenue incredit balances. And, those hospitals with 200to 399 beds reported a higher figure of 1.00day compared to 0.83 in the first quarter.Two groups reported a lower rate of revenue

tied up in credit balances during the secondquarter. Hospitals with 400 to 699 beds reallyhave it under control, dropping from 0.85 daysto 0.55 days from the first to second quarter.Finally, the group of facilities with 100 to 199beds reported a rate of 0.70 days in the secondquarter, compared to 0.80 days in the previousquarter.


Days Revenue in Credit Balances—By Bed Size

0.70

4

2

0

National Average

0.93

200–399 Beds0–99 Beds 100–199 Beds 400–699 Beds 700+ Beds

0.55n/a

1.00

Days Revenue in Credit Balances—Prior Quarter vs. Current Quarter

4

3

2

1

0

National Average 200–399 Beds0–99 Beds 100–199 Beds 400–699 Beds 700+ Beds

1st Qtr. 20102nd Qtr. 2010

n/a n/a

0.80 0.70 0.850.55

0.95 1.000.930.86 0.83

1.58

1.58

Days Revenue in Credit Balances—By Geographic Setting

0.57

4

2

0

National Average

1.090.93

RuralUrban Suburban

0.97

C R E D I T B A L A N C E S B Y G E O G R A P H I C S E T T I N G

It has become a pattern for rural hospitals toperform best in this category, but that changedin the second quarter. By geographic setting,suburban hospitals had the smallest amount ofrevenue tied up in credit balances at 0.57 days.The rural hospitals responding to HARA had0.97 days of revenue in credit balances.

Urban hospitals reported the greatestamount of revenue in credit balances.This group went over one day to 1.09days. It may be that city hospitals havemore accounts to handle and, thus, havemore money ending up as a credit in patients’accounts.


Open Accounts per Collector—Prior Quarter vs. Current Quarter

1st Quarter 2010 5,200.00

2nd Quarter 2010 7,796.18

Open Accounts per Collector—By Bed Size

20,000

15,000

10,000

5,000

0

NationalAverage

200–399 Beds

0–99Beds

100–199 Beds

400–699 Beds

700+Beds

Open Accounts per Collector—By GDRO

30,000

25,000

20,000

15,000

10,000

5,000

0

NationalAverage

90+Days

Fewer Than 60Days

60–90Days

O P E N A C C O U N T S P E R C O L L E C T O R

The number of open accounts per collector FTE has increased again,creating a see-saw effect over the last few financial reporting periods.In the second quarter, hospitals reported 7,796.18 open accounts percollector. That is up from 5200.00 in the first quarter. Previously, in thefourth quarter of last year, the figure was 7,166.00—hence, the see-sawanalogy.Large hospitals with 400 to 699 beds reported that their collectors had

the lightest workload. This group was working 3,630.33 A/R accounts percollector. As we have noted in the past, this group of large hospitals likely

n/a

n/a

5,950.33

1,295.00

3,630.33

9,888.67

12,647.20

KE

YR

AT

IO

S7,796.18

8,202.507,796.18


has the resources to employ more collectionstaff and spread the work out to more people.On the flip side, hospitals with 200 to 399

beds reported assigning 12,647.20 accounts totheir collections staffers. This group handlesthe clinic claims, which brings up the total.Hospitals with a higher average GDRO of

more than 60 days are asking their collectors towork on fewer open accounts. Facilities with aGDRO of 60 to 90 days reported only 1,295.00open accounts per collector. On the other hand,hospitals with a lower average GDRO of fewerthan 60 days reported a higher number(8,202.50) of open accounts per collector.

For a long time, hospital collection personnelwere called just that, collectors. Over time,however, collectors’ titles have changed. Hos-pital finance directors indicate that collectionstaffers may have different titles, but there aregood reasons for it.

“We don’t have a position we call a collec-tor, but that is effectively their duty—to callpatients and seek payment,” says M. ToddCole, FHFMA, CPA, director of patientaccounting for Tri Health, Inc., in Cincinnati,Ohio. “Instead, these people are calledaccount specialists.”

John Kivimaki, patient accounting directorfor Mary Rutan Hospital in Bellefontaine,Ohio, states that the collectors in his office arecalled credit representatives. One good reasonthey aren’t called collectors: they don’t makeany collection calls.

“Our credit representatives assist patients

with financial assistance applications and set-ting up payment plans. Our early out programat one of our collection agencies receives thepatient bill after it becomes self-pay [afterinsurance pays] or is self-pay from the begin-ning, at day one,” Kivimaki says. And, whilethey don’t make calls, the credit representa-tives do take calls from patients. “The mainreason we changed to this process is that, withonly two people in this role, it was impossibleto handle all the calls coming in, and alsomake all the necessary calls to self-paypatients,” he says.

Cole indicates that, as far as he knows,many hospitals outsource the collection func-tion, but many other hospitals still employ theuse of predictive dialers, queuing systems,and people to collect for them—pre-bad debt.“We don’t do the bad-debt collecting,” hesays.

COLLECTORS BYA#YOTHER #AME…HOSPITALCOLLECTIO# STAFF HAVE #EWTITLES

H O W M A N Y C O L L E C T O R S T O E M P L O Y

What is a good standard to use to determinehow many collectors you should employ?Several factors can influence the idealstandards:• Percent of self-pay. The larger your amountof self-pay, the more collectors you willneed. Other third-party payer mixes will alsodictate need;

• Present days outstanding. If your days arepresently over 70, you’ll need more collec-tors to pull them down; and

• Effective pre-admission program. If youdon’t have a high percentage of patientsadmitted via preadmission—with good up-front financial arrangements—you’ll needmore collectors on the back end.

It’s a mixed bag as to whether hospitalsfarm out their collection activities or keepthem inhouse, says Tom Hajny, Sales Execu-tive, Health Payment Systems, Inc., in Mil-waukee, Wisconsin. “Many do early outprograms, but many still attempt to do follow-up internally. When discussing self-payreceivables, you always have to segregate theuninsured from the self-pay after insurance,”he says “Most bad debt is attributable to theuninsured category these days, even thoughthe self-pay after insurance is growing and isanywhere from 1.50 percent to 8.00 percentspecific to providers.”

Collecting self-pay receivables can be verylabor intensive and is best left to collectionagencies with day-one-and-out programs,Hajny asserts. “For those that attempt to do itinternally, it should be oriented toward cus-tomer service and staff education includinginstallment plans and [qualifying people for]charity care. Hard collecting should be left toagencies,” he says.


Job DescriptionsVaried job titles give the positions more flexi-bility, as noted. “Our account specialists aresegmented into groups: billing (send outclaims for either commercial or governmentalpayors); customer service (take inbound calls);collection (make outbound calls); and refunds(return monies to patients/payors),” Cole says.

Hospitals may not employ collectors—andthen again they may, according to industry con-sultant Jim Grigsby of Sebastian, Fla. “Manyhospitals use collectors to follow large self-paybalances, usually $1,000 and over, before send-ing them to collection agencies. I don’t know ofany hospital working accounts under $1,000,although some physician practices work lowbalance accounts,” Grigsby says.

Obviously, collectors—or whatever they arecalled—handle a wide array of tasks. “It isbecoming more common to give a job a flexi-ble title so the position can cover more thanone set of duties,” Grigsby says.

F T E S I N A / R M A N A G E M E N T U P

There was not much change in the number offull-time equivalents (FTEs) involved inreceivables management from the first to thesecond quarter of the year. There was just aslight decrease from 37.45 FTEs in the firstquarter to 37.07 FTEs in the second quarter.Some hospitals are hiring staff in certain

areas, but many are trying to make do with theemployees that they have in place. It has beena difficult time for providers who have to domore with fewer employees.It makes sense the big city or urban hospitals

would employ the greatest number of FTEs,and that was true in the second quarter. Thenumber reported by this group of hospitals was48.07 FTEs. Suburban hospitals were closebehind with 46.63 FTEs in A/R management.

0

0

0

0

FTEs Involved in theA/R Management Process

80

60

40

20

1st Qtr.2010

4th Qtr.2009

2nd Qtr.2010

3rd Qtr.2009

21.69

29.69

37.45 37.07

Finally, rural hospitals responding to HARA inthe second quarter reported 13.91 FTEsinvolved in receivables management.


We are sometimes asked by HARA sub-scribers, “Who is included in ‘FTEs inA/R management?’” This calculationshould include those staff members per-forming insurance billing and insuranceverification, patient reps, cashiers and cashapplication staff, refund clerks, and collec-tors. All managers, directors, and supervi-sors involved in the above areas shouldalso be included. In addition, it includeseveryone working in the business office, aswell as any temporary or outsourced work-ers. It does not include utilization reviewand coding staff, precertification staff, orregistration staff. 0

0

0

0

0

Number of FTEs inReceivables Management—

by Geographic Setting

80

60

40

20

0

SuburbanUrbanUS

Average

48.07 46.63

Rural

37.07

13.91

O P E N A C C O U N T S P E R B U S I N E S S O F F I C E F T E I N C R E A S E D

Business Office Open Accounts per FTE

6,000

5,000

4,000

3,000

2,000

1,000

0

1st Qtr. 20104th Qtr. 2009 2nd Qtr. 20103rd Qtr. 2009

3,960.53

2,228.24

3,353.28

Open accounts per business office FTE haveincreased in the second quarter of 2010. Theaverage number of open accounts was report-edly 3,353.28. This compares to only 2,228.24

accounts in the first quarter of the year.In 2009, there had been an upward trend

until the fourth quarter when accounts per FTEdropped over very slightly.

