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Health and Hospital Committee Report September 19, 2006
Cook County 2006 Transition Team Health & Hospital Committee Table of Contents 1. Executive Summary 2 Healthcare Financial Management Warning Signs 3. Short Term Organization Recommendations 4. Short Term Financial Recommendations 5. Long Term Organization Recommendations 6. Long Term Financial Recommendations 7. Discussion 8. Conclusion 9. Appendices -Attachments -Committee Members Executive Summary Page 1 C The Cook County 2006 Transition Team’s Health and Hospitals Committee were given the charge of initiating a review of the current conditions at the Bureau of Health Services. We examined the Bureau’s medical care delivery system and its financial and clinical operations with the intention of examining the state of leadership, communication and accountability within the Health Bureau. Our review included 38 interviews with upper management, clinical personnel, financial staff and operational personnel which we felt were critical to the business of health care delivery. Collectively, this spoke to a lack of management and financial coordination of the most basic operations required to properly run the Health Bureau. There was a redundancy of management with no common organization goals or vision. In conclusion, upper management is very disconnected from the daily operational milieu of the Bureau, ultimately resulting in an environment where the Health Bureau functioning on a day to day basis resolving financial or operational crisis as they are encountered. C The Cook County Health Bureau (CCBH) was evaluated to the health industry standards in our attempt to determine using Healthcare Financial Management Association (See Appendix for references)
Committee Recommendations Page 2 Our findings parallel the warning signs identified by the Healthcare Financial Management Association as signs of a troubled organization. Healthcare Financial Management Association Warning Signs 1. Board and senior management acceptance of poor financial performance 2. Lack of middle management depth and experience 3. Lack of accountability or illogical reporting relationships involving managers/supervisors 4. Poor physician relations 5. Lack or erosion of profitable payer mix 6. Inadequate information management, business processes and reporting systems 7. No long-term budgets and plans or unrealistic/missing budget targets; 8. Increasing A/R days and bad-debt expense 9. A liquidity squeeze, such as decreasing cash reserves and days of cash on hand (red alert: extended vendor payments – more than 80 days) 10. Audit surprise or failure The Health Financial Management Association, (an industry standard) offers a clear set of parameters which allow for an impartial assessment of the Health Bureau. The Health Bureau present status is by all accounts of a “troubled organization”, are present in the estimation of the Health and Hospital Committee. Committee Recommendations Page 3 Short-term Organizational Recommendations 1. Review and evaluate Bureau leadership for appropriate changes. Benefit – establish a management structure and a leadership team that fulfills the Mission and guides the organization towards organizational and fiscal stability. 2. Implement a Transition Advisory Council to help facilitate the transformation of the Bureau from its present state to a more Performance-Based Business Model. Benefit – to assist in the development and implementation of a Strategic Business Plan. 3. Analyze mission-critical business processes. Benefit – identify opportunities to improve workflow, efficiencies, cost control, improve revenue and optimize use of available resources. There are both internal Cook County auditors and Industrial Engineers who are capable of performing this work. Committee Recommendations Page 4 4. Right-size organization by examining all departments against industry standards. Benefit – evaluate human resources determine department goals and implement accountability. 5. Document the information systems architectural. Benefit – to determine if the information technology infrastructure supports the strategic business plan and the department business processes in order to maximize revenue and mitigate risk. This also aids in more effective management of consulting services, ensures knowledge transfer and minimizes the dependency on consultants. There are both internal Cook County auditors and Industrial Engineers who are capable of performing this work. 6. Conduct an independent audit to evaluate the medical records systems and financial systems benchmarked against industry standards. Benefit - to achieve compliance and reduce risk. 7. Evaluate productivity and distribution of physician, nursing and para-medical staff against industry standards Benefit – allocates medical resources to better serve the patient populations at each Bureau facility. Committee Recommendations Page 5 Short-term Financial Recommendations 1. Immediately implement performance-based goals for physician leadership and management of medical staff. Benefit – To improve fiscal accountability to Cook County taxpayers. 