3,845.05

How Many Collectors Do You #eed?• One FTE collector per every 50 to 70 beds—or• One FTE collector per every 3,000 to 4,000 open accounts#ote: Collectors with access to effective collection follow-up software, predictive dialers,etc., will be able to work more accounts.

H O W M A N Y C O L L E C T O R S D O Y O U N E E D ?

Staffing Recap—By Account Volume

Average FTEs involved in thereceivables management function . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37.07 FTEs

Business office (excludeadmissions/registration) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 FTE for every 1,983.18 open accounts

Inpatient accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 FTE for every 195.85 open accounts

Outpatient accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 FTE for every 1,443.54 accounts

Emergency room accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 FTE for every 343.78 accounts

Billers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 FTE for every 2,790.93 claims

Collectors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 FTE for every 7,796.18 accounts

C O S T T O C O L L E C T I N C R E A S E S

US hospitals reported that the average cost tocollect a dollar rose in the second quarter of2010. The cost was 2.19 cents in the first quar-ter and rose to 2.51 cents in the second.“The cost to collect is typically reflected six

months after the actual issue affecting it,” saysHARA editorial advisor Rob Borchert of BestPractice Associates in Fredericksburg, Virginia.“Six months ago, there could have been a num-ber of things that happened. To name a few, anincrease in self-pay, higher deductibles andcopayments, and more health savingsaccounts,” he says.If we review the cost to collect by hospital

bed-size grouping, hospitals with 100 to 199beds once again reported spending the smallestamount at 1.30 cents per dollar (down from1.55 cents). Large hospitals with 400 to 699beds reported spending the greatest amount tocollect at 3.38 cents. This figure was substan-tially higher than what any of the other groupsspent in the second quarter.As was the case in the first quarter, facilities

with a lower average GDRO, below the bench-mark of 60 days, reported spending more to col-lect a dollar than their counterparts with a higheraverage GDRO. The “high performing” group

0

8

Average Cost to Collect

1.98¢

8¢

6¢

4¢

2¢

0¢

1st Qtr.2010

2.51¢

4th Qtr.2009

2nd Qtr.2010

3rd Qtr.2009

2.19¢ 2.19¢

Cost to Collect—By GDRO

6¢

4¢

2¢

0¢

USAverage

90+Days

Fewer Than60 Days

60–90Days

n/a

2.51¢ 2.53¢2.20¢


Cost to Collect—By Geographic Region(2nd Quarter 2010)

6¢

4¢

2¢

0¢

North-east

Mid-west

Mid-Atlantic

South-east

South-west

2.36¢

n/a

2.17¢

North-west

n/a

1.93¢

Cost to Collect—By Bed Size

6¢

4¢

2¢

0¢

0–99Beds

400–699Beds

100–199Beds

200–399Beds

700+Beds

n/a

1.30¢

2.20¢2.42¢


Figuring the Cost-to-Collect RatioHow do you determine your cost to collect? HARA editorial advisor Deborah Shapiro offers some advice.

1. Tabulate business office expenses including admitting/registration for this quarter. This information generallycomes from your budget.

2. Divide this figure by the total number of dollars collected during the same period. Do not include non-patientrevenue.

Sample Cost-to-Collect Calculation:

$150,000 (expenses)

$6,700,000 (collections)

3.38¢ 3.47¢

spent more than 2.50 cents on average, whilethe “mid-range performers” with a GDRO of 60to 90 days spent a bit less at 2.20 cents.Looking at this indicator by the geographic

location of hospitals responding to the HARA

survey, those in the Northeast region reportedspending under 2.0 cents (1.93) to collect adollar, which was the smallest amount. Hospi-tals in the Southeast spent the most to collect,at 3.47 cents.


Average Number of ER Accountson ATB—By Bed Size

0–99Beds

100–199Beds

200–399Beds

400–699Beds

700+Beds

Average Number of InpatientAccounts on ATB—By Bed Size

0–99Beds

100–199Beds

200–399Beds

400–699Beds

700+Beds

3rd Qtr. 2009

4th Qtr. 2009

1st Qtr. 2010

2nd Qtr. 2010

938.80

656.00

458.50

445.00

1,396.50

897.29

1,051.33

1,075.00

9,128.00

11,357.17

4,492.89

14,958.40

9,730.00

11,281.80

9,406.43

8,481.50

n/a

n/a

n/a

n/a

A C C O U N T V O L U M E H I G H E R O V E R A L L

Despite reports that patients are putting offtreatments and procedures, US hospitalsreported an increase in the average number ofopen accounts during the second quarter. Hos-pitals reported an average of 73,516.78 open

accounts in A/R. This compares with52,453.33 in the first quarter.The increase showed up across all types of

accounts. The increase was greatest, however,in the number of outpatient accounts.

3,268.20

3,560.00

2,860.67

2,899.00

6,832.25

4,998.71

5,817.00

5,910.00

16,836.29

22,592.75

10,338.75

24,971.50

15,996.00

21,699.33

15,187.75

12,970.60

n/a

n/a

n/a

n/a

3rd Qtr. 2009

4th Qtr. 2009

1st Qtr. 2010

2nd Qtr. 2010

Account Volume1ST QTR. 2010 2ND QTR. 2010

Open inpatient accounts on ATB 4,837.78 7,260.33Open ER accounts on ATB 9,416.33 12,744.40Open outpatient accounts on ATB 38,199.22 53,512.05Total open accounts on ATB 52,453.33 73,516.78


E R A C C O U N T V O L U M E

US hospitals reported the number of openemergency room (ER) accounts on aged trialbalance (ATB) increased from 9,416.33 in thefirst quarter to 12,744.40 in the second. In fact,the second quarter figure was closer to thefourth quarter of last year, when there were10,961.05 open ER accounts on ATB.Once again, there was a wide range in the

number of open ER accounts among hospitals

by bed-size. The smallest hospitals with zero to99 beds reported 2,899.00 open ER accounts onATB. This is quite similar to the figure reportedin the first quarter of the year, 2860.67.Hospitals with 200 to 399 beds reported the

greatest number of open ER accounts on ATB.This group had 24,971.50 open accounts. Thiscompares to 10,338.75 in the first reportingperiod.

E R A C C O U N T S B Y G E O G R A P H I C S E T T I N G

Reviewing the average number of open ERaccounts by geographic setting, suburban hospi-tals report the greatest number of open accounts.This group reported 38,271.00 open ER

accounts in the second quarter. City hospitalsreported 12,305.33 open ER accounts, and hos-pitals located in rural areas reported 4,733.83open ER accounts in the second quarter.

I N P A T I E N T A C C O U N T S

While many hospitals are seeing a drop ininpatient revenues, there was an increase inthe number of open inpatient accounts on ATBin the second quarter. Hospitals in the 200 to399 bed-size category indicated that they havean average of 14,958.40 open inpatientaccounts on ATB, a large increase from the

first quarter when the figure was 4,492.89open accounts.US hospitals with zero to 99 beds reported

only 445.00 open inpatient accounts on ATB inthe second quarter. This was only a slightchange from the previous quarter when the fig-ure stood at 458.50 accounts.

Number of Open ER Accounts on ATB—By Geographic Setting

80,000

60,000

40,000

20,000

0

Mean RuralUrban Suburban

4,733.8312,744.40 12,305.33

38,271.00


CBO

SPOTLIG

HT

Uncollectibles as a Percentage of CBO Gross Revenue

Charity:63.69%of Total

3.07% ofGross

Revenue

Bad Debt:36.31%of Total

1.75% ofGross

Revenue

Uncollectibles over Last Four Quarters—CBOs Only

3RD QTR. 2009 4TH QTR. 2009 1ST QTR. 2010 2ND QTR. 2010

5.76% 5.95% 4.52% 4.82%

C H A R I T Y I N C R E A S E S I N S E C O N D Q U A R T E R

In the not too distant past, hospitals were taking a lot of heat for theircharity care policies—or seeming lack of them, at least according tomedia reports. As a result, many providers reviewed and revampedtheir policies. In the second quarter of 2010, consolidated businessoffices (CBOs) reported a higher level of uncollectible write-offs,which was driven by a higher level of charity write-offs. With theincreased number of patients who may now be uninsured, this probablyis no surprise.Overall, US hospitals with CBOs indicated that uncollectibles repre-

sented 4.82 percent of gross revenue. That compares with 4.52 percent inthe first quarter.When we examine the two parts of uncollectibles, charity and bad

debt, we see that charity care represented 3.07 percent of gross rev-enue in the second quarter. This is an increase over 2.69 percent inthe first quarter of 2010. Bad debt represented 1.75 percent of gross


Uncollectibles as Percentage of Gross Revenue—CBOs vs. HospitalsFACILITY COMBINEDTYPE BAD DEBT CHARITY UNCOLLECTIBLES

CBOs 1.75% 3.07% 4.82%Hospitals 2.36% 2.18% 4.54%

GDRO (CBOs Only)—Prior Quarter vs. Current

60

50

40

30

20

10

0

2nd Quarter 20101st Quarter 2010

2nd Quarter 2010 GDRO—CBOs vs. Hospitals

CBOS HOSPITALS

43.31 40.31

G D R O U P S L I G H T L Y

In the second quarter of 2010, CBOs reportedan average GDRO of only 43.31 days. Thiskey indicator improved from the first quarter,when it was 48.80 days. Unlike previousquarters, hospitals’ average GDRO was nothigher than CBOs. In fact, it was three daysbetter at 40.31 days. Nevertheless, both CBOsand hospital were still averaging below the50-day benchmark sometimes used by theindustry.

48.80

43.31

revenue—and that level declined from thefirst quarter when it was 1.83 percent ofgross revenue.While it has been true in recent quarters that

CBOs performed better than hospitals in termsof uncollectible write-offs, that was not thestory in the second quarter of this year. UShospitals responding to the HARA survey

reported 4.54 percent of gross revenue asuncollectible, while the CBOs reported 4.82percent of gross revenue was written off.Broken down into its components, hospitals

reported that bad debt represented 2.36 percentof gross revenue. Unlike CBOs, charity was thesmaller portion of uncollectibles, at 2.18 per-cent of gross revenue.


M A N A G E D C A R E U P

In the second quarter of 2010, managed care wasthe biggest payer in the mix, representing 32.11percent ofA/R among CBOs.And, as usual,Medicare was next in line with 25.12 percent ofA/R. These two payers typically represent thebiggest pieces of the payer pie for CBOs.The third place for payers was held by Med-

icaid with 17.22 percent of A/R in the secondquarter. This is down from the first quarterwhen it was reportedly 20.05 percent. In the

coming months, we may see Medicaid grow asmore people are added to the state rolls.US hospitals reported a bit less self-pay in

the second quarter. The percentage fell from17.50 percent to 16.45 percent of A/R.As usual, commercial insurance and “other

payers” such as TRICARE represented thesmallest percentage of the payer pie. Theywere 5.17 percent and 3.93 percent, respec-tively.

Outstanding Receivables—By Financial Class (CBOs Only)

ManagedCare:

32.11%

Medicare:25.12%

Self-Pay:18.91%

Medicaid:17.22%

Other: 3.93%Commercial: 5.17%

Outstanding Gross Revenue—By Financial Class (CBOs Only)

ManagedCare:

37.01%

Medicare:39.44%

Self-Pay: 7.14%

Medicaid:12.32%

Other: 2.67% Commercial: 2.64%

O U T S T A N D I N G G R O S S R E V E N U E

It is no surprise that Medicare and managed careagain represent the two largest payers contribut-ing to gross revenue among CBOs in the secondquarter of 2010. Medicare represents the largestportion at 39.44 percent. Although managedcare was a bigger part of the A/R pie for CBOsat 32.11 percent versus 25.12 percent forMedicare, it nevertheless comes in second toMedicare with 37.01 percent of gross revenue.

In the second quarter, CBOs respondingto the HARA survey reported that Medicaidmade up 12.32 percent of gross revenue.Self-pay represented 7.14 percent of grossrevenue, followed by “other” payers(workers compensation, TRICARE, etc.)at 2.67 percent and commercial payerswith slightly less at 2.64 percent of grossrevenue.


E M P L O Y E E W O R K L O A D ( C B O S )

CBOs reported that their employees worked onfewer accounts in the second quarter. A/Raccounts per biller FTE averaged 4,828.46 com-pared to 5,282.00 in the first quarter. Claims perbiller were also down, from 1,714.42 in the firstquarter to 1,424.31 in the second.Collectors working in a CBO saw a slightly

smaller workload in the second quarter at4,540.38A/R accounts per collector FTE. Thiscompares to 4,547.92 accounts in first quarter.CBOs reported that open accounts per busi-

ness office FTE fell as well. That ratiodecreased from 13,453.67 to 11,419.92accounts in the second quarter.

A C C O U N T S O V E R 9 0 D A Y S U P

In the second quarter of this year, CBOsreported an increase in discharged A/R agingover 90 days old. More than 29 percent (29.04percent) of discharged A/R was more than 90days old, according to survey data. That broke

down to 8.02 percent from 91 to 120 days oldand 21.02 percent at 120+ days old.Despite a dip in the first quarter, the percent-

age of discharged A/R older than 90 daysamong CBOs had been on an upward trend,

Average Workload (CBOs)—1st Quarter vs. 2nd Quarter 2010

20,000

15,000

10,000

5,000

0

Accounts per Biller

1,714.42

Accounts per BusinessOffice FTEClaims per Biller Accounts per Collector

5,282.00

1,424.31

4,540.38

11,419.92

1st Qtr. 20102nd Qtr. 2010

4,828.46

13,453.67

4,547.92

Discharged A/R Aging Compensation (CBOs)Percentage of Total A/R—2nd Quarter 2010

60

50

40

30

20

10

0

31–60 Days 120+ Days61–90 Days 91–120 Days0–30 Days

21.02%

11.45%

41.91%

8.02%

17.58%


Discharged A/R Aging > 90 Days Old—As Percentage of Total A/R

3RD QTR. 2009 4TH QTR. 2009 1ST QTR. 2010 2ND QTR. 2010

28.26% 28.46% 27.77% 26.50%

growing every quarter in 2009. It is once againheaded upward, but we will see what the nextquarter brings.Looking at the other numbers, the percent-

age of A/R from zero to 30 days old was 41.91percent, while A/R from 31 to 60 days wasreportedly 17.58 percent. And, there was 11.45percent of A/R in the 61 to 90-day category.

C O S T T O C O L L E C T A H E A L T H C A R E D O L L A R

As is often the case, CBOs reported spendingless in the second quarter to collect a healthcare dollar than their hospital counterparts.Where hospitals spent 2.51 cents on average,CBOs spent 1.77 cents to collect a dollar.CBOs may have more personnel in place dedi-cated to this activity, whereas many hospitalshave been forced to cut staff or not replacethose who leave.

Cost to Collect—CBOs vs. Hospitals(2nd Quarter 2010)

CBOs1.77 cents

Hospitals2.51 cents


KEY

QUESTIONS I S YOUR COLLECT ION POL ICY DO ING THE JOB?

Does Your Hospital Have an Effective Collections Policy?

100

75

50

25

0

Percent Responding “Yes”

91.70%

2009

Having an effective collection policy in writing and making sure yourpatients understand that policy is crucial to cash flow. Constant reports inthe news media about increasing insurance costs for individuals and busi-nesses make it vital for health care providers to do a better-than-adequatejob of collecting, as well as working with patients to help them qualifyfor funding or setting up a payment plan.When asked, “Does

your hospital have aneffective collectionspolicy?” the majority ofhospitals responding tothe second quarterHARA survey said theybelieve they have it—at94.40 percent. That fig-ure is an increase over second quarter 2009, when 91.70 percent of hospi-tals responding to the HARA survey indicated that they have an effectivecollection policy. This means that only 5.60 percent believe their policyleaves something to be desired. Of course, any policy is only as good asthe results it generates in terms of the bottom line.The reason why hospitals may believe they have a good policy in

place? Hospitals may have revised and updated their collection policiesin order to comply with privacy requirements and they also want bettercollection results, of course.

20102006 2007 2008

100.00% 100.00% 100.00%94.40%

Hospitals may have revisedand updated their collection policiesin order to comply with privacyrequirements—and they alsowant better collection results.


The urgency to collect self-pay balances frompatients is evident by the response to this par-ticular question to HARA responders: “Whenare collection calls place to patients for theirbalance due amount?” Nearly 45 percent(44.40 percent) of hospitals reported that theyplace these calls within 30 days after billing.This compares with a much lower 26.10 per-cent in the second quarter of last year.

making collection demands earlier in theprocess.About one third of hospitals responding to

the survey (33.30 percent) indicated that theyplace calls within 90 days of billing. This isdown slightly from last year, when that figurewas 39.10 percent. Obviously, some hospitalsare shifting their efforts to making calls muchearlier after billing.This year, there was a smaller percentage of

hospitals making initial calls “prior to refer-ral.” While 30.40 percent of hospitals madecalls to patients before turning them over to anagency in 2009, only 17.60 percent were doingso in 2010.Finally, there were a slightly greater

number of hospitals reporting that theynever make collection calls to patients.In 2010, 5.60 percent of facilities nevermade those calls, which increased from4.30 percent in 2009.

C O L L E C T I O N C A L L S P L A C E D E A R L Y I N T H E P R O C E S S

When Are Collection Calls Placed to Patients for Their Balance Due Amount?