2. Provide mandatory in-service training to educate the medical and para-medical personnel on accurate professional billing and documentation. Benefit – This will allow the Bureau to bill for professional fees and services rendered at all Bureau facilities and where services are rendered elsewhere, i.e. other hospitals and Community Partner locations. This would have a very significant impact on revenue generated, especially in OB/Gyn, Pediatrics and Family Medicine. This is a highly insured population base, i.e. Kid Care, Women’s Health, Obstetrics, Deliveries, Newborn, Immunizations, etc. The Patient Accounting system is capable of accepting itemized billing; both electronic and/or paper encounters could be used to capture the patient information. Committee Recommendations Page 6 3. Immediately implement the front-end eligibility verification process so that it takes place at Registration. Benefit -This will help distinguish insured patients from truly uninsured self pays and allow for referrals to financial counseling to be offered prior to service, i.e., charity care, MANG, IDPA, etc. This accelerates the revenue cycle and provides accurate patient billing. The software to do this is currently in place but the features are under-utilized. This process improvement should be implemented Bureau-wide to maximize the revenue opportunity. 4. Conduct a comprehensive review of the Bureau’s policy on charity care, i.e. Limit of Liability (LOL) eligibility. Benefit – to ensure the appropriate distribution of the patient’s financial responsibility at all Bureau locations. 5. Implement and adhere to IDPA equivalent formulary. For non-formulary medications approval should be required by a Formulary and Therapeutics Committee. Benefit – it would result in major cost savings because of expanded use of generic medications over “designer drugs. Committee Recommendations Page 7 (Cont’) 6. Leverage on the State of Illinois purchasing power for all Bureau medications and supplies. The purchase of non-formulary medications should be according to Average Wholesale Pricing. Benefit – coordinated purchasing resulting in cost savings. 7. Immediately implement Medicare D for medical care and pharmaceutical. Benefit – reduces cost of drugs and increases reimbursement streams. 8. Establish a merchant acceptance at the point of Registration. Benefit – improves payment options, revenue and customer service. 9. Medical revenue generated by the health services should be managed by the Health Bureau Finance division. The funds should be placed in CCBH accounts. Benefits-Fiscal accountability at the operational level -Allows for accurate budgeting and forecasting -Mimic Private Hospital economic structure and operations. It is the opinion of the committee that the recommendations presented herein reflect interventions that could have a significant impact upon the Bureau of Health Services within the next 90 days. Our long term recommendations have also been outlined for review. Committee Recommendations Page 8 Long-Term Organizational Recommendations 1. Routinely evaluate the lines of business and types of care. Benefit – to ascertain if the deployment of Bureau resources are fulfilling the Bureau’s Mission and Strategic Business Plan. 2. Routinely evaluate the Community Partnership Agreements. Benefit – determine if these relationships are mutually beneficial and support the Bureau’s Mission and Strategic Business Plan. 3. Routinely evaluate the Contracts with teaching programs and research partners. Benefit – determine if these relationships are mutually beneficial and support the Bureau’s Mission and Strategic Business Plan. 4. Establish a process for implementing Performance-Based Contracting. Benefit – optimizes the performance of contractors by defining clear statements of work, measurable project goals, defining clear roles and responsibilities, established a vehicle for knowledge transfer and performance reporting. 5. Maximize use of the human capital within the Bureau. Benefit – helps to reduce consulting costs, lends to employee development and improves employee morale. 6. Develop a risk mitigation strategy Committee Recommendations Page 9 Long Term Financial Recommendations: 1. Review current Medicare medical education payments. Benefits – to negotiate a major rate increase for resident and intern FTE. 2. Review payment history from Community Partners and implement a procedure to capture professional fees for patient care. Benefits – to negotiate reimbursement for services rendered in past years, etc. 3. Identify non-Cook County patient visits and cost of care. Benefits – to begin to implement a charge-back process on a regional basis and work with surrounding counties on a regional health delivery system. 4. Centralize Registration across the Bureau. Benefits – improves customer satisfaction and enhances revenue and medical record coordination. 5. Implement mandatory physician billing and tie physician salary to productivity. Benefits – Increases accountability among medical staff. 6. Research the possibility of a Co-Pay policy for each patient visit. 7. Standardize clinical charges across all Bureau locations. Benefits – to maximize reimbursement. Committee Recommendations Page 10 Discussion: It is the opinion of the Health and Hospital Committee that the Cook County Health Bureau is a troubled organization by the healthcare industry standards. The Health Bureau organizational crisis is exacerbated by a lack of leadership, communication and accountability. The financial condition of the Health Bureau, and the precarious financial condition of the Health Bureau have developed over a period of time and was generally well known, for a number of years, to both Cook County officials as well as to the Health Bureau leadership. The Federal IGT funds, an important