60

50

40

30

20

10

0

30 Days Never90 Days Prior to Referral

20092010

33.30% 30.40%

44.40%

About one third of hospitals(33.30 percent) indicated that they

place collection calls within90 days of billing.

According to what HARA editors haveheard, health care providers are trying veryhard to work with patients to create a way forthem to pay their bills. This likely explainswhy more of the nation’s hospitals are

5.60%4.30%

26.10%

16.70%

39.10%


Do You Use a Patient Finance Program?

100

80

60

40

20

0

87.50%

How Many Outgoing Calls Do YourCollectors Place Per Day?

31–40 Calls40.00%

11–20 Calls33.30%

21–30 Calls20.00%

More than50 Calls6.70%

0–10 Calls0.00%

41–50 Calls0.00%

Percent Responding “Yes”20102005 2006 2007 2008 2009

63.60%

75.00%

As we do each year in the second quarter, wealso asked hospitals to tell us how many outgo-ing collection calls their staffers make eachday. The greatest number of US hospitals at40.00 percent indicated that their collectionstaff makes 31 to 40 calls per day. On the otherhand one third of hospitals say that their staffmakes 11 to 20 calls every day, while 20.00percent make 21 to 30 calls per day.Looking at the average number of calls

placed in 2009 compared to 2010, the percent-age of hospitals making fewer than 20 callsper day increased from 19.00 percent to 33.30percent. More hospitals indicated making 21to 40 calls per day, compared to last year. Butonly 6.70 percent were making more than 40calls per day in 2010, compared to 23.80 per-cent in 2009.Most collectors have other duties to per-

form, which could explain why a greater per-centage of them are making 20 or fewer callsper day. And, as noted earlier in the issue, col-lectors are not necessarily even called “collec-tors.” These employees may be called credit

O U T G O I N G C A L L S M A D E

F E W E R O F F E R F I N A N C E P R O G R A M S

78.30% 76.20% 77.80%

representatives or financial representatives—orthey may have some other title. Their dutiesmay include making calls to patients or takingcalls from patients—or both. However,because they are oftentimes performing theduties of more than one position, hospital col-lectors are not simply collectors any more.


Hospitals have always been accommodating topatients, allowing payment plans withoutcharging interest. That has not changed,according to the respondents to the secondquarter key questions.More than three quarters of those respond-

ing to the second quarter survey indicated

that they use a patient finance program(77.80 percent). Less than one fourth donot offer such plans. Interestingly, this is asmaller percentage of hospitals than in 2009.Last year, 87.50 percent of hospitalsreported offering a finance program topatients.

If You Use a Financing Plan, What Type of Plan Is It?

100

80

60

40

20

0

Bank Note

20092010

10.00%

20.00%

0.00% 0.00%

25.00%

7.10%

Bank Finance Credit CardsHospital Finance

w/InterestHospital Financew/o Interest

28.60%

50.00%

When asked what type of finance programsthese hospitals offer to their patients, themajority indicated “hospital financed no inter-est.” This, again, is not surprising because it isthe most commonly offered patient paymentplan used by health care providers. On theother hand, this is a smaller percentage thanlast year, when 70.00 percent indicated thatthey offered interest-free payment plans.

HARA editors have heard from some healthcare providers that they are backing awayfrom long-term payment plans and offeringother types of help to patients. Of course,credit cards are accepted by many providers.This year 35.70 percent of hospitals indicatedthat they accept structured payments on creditcards. In fact, a growing number of hospitalswill allow patients to pay on-line on theirWeb site.

T Y P E S O F F I N A N C I A L H E L P

Some hospitals have partnered with banksor credit unions to help patients get loans, too.The local bank provides a loan so the hospitalcan be paid immediately. This type of optionis usually used for large bills. This year, 28.60percent of hospitals indicated that they arehelping to partner patients with banks.

Finally, 7.10 percent of hospitals reportedoffering “bank note” financing to patients. Thiscompares with a larger 10.00 percent in 2009.

HARA editors have heard fromsome health care providers that theyare backing away from long-term

payment plans and offeringother types of help to patients.

70.00%

35.70%

When asked “How many days from service isa self-pay account turned over to a collectionagency?” nearly 45 percent of hospitals indi-cated that they wait 121 to 180 days to referthem to an agency. This is up slightly fromlast year, when 41.70 percent referred them toan agency.

Over one third of hospitals (38.90 percent)refer their accounts after 90 days but before

M A J O R I T Y O F A C C O U N T S R E F E R R E D A F T E R 1 2 0 D A Y S

120 days, according to the survey data. Lastyear, a higher 41.70 percent of facilities alsowere waiting at least 90 days to turn over anaccount.In 2010, only 16.70 percent turned self-pay

accounts over to an agency in fewer than 90days. This compares with 8.30 percent in 2009.No hospitals reported referring self-payaccounts to a collection agency in more than180 days.Many hospitals use an “early out” program

for their self-pay accounts. The accounts go tothe agency as soon as they are dischargedfrom the system. In this situation, the agenciesact as an extension of the hospital and do notuse an aggressive approach. The agencies alsowork to help identify patients who might qual-ify for charity programs.

How Many Days from Service Before a Self-Pay Account Is Turned Over?

60

50

40

30

20

10

0

Less Than 90 Days More Than 180 Days91 to 120 Days 121 to 180 Days

20092010

38.90%41.70%41.70%

0.00%

8.30%

16.70%

44.40%


Many hospitals use an “early out”program for their self-pay accounts.These accounts go to an agencyas soon as they are discharged

from the system.

8.30%

What Is Your Average Net Recovery on Accounts Placed with an Agency?

70

60

50

40

30

20

10

0

0–10%

20092010

0.00%

11–20% 21–30% 31–40% 41–50% More than 50%

0.00%0.00% 0.00%0.00%

50.00%

64.70%

US hospitals contract with collection agenciesfor help in collecting difficult accounts. Therecovery rates can vary, depending upon thetype of account that is placed with the agencyand the amount of the account. Hospitalsexpect to obtain a greater return from theiragency than they could obtain on their ownbecause the agencies have the expertise and theresources to get it for them.

A V E R A G E N E T R E C O V E R Y

In 2010, most hospitals reported a net recov-ery of 11 to 20 percent. Nearly 65.00 percentof hospitals responding in the second quarterof 2010 indicated that they are getting a returnof 11 to 20 percent, compared to 50.00 percentin 2009.About one quarter (23.50 percent) of hospi-

tals indicated they got an average net recoveryof 0.00 to 10.00 percent from their agencies in2010. This is down from last year, when thefigure was 33.30 percent.Only 5.90 percent of hospitals reported

getting 21 to 30 percent as a net recoveryfrom agencies. Finally, another 5.90percent received 31 to 40 percent in netrecovery.

33.30%

16.70%

5.90%5.90%

23.50%


Recovery rates can vary dependingupon the type of account that isplaced with the agency and the

account of the accounts.

HARA

STATIS

TIC

S


Summary Comparison of Superior-Performing Hospitals • 54

Recap Report—By Bed Size • 56

Recap Report—By Geographic Location • 58

Recap Report—By Geographic Setting • 60

Summary Comparison of CBOs • 62

HARA Calculations • 64

Sample Survey Spreadsheet • 65

Glossary • 68

THEBENCHMARKIN HOSPITALRECEIVABLES


SUMMARYCO

MPARISONOF

SUPERIOR-PERFORM

INGHOSPITALS C O M P A R I S O N — B Y G D R O A V E R A G E


Percent YTD G/R—Bad debt 2.36 2.42 1.40 —

Percent YTD G/R—Charity 2.18 2.16 2.40 —

Percent YTD G/R—

Total uncollectibles 4.54 4.60 3.80 —

Percent DCH receivables over 90 22.18 22.86 10.50 —

Percent DCH receivables over 120 16.15 16.66 7.50 —

Percent DCH receivables self-pay 14.05 14.14 12.50 —

Percent DCH A/R—0–30 days 53.77 52.48 75.80 —




Percent DCH A/R—GT 120 days 16.15 16.66 7.50 —

Percent TTL A/R—Medicare 29.12 28.78 35.00 —

Percent TTL A/R—Commercial 10.11 10.52 3.10 —

Percent TTL A/R—Medicaid 12.87 12.17 24.70 —

Percent TTL A/R—Managed care 27.55 27.72 24.70 —

Percent TTL A/R—Other 5.77 6.11 0.00 —

Percent TTL A/R—

Delayed medical records 12.47 13.07 2.20 —

Percent TTL G/R—Self-pay 4.67 4.71 3.90 —

Percent TTL G/R—Medicare 40.16 40.09 41.20 —

Percent TTL G/R—Commercial 9.77 10.29 0.90 —

Percent TTL G/R—Medicaid 13.37 12.25 32.30 —

Percent TTL G/R—Managed care 29.73 29.68 30.70 —

Percent TTL G/R—Other 2.96 3.14 0.00 —


C O M P A R I S O N — B Y G D R O A V E R A G E


Average days DCH/Bill—

Medicare 9.56 9.73 6.70 —


All others 8.43 8.54 6.70 —

Gross days 40.31 40.18 42.60 —

Net days 53.77 52.05 81.30 —

Average number of beds 279.28 268.35 465.00 —

Open inpatient accounts 7,260.33 7,252.71 7,390.00 —

Open E/R accounts 12,744.40 12,393.00 17,664.00 —

Open outpatient accounts 53,512.05 56,076.77 9,912.00 —

Open accounts—Total 73,516.78 75,722.48 34,966.00 —

Claims billed per month 22,237.50 22,521.77 17,405.00 —

Cost to collect per dollar 2.51¢ 2.53¢ 2.20¢ —

A/R accounts per biller FTE 10,282.20 10,517.14 6,993.00 —

Total claims per biller FTE

per month 2,790.93 2,741.64 3,481.00 —

A/R accounts per

collector FTE 7,796.18 8,202.50 1,295.00 —

FTEs allocated to

financial counsel 3.86 2.85 19.00 —

FTEs involved in

A/R management 37.07 35.60 62.00 —

Open accounts per

business office FTE 3,353.28 3,517.35 564.00 —

Days revenue in

medical records 5.14 5.39 0.90 —

Days revenue in

credit balances 0.93 0.96 0.30 —

Percent G/R—Gross denials 0.09 0.08 0.20 —

Percent G/R—Net denials 0.24 0.25 0.00 —


R E C A P R E P O R T — B Y B E D S I Z E


Percent YTD G/R—Bad debt 2.36 2.80 2.10 2.40 2.17 —

Percent YTD G/R—Charity 2.18 3.30 1.00 2.34 1.88 —

Percent YTD G/R—

Total uncollectibles 4.54 6.10 3.10 4.74 4.05 —

Percent DCH receivables over 90 22.18 25.53 17.53 22.02 22.38 —

Percent DCH receivables over 120 16.15 17.33 11.07 16.52 17.60 —

Percent DCH receivables self-pay 14.05 13.55 6.47 16.36 16.25 —

Percent DCH A/R—0–30 days 53.77 43.33 61.37 55.36 55.62 —




Percent DCH A/R—GT 120 days 16.15 17.33 11.07 16.52 17.60 —

Percent TTL A/R—Medicare 29.12 27.52 32.93 28.60 28.72 —

Percent TTL A/R—Commercial 10.11 10.33 12.37 11.66 7.53 —

Percent TTL A/R—Medicaid 12.87 17.83 17.37 8.82 10.68 —

Percent TTL A/R—Managed care 27.55 25.55 27.33 31.04 26.08 —

Percent TTL A/R—Other 5.77 2.73 3.57 3.54 10.75 —

Percent TTL A/R—

Delayed medical records 12.47 18.30 11.63 8.92 11.95 —

Percent TTL G/R—Self-pay 4.67 6.43 3.87 4.38 4.13 —

Percent TTL G/R—Medicare 40.16 35.30 38.47 42.24 42.50 —

Percent TTL G/R—Commercial 9.77 10.90 14.67 10.38 6.05 —

Percent TTL G/R—Medicaid 13.37 16.40 19.37 10.98 10.33 —

Percent TTL G/R—Managed care 29.73 29.00 20.83 30.48 34.05 —

Percent TTL G/R—Other 2.96 1.97 2.80 2.08 4.43 —


R E C A P R E P O R T — B Y B E D S I Z E



Medicare 9.56 9.80 10.70 8.78 9.48 —


All others 8.43 8.65 7.77 8.30 8.73 —

Gross days 40.31 49.97 24.47 41.64 38.18 —

Net days 53.77 56.65 41.25 62.24 48.97 —

Average number of beds 279.28 48.00 116.33 313.40 486.50 —

Open inpatient accounts on ATB 7,260.33 445.00 1,075.00 14,958.40 8,481.50 —

Open E/R accounts on ATB 12,744.40 2,899.00 5,910.00 24,971.50 12,970.60 —

Open outpatient accounts on ATB 53,512.05 14,638.00 12,950.00 106,715.80 55,372.67 —

Open accounts—Total 73,516.78 17,982.00 19,935.00 146,645.70 76,824.77 —

Claims billed per month 22,237.50 5,755.50 10,212.67 24,207.20 37,596.50 —

Cost to collect per dollar 2.51¢ 2.42¢ 1.30¢ 2.20¢ 3.38¢ —

A/R accounts per biller FTE 10,282.20 6,739.00 4,840.50 21,347.25 6,491.00 —


per month 2,790.93 1,857.33 3,034.00 2,591.50 3,309.67 —

A/R accounts per

collector FTE 7,796.18 9,888.67 5,950.33 12,647.20 3,630.33 —

FTEs allocated to

financial counsel 3.86 1.14 2.15 4.20 5.50 —

FTEs involved in

A/R management 37.07 5.68 9.92 38.94 70.01 —

Open accounts per

business office FTE 3,353.28 6,785.75 2,856.33 3,581.80 1,123.00 —

Days revenue in

medical records 5.14 7.40 5.37 3.80 4.63 —

Days revenue in

credit balances 0.93 1.58 0.70 1.00 0.55 —

Percent G/R—Gross denials 0.09 0.12 0.00 0.02 0.17 —

Percent G/R—Net denials 0.24 0.10` 0.03 0.32 0.37 —


R E C A P R E P O R T—B Y G E OG R A P H I C L O C AT I O N

US NORTH- MID- SOUTH- MID- SOUTH- NORTH-TOTAL EAST ATLANTIC EAST WEST WEST WEST

Percent YTD G/R—Bad debt 2.36 2.60 0.60 2.35 2.68 2.26 —

Percent YTD G/R—Charity 2.18 1.07 0.90 4.57 2.02 1.34 —

Percent YTD G/R—

Total uncollectibles 4.54 `3.67 1.50 6.92 4.70 3.60 —

Percent DCH receivables over 90 22.18 24.63 19.50 26.55 17.90 22.00 —

Percent DCH receivables over 120 16.15 19.60 15.90 20.35 11.70 15.22 —

Percent DCH receivables self-pay 14.05 12.47 2.60 19.12 22.60 4.68 —

Percent DCH A/R—0–30 days 53.77 52.67 63.20 47.90 56.00 55.02 —




Percent DCH A/R—GT 120 days 16.15 19.60 15.90 20.35 11.70 15.22 —

Percent TTL A/R—Medicare 29.12 32.33 22.90 25.65 28.66 31.68 —

Percent TTL A/R—Commercial 10.11 14.10 10.80 12.10 8.62 7.46 —

Percent TTL A/R—Medicaid 12.87 12.93 8.10 16.47 9.88 13.88 —

Percent TTL A/R—Managed care 27.55 21.43 40.80 23.27 19.12 40.42 —

Percent TTL A/R—Other 5.77 6.77 14.80 3.35 9.12 1.94 —

Percent TTL A/R—

Delayed medical records 12.47 15.23 11.50 11.68 16.20 7.90 —

Percent TTL G/R—Self-pay 4.67 2.70 1.90 6.93 5.30 3.96 —

Percent TTL G/R—Medicare 40.16 39.63 30.60 35.20 46.58 39.92 —

Percent TTL G/R—Commercial 9.77 18.20 5.50 14.25 10.60 1.14 —

Percent TTL G/R—Medicaid 13.37 13.60 3.10 15.30 11.12 15.98 —

Percent TTL G/R—Managed care 29.73 21.90 43.70 25.35 24.98 39.90 —

Percent TTL G/R—Other 2.96 4.00 15.30 2.92 1.44 1.42 —


R E C A P R E P O R T—B Y G E OG R A P H I C L O C AT I O N

US NORTH- MID- SOUTH- MID- SOUTH- NORTH-TOTAL EAST ATLANTIC EAST WEST WEST WEST


Medicare 9.56 8.47 6.30 4.32 16.48 8.14 —


All others 8.43 7.80 11.40 6.32 10.72 7.62 —

Gross days 40.31 27.60 43.80 39.72 43.16 44.86 —

Net days 53.77 46.50 61.40 51.70 42.55 67.24 —

Average number of beds 279.28 286.33 608.00 337.25 190.80 `251.40 —

Open inpatient accounts 7,260.33 5,215.67 15,511.00 5,707.75 1,140.60 14,198.80 —

Open E/R accounts 12,744.40 12,430.00 — 14,374.00 4,804.80 19,832.00 —

Open outpatient accounts 53,512.05 82,711.34 112,749.00 36,162.75 17,151.80 74,384.80 —

Open accounts—Total 73,516.78100,357.01 128,260.00 56,244.50 23,097.20 108,415.60 —

Claims billed per month 22,237.50 29,386.67 55,620.00 33,524.00 15,176.80 9,303.00 —

Cost to collect per dollar 2.51¢ 1.93¢ — 3.47¢ 2.17¢ 2.36¢ —

A/R accounts per biller FTE 10,282.20 7,491.33 11,767.00 7,866.75 2,723.60 37,453.50 —


per month 2,790.93 2,918.00 5,103.00 3,123.00 1,867.00 3,090.00 —

A/R accounts per

collector FTE 7,796.18 5,482.67 7,917.00 4,802.00 4,780.75 13,967.80 —

FTEs allocated to

financial counsel 3.86 3.67 1.00 3.33 3.83 4.88 —

FTEs involved in

A/R management 37.07 53.44 61.40 48.21 21.50 29.04 —

Open accounts per

business office FTE 3,353.28 2,176.00 2,089.00 3,617.50 1,142.60 6,311.80 —

Days revenue in

medical records 5.14 6.17 5.00 4.78 6.12 3.86 —

Days revenue in

credit balances 0.93 0.80 0.70 0.77 0.42 1.68 —

Percent G/R—Gross denials 0.09 0.00 0.00 0.20 0.08 0.08 —

Percent G/R—Net denials 0.24 0.03 1.40 0.12 0.34 0.12 —


R E C A P R E P O R T— B Y G E O G R A P H I C S E T T I N G

USTOTAL URBAN SUBURBAN RURAL

Percent YTD G/R—Bad debt 2.36 1.72 2.03 3.10

Percent YTD G/R—Charity 2.18 2.76 1.77 1.70

Percent YTD G/R—

Total uncollectibles 4.54 4.48 3.80 4.80

Percent DCH receivables over 90 22.18 24.65 19.40 19.98


Percent DCH receivables self-pay 14.05 10.68 14.27 17.10

Percent DCH A/R—0–30 days 53.77 51.99 59.63 53.42




Percent DCH A/R—GT 120 days 16.15 19.04 14.77 12.47

Percent TTL A/R—Medicare 29.12 24.56 25.80 35.63

Percent TTL A/R—Commercial 10.11 9.19 12.10 10.42

Percent TTL A/R—Medicaid 12.87 18.14 7.03 9.70

Percent TTL A/R—Managed care 27.55 30.06 34.23 22.40

Percent TTL A/R—Other 5.77 7.42 6.57 3.08

Percent TTL A/R—

Delayed medical records 12.47 10.11 5.97 16.73

Percent TTL G/R—Self-pay 4.67 4.47 4.13 5.07

Percent TTL G/R—Medicare 40.16 36.74 36.20 44.90

Percent TTL G/R—Commercial 9.77 5.75 13.53 13.12

Percent TTL G/R—Medicaid 13.37 18.75 4.53 11.35

Percent TTL G/R—Managed care 29.73 33.42 35.60 23.78

Percent TTL G/R—Other 2.96 2.33 6.03 1.80


R E C A P R E P O R T— B Y G E O G R A P H I C S E T T I N G

USTOTAL URBAN SUBURBAN RURAL


Medicare 9.56 8.46 6.77 12.47


All others 8.43 7.47 8.80 9.05

Gross days 40.31 39.44 47.47 38.38

Net days 53.77 52.70 67.23 46.46

Average number of beds 279.28 334.88 371.67 113.67

Open inpatient accounts 7,260.33 6,399.75 22,560.67 878.00

Open E/R accounts 12,744.40 12,305.33 38,271.00 4,733.83

Open outpatient accounts 53,512.05 51,089.00 155,837.00 14,089.50

Open accounts—Total 73,516.78 69,794.08 216,668.67 19,701.33

Claims billed per month 22,237.50 23,318.50 36,990.67 11,690.67

Cost to collect per dollar 2.51¢ 2.64¢ 2.75¢ 2.34¢

A/R accounts per biller FTE 10,282.20 7,592.17 27,594.33 3,994.80


per month 2,790.93 2,545.33 3,133.33 2,623.20

A/R accounts per

collector FTE 7,796.16 4,787.12 18,332.67 7,357.40

FTEs allocated to

financial counsel 3.86 4.90 1.33 3.48

FTEs involved in

A/R management 37.07 48.07 46.63 13.91

Open accounts per

business office FTE 3,353.28 3,090.88 4,750.00 3,430.50

Days revenue in

medical records 5.14 4.37 2.67 6.68

Days revenue in

credit balances 0.93 1.09 0.57 0.97

Percent G/R—Gross denials 0.09 0.12 0.00 0.07

Percent G/R—Net denials 0.24 0.10 0.47 0.28


C O M P A R I S O N O F C B O S — B Y Q U A R T E RSUMMARYCO

MPARISO

NOFCB

OS

3RD QTR. 4TH QTR. 1ST QTR. 2ND QTR.2009 2009 2010 2010

Percent YTD G/R—Bad debt 2.50 2.95 1.83 1.75

Percent YTD G/R—Charity 3.26 3.00 2.69 3.07

Percent YTD G/R—

Total uncollectibles 5.76 5.95 4.52 4.82



Percent DCH receivables self-pay 18.84 16.06 17.32 18.91





Percent DCH A/R—GT 120 days 20.71 20.98 20.30 21.02

Percent TTL A/R—Medicare 26.10 26.69 26.59 25.12

Percent TTL A/R—Commercial 2.74 2.69 3.87 5.17

Percent TTL A/R—Medicaid 17.26 17.35 20.05 17.22

Percent TTL A/R—Managed care 31.28 32.96 27.55 32.11

Percent TTL A/R—Other 3.79 4.27 4.44 3.83

Percent TTL A/R—

Delayed medical records 17.13 14.44 13.10 17.65

Percent TTL G/R—Self-pay 6.79 6.54 6.71 7.14

Percent TTL G/R—Medicare 40.21 40.85 40.88 39.44

Percent TTL G/R—Commercial 1.54 1.56 1.09 2.64

Percent TTL G/R—Medicaid 12.21 12.21 14.14 12.32

Percent TTL G/R—Managed care 36.71 35.81 34.36 37.01

Percent TTL G/R—Other 2.53 3.01 2.82 2.67


C O M P A R I S O N O F C B O S — B Y Q U A R T E R

3RD QTR. 4TH QTR. 1ST QTR. 2ND QTR.2009 2009 2010 2010


Medicare 6.01 6.51 6.03 5.89


All others 5.75 6.80 5.77 5.65

Gross days 44.16 48.18 48.80 43.31

Net days 62.35 70.39 50.47 62.77

Average number of beds 579.71 486.86 588.00 576.46

Open inpatient accounts 6,676.29 9,051.14 5,683.33 6,400.31

Open E/R accounts 10,800.64 16,808.09 13,401.90 13,473.33

Open outpatient accounts 39,489.86 54,228.50 38,589.83 39,356.54

Open accounts—Total 56,766.79 80,087.73 57,675.06 59,230.18

Claims billed per month 20,695.50 18,069.07 21,168.08 19,758.15

Cost to collect per dollar 10.79¢ 2.44¢ 1.92¢ 1.77¢

A/R accounts per biller FTE 4,774.50 14,415.00 5,282.00 4,828.46


per month 1,593.21 2,085.71 1,714.42 1,424.31

A/R accounts per

collector FTE 4,389.43 6,367.00 4,547.92 4,540.38

FTEs allocated to

financial counsel 6.58 6.23 6.79 6.69

FTEs involved in

A/R management 21.80 24.51 19.79 21.54

Open accounts per

business office FTE 10,579.79 11,055.29 13,453.67 11,419.92

Days revenue in

medical records 5.32 5.56 4.86 4.75

Days revenue in

credit balances 0.04 0.51 0.52 0.54

Percent G/R—Gross denials 0.33 0.02 0.05 0.05

Percent G/R—Net denials 0.53 0.36 0.34 0.47


S E L E C T E D H A R A C A L C U L A T I O N S

HARACALCULATIO

NS

These are just some of the calculations. Calculations correspond with HARAsurvey questions, beginning with Total Number of Licensed Beds (line #3).(See pages 65–67 for a copy of the electronic spreadsheet survey.)

UNCOLLECTIBLESBad debt = total gross dollars of bad debtwrite-off ÷ total gross revenue year-to-date (determined by addingall categories of gross revenue).

Charity = total gross dollars ofcharity write-off ÷ total gross revenueyear-to-date.

Total uncollectibles = total gross dollars ofbad debt write-off + total gross dollars ofcharity write-off ÷ total gross revenueyear-to-date.

DISCHARGE A/RDCH receivables over 90 days = openA/R 91–120 days old + open A/R over121 days old ÷ total dollars in openA/R (total of lines #23–27).

DCH receivables over 120 days = openA/R over 121 days old ÷ total dollars inopen A/R (line #28).

DCH receivables self-pay = total dollars inself-pay only ÷ total dollars in open A/R(including in-house).

Percent DCH A/R—0–30 days = dollaramount of open A/R 0–30 days old÷ total dollars in open A/R.




OPEN A/RTTL A/R—Self-pay = total dollars in self-pay ÷ total dollar amount of open A/R(total of lines 36–41).

TTL A/R—Medicare = total dollars inMedicare ÷ total dollar amount of openA/R (line 42).

TTL A/R—Commercial = total dollars incommercial ÷ total dollar amount of openA/R (line 42).

TTL A/R—Medicaid = total dollars in Medi-caid ÷ line #42.

TTL A/R—Managed care = total dollarsin managed care ÷ line #42.

TTL A/R—Other = total dollars in other÷ line #42.

Gross A/R (TTL dollar amount of grossA/R) = sum of accounts in all payer cate-gories. This number should match totaldollars in open A/R.

Net A/R (gross A/R less allowances) =majority of hospitals find net A/R by sub-tracting contractual allowances,bad debt, and charity write-offs fromgross A/R.

Percent TTL A/R—Delayed in medicalrecords = dollar amount of receivablesdelayed in medical records ÷ total A/R.

AVERAGE DISCHARGE-TO-BILL TIMEAverage days DCH/Bill—Medicare = aver-age number of calendar days from dis-charge to billing Medicare (inpatient only)(line #9).

Average days DCH/Bill—All others = aver-age number of calendar days from dis-charge to billing for all other financialclasses (inpatient only) (line #10).

GROSS DAYS REVENUE OUTSTANDINGGross revenue divided by days in a quarter= average daily revenue (ADR). Total dol-lar amount in open A/R ÷ ADR = GDRO.

Cost to collect = dollar amount of total YTDexpenses ÷ dollar amount of total YTDcollections.

STAFFING RATIOSA/R accounts per biller FTE = total openaccounts ÷ number of billers (line #12).

Total claims per biller FTE = claims billedper month (line #11) ÷ number of billers(line #12).

Total accounts per collector FTE = totalopen accounts (line #8) ÷ number of col-lectors (line #13).

Business office open accounts per FTE =total open accounts (line #8) ÷ FTEs inreceivables management (line #15).

Days revenue in medical records = dollaramount of receivables delayed by med-ical records, seen as average days of rev-enue. Number is found by dividing thetotal dollar amount in medical records byaverage daily revenue.

Days revenue in credit balances = totalamount of dollars resulting from overpay-ments, etc. ÷ average daily revenue.


S A M P L E S U R V E Y S P R E A D S H E E T

1. Please enter data in yellow cells. If value is zero, enter 0. Note: #DIV/0! signifies cells that Excel calculates automatically.Submit data by XX/XX/XXFor questions, email JoAnn Petaschnick at [email protected].

2. Month 1 Month 2 Month 3 Quarter Average

3. Total number of licensed beds #DIV/0!

4. Number of admissions for the month #DIV/0!

5. Number of open inpatient accts. on ATB #DIV/0!

6. Number of open ER accts. on ATB #DIV/0!

7. Number of open outpatient accts. on ATB #DIV/0!

8. Total open accounts in A/R #DIV/0!

9. Days from discharge to bill Medicare (inpatient) #DIV/0!

10.Days from discharge to bill for other classes (inpatient) #DIV/0!

11.Number of claims billed for the month #DIV/0!

12.Number of FTEs allocated to billing activity #DIV/0!

13.Number of FTEs allocated to collection follow-up #DIV/0!

14.Number of FTEs allocated to financial counseling #DIV/0!

15.Number of FTEs involved in receivables management #DIV/0!

16.A/R accounts per biller FTE #DIV/0! #DIV/0! #DIV/0! #DIV/0!

17. Total claims per biller FTE #DIV/0! #DIV/0! #DIV/0! #DIV/0!

18.A/R accounts per collector FTE #DIV/0! #DIV/0! #DIV/0! #DIV/0!

19.Open accounts per business office FTE #DIV/0! #DIV/0! #DIV/0! #DIV/0!

COST TO COLLECT RATIO

20.Monthly admitting/registration/bus. office expenses #DIV/0!

21.Monthly collections attributable to patient revenue #DIV/0!

22.Cost to collect #DIV/0! #DIV/0! #DIV/0! #DIV/0!

ACCOUNTS RECEIVABLE PORTFOLIO

23.Open A/R 0–30 days old #DIV/0!




27.Open A/R more than 120 days old #DIV/0!

28. Total dollars in open A/R (gross A/R) $0 $0 $0 #DIV/0!

29.Percent of A/R 0–30 days old #DIV/0! #DIV/0! #DIV/0! #DIV/0!




33.Percent of A/R more than 120 days old #DIV/0! #DIV/0! #DIV/0! #DIV/0!

34.Percent of A/R over 90 days #DIV/0! #DIV/0! #DIV/0! #DIV/0!

35.Dollar amount of accounts delayed in medical records #DIV/0!

36. Total dollars in self-pay only #DIV/0!

continued…

Month 1 Month 2 Month 3 Quarter Average

37.Total dollars in Medicare #DIV/0!

38. Total dollars in commercial insurance #DIV/0!

39. Total dollars in Medicaid #DIV/0!

40. Total dollars in managed care; HMOs or PPOs #DIV/0!

41. Total dollars in other #DIV/0!

42. Total dollar amount of gross A/R $0 $0 $0 #DIV/0!

43.Net A/R (gross A/R less allowances) #DIV/0!

44.Percentage of gross A/R in self-pay #DIV/0! #DIV/0! #DIV/0! #DIV/0!

45.Percentage of gross A/R in Medicare #DIV/0! #DIV/0! #DIV/0! #DIV/0!

46.Percentage of gross A/R in commercial insurance #DIV/0! #DIV/0! #DIV/0! #DIV/0!

47.Percentage of gross A/R in Medicaid #DIV/0! #DIV/0! #DIV/0! #DIV/0!

48.Percentage of gross A/R in managed care #DIV/0! #DIV/0! #DIV/0! #DIV/0!

49.Percentage of gross A/R in other #DIV/0! #DIV/0! #DIV/0! #DIV/0!

50.Percentage of receivables delayed in medical records #DIV/0! #DIV/0! #DIV/0! #DIV/0!

51.Days revenue in medical records #DIV/0! #DIV/0! #DIV/0! #DIV/0!

52. Total dollars in gross A/R per bed #DIV/0! #DIV/0! #DIV/0! #DIV/0!

COLLECTION ACTIVITY

53.Gross revenue $0

54. Total gross dollars of bad debt write-off $0

55. Total gross dollars of charity write-off $0

56. Total gross dollars of uncollectibles $0 $0 $0 $0

57.Bad debt as percentage of uncollectibles #DIV/0! #DIV/0! #DIV/0! #DIV/0!

58.Charity as percentage of uncollectibles #DIV/0! #DIV/0! #DIV/0! #DIV/0!

59.Bad debt as percentage of gross revenue #DIV/0! #DIV/0! #DIV/0! #DIV/0!

60.Charity as percentage of gross revenue #DIV/0! #DIV/0! #DIV/0! #DIV/0!

61.Uncollectibles as a percentage of gross revenue #DIV/0! #DIV/0! #DIV/0! #DIV/0!

62.Average daily revenue $0 $0 $0 $0

63.GDRO #DIV/0! #DIV/0! #DIV/0! #DIV/0!

64.Average daily revenue per bed #DIV/0! #DIV/0! #DIV/0! #DIV/0!

65.Gross revenue in self-pay #DIV/0!

66.Gross revenue in Medicare #DIV/0!

67.Gross revenue in commercial insurance #DIV/0!

68.Gross revenue in Medicaid #DIV/0!

69.Gross revenue in managed care: HMOs and PPOs #DIV/0!

70.Gross revenue in other #DIV/0!

71. Total gross revenue $0 $0 $0 #DIV/0!

72.Percentage of gross revenue in self-pay #DIV/0! #DIV/0! #DIV/0! #DIV/0!

73.Percentage of gross revenue in Medicare #DIV/0! #DIV/0! #DIV/0! #DIV/0!

continued…



Month 1 Month 2 Month 3 Quarter Average

74.Percentage of gross revenue in commercial insurance #DIV/0! #DIV/0! #DIV/0! #DIV/0!

75.Percentage of gross revenue in Medicaid #DIV/0! #DIV/0! #DIV/0! #DIV/0!

76.Percentage of gross revenue in managed care #DIV/0! #DIV/0! #DIV/0! #DIV/0!

77. Percentage of gross revenue in other #DIV/0! #DIV/0! #DIV/0! #DIV/0!

78.Dollar amount of contractual allowances $0

79.Net revenue $0 $0 $0 $0

80.Average net daily revenue $0 $0 $0 $0

81.Net days revenue outstanding (NDRO) #DIV/0! #DIV/0! #DIV/0! #DIV/0!

82. Total dollar value of credit balances #DIV/0!

83.Days revenue in credit balances #DIV/0! #DIV/0! #DIV/0! #DIV/0!

84.Percent G/R—Gross denials #DIV/0! #DIV/0! #DIV/0! #DIV/0!

85.Percent G/R—Net denials #DIV/0! #DIV/0! #DIV/0! #DIV/0!

KEY QUESTIONS (insert an X next to the appropriate answer)

84. Do you have more or fewer employees in the business office this year? __ More __ Fewer __ Same

85. How much has revenue from managed care increased at your facility in the past year?

__ Not at all __ Less than 10% __ 10 to 25% __ 26 to 50% __ More than 50%

86. Do you think patients fully understand their bills at discharge? __ Yes __ No


GL

OS

SA

RY A

Admission: The formal acceptance of inpatients into a hospital or otherinpatient health facility. Such inpatients are typically provided with room,board, and continuous nursing service and stay at least overnight.

Admitting department: The hospital department that secures patient demo-graphic and financial information on inpatients for registration purposes;schedules pre-admission testing; coordinates patient room assignments;records all patient movement including transfers and discharges for the pur-pose of maintaining accurate census data; and disseminates patient informa-tion to other hospital departments.

Aged trial balance (ATB): All open accounts for a particular time period.An ATB for zero to 90 days would be a listing of accounts that are open andhave existed for up to 90 days after a patient’s discharge.

Assignment of benefits: Form that indicates to whom the benefits should bepaid. Signing would indicate the patient would like payment to go tothe provider.

Authorization: Required from a patient for disclosure of clinical data rela-tive to hospital reimbursement claims. An authorization form allows theprovider to release to the third party: (1) the admitting diagnosis for deter-mining eligibility; and (2) the diagnosis of any procedures performed asneeded in claims reimbursement processing.

BBad debt:An account that is uncollectible from a patient, although thepatient has or may have the ability to pay. This results in a credit loss for thehospital, clinic, or other health care facility. These losses may be reflected asan allowance from revenue or as an expense of doing business for the entity.

Bed size: The number of hospital beds, vacant or occupied, maintained reg-ularly for use by inpatients during a reporting period. (The typical reportingperiod is 12 months.) To determine this amount, add the total number ofbeds that are available every day during the hospital’s reporting period.Then, divide this amount by the total number of days in the reporting period.

Biller:An FTE biller spends more than 50 percent of the workweek process-ing claims, rebills, and claim rejections. #ote: For purposes of filling out theHARA survey, this number should include FTEs contracted from outsourcingagencies or billing and collection agencies.

Blue Cross (BC): A nonprofit organization covering hospital, medical, sur-gical, and major medical. Most Blue Cross subscribers sign up for coverageat their work place under a group plan.

CCivilian Health and Medical Program of the Uniformed Services(CHAMPUS):A program administered by the Department of Defense thatprovides benefits for health care services furnished by civilian providers,physicians, and suppliers and to spouses and children of active duty, retired,and deceased members.


Full-time equivalent (FTE): The term usedin hospital budgeting and human resourcesthat represents the number of hours a full-time employee would be expected to work ina given year. In other words, 40 hours per weekor 2,080 annual hours. This term isused in hospital budgeting, position control, andproductivity.

GGross days revenue outstanding (GDRO):A calculation used to compare the cash flow andlevel of receivables between health care organi-zations. GDRO is calculated by determininggross revenue during a given period divided bythe number of days in that period. This figure isthen divided into the total accounts receivable.Do not subtract contractual allowances.

HHealth maintenance organization (HMO):There are two fundamental types of HMO plans:(1) the group model, where HMOs contract withseveral group practices and share the risk of theventure with the physicians; and (2) independentpractice associations (IPAs)—loose-knit, prepaidplans that contract with individual physicians totreat patients in their offices, often on a fee-for-service basis.

MMedicaid: A federal health insurance plan,authorized by Title XIX of the Social SecurityAct, Public Law 89-97, administered by individ-ual states to provide health care for the poor.

Medical record: A patient file containingsufficient information to clearly identify thepatient, to justify the patient’s diagnosis andtreatment, and to accurately document theresults. The record serves as a basis for planningand continuity of patient care and provides ameans of communication among physicians andany other professionals involved in the patient’scare. The record also serves as a basis for review,study, and evaluations on serving and protectingthe legal interests of the patient, hospital, andresponsible practitioner.

Medical records department: The hospitaldepartment responsible for the cataloging,

Collector: An FTE collector spends more than50 percent of the workweek following up onreceivables. #ote: For purposes of filling out theHARA survey, this number should include FTEscontracted from outsourcing agencies or billingand collection agencies.

Contractuals: An allowance for the differencebetween charges and the amount of money actu-ally paid by a third party. Contractual allowancesinclude any agreements made regarding dis-counts for third-party payers.

Coordination of benefits (COB):Amethodof integrating benefits payable under morethan one group health insurance plan so theinsured’s benefits from all sources do not exceed100 percent of his or her allowable medicalexpenses.

Cost to collect: This is determined by tabulatingall business office expenses for a given periodand dividing the figure by the total number ofdollars collected during the same period.

DDiagnostic related group (DRG) rate:A dollaramount used by Medicare to pay hospitals forservices rendered. It is based on the average ofall patients belonging to a specific DRGadjusted for economic factors, inflation, andbad debts.

Discharge: The process whereby the patientleaves the hospital provided certain criteria aremet. A patient must obtain financial clearancebefore leaving the hospital.

Discharge-to-bill (DTB) time: The length oftime between a patient’s discharge and the timethe bill leaves the facility.

FFinancial counselor:An FTE financialcounselor spends more than 50 percent of theworkweek managing receivables during the up-front collection process and prior to accountsbeing billed. Financial counselors may alsoprocess charity and/or free care applications.

Fiscal intermediary: An agency, usually aninsurance carrier, designated by the Social Secu-rity Administration to administer benefits of theMedicare program.

SSecondary payer: An insurance carrier orprogram that is secondary to the primary insur-ance carrier or program (usually billed after thefirst carrier).

Self-pay: Individuals, institutions, or corpora-tions assuming the entire responsibilityfor payment of hospital and medical billsthat otherwise might be covered by an insurancepolicy.

Superior-performing hospital: A hospital witha GDRO average of 60 days or less.

TTeaching hospital: A hospital providing under-graduate or graduate medical education, usuallywith one or more medical or dental internshipsand/or residency programs in affiliation with amedical school.

Third-party payer: Any agency or organizationthat pays or insures a specific package of healthor medical expenses on behalf of the beneficiar-ies or recipients. (Blue Cross plans, Medicare,Medicaid, and health maintenance organizations(HMOs) are examples.)

UUncollectible: Percent of gross revenue that iswritten off either as bad debt or as charity.

Utilization review (UR): The process ofexamining the appropriate need of a patient’shospital admission, services provided, thepatient’s length of stay (LOS), and the hospital’sdischarge practices. This type of review isrequired by Medicare, Medicaid, and many otherthird-party payers and regulatory agencies.

VVerification: The process performed byregistrars to verify and interpret the patient’sinsurance coverage prior to or at the timeof registration.

WWorkers’ compensation:Workers’ compensa-tion is the cost of an injury sustained on the jobthat is covered by an employer, if verified by thatemployer.

maintenance, processing, and control of patienthospital medical records.

Medicare coinsurance amount: Under Part A,the amount the patient is responsible for payingis equal to one-fourth of the Part AMedicareCash Deductible for each inpatient day from the61st to the 90th day. Under Part B, the amountthe patient is responsible for paying is equal to20 percent of the charges after the annual Part BMedicare Cash Deductible is met.

Medicare secondary payer: Asystem thatrequires hospitals to identify payers who are pri-mary to Medicare as part of the admission process.

N#et days revenue outstanding (#DRO): Acalculation used to compare the cash flow andlevel of receivables between health care organi-zations. (See Gross Days Revenue Outstanding.)Contractual allowances are subtracted.

PPre-admission: The process of obtaining andconfirming patient demographic and financialinformation at least 24 hours in advance ofarrival.

Preferred provider organization (PPO):Adirect contractual arrangement among hospitals,physicians, insurers, employers, or third-partyadministrators in which providers join togetherto offer health care for a distinct group of people.

Primary payer: The insurance carrier orprogram that takes precedence in the payment ofa hospital bill when two or more third-partypayers have potential responsibility for thereimbursement.

Proration: The process of determining the patient’sportion of charges as separate from the insuranceportion. Proration enables a hospital to determinewhat a patient owes at or prior to discharge.

RReceivable: Refers to either the total or a portionof a patient’s account, which represents uncol-lected revenue for the facility.

Receivables aging: The number of days receiv-ables age from the point of discharge to the timethe open account is closed.


Survey Notes


Survey Notes


Navigate the Complex Medicare Claims Appeals Process!

ISBN 9780735564817, One volume, Looseleaf, Updated annually, $265.

Medicare Claims Appeals Process Handbook helps you understand the appeals process every stepof the way. You’ll know exactly what you can and can’t do, the essential timeframes for pursuingappeals, where to send information, and how to proceed—at every level of the appeals process!

• Overview of Claims Processing System

• The Role of National CoverageDeterminations and Local Coverage Determinations

• Overview of the New Claims Appeals Process

• Provider and Supplier Appeal Rights and Rules for Representation

• Initial Determinations

• Post-Payment Audits

• Redeterminations

• Qualified Independent Contractor Reconsiderations

• Administrative Law Judge Appeals

• Medicare Appeals Council Review

• The Recovery Audit Contractor Program

• Judicial Review

• Quality Improvement Organization Reviews

• Reopenings

Highlight of Contents

Call 1-800-638-8437 or visit www.aspenpublishers.com today to order your 30-Day RISK-FREE copy! (Refer to Priority Code AB31)

9900529815

Documents

TheBenchmarkinHospitalReceivablesnews.wolterskluwerlb.com/media/HARASpecialReport.pdfHealth Care Reform Has Become a Reality! ISBN: 9780808022879, $149; Two Volume Softcover Call 1-800-638-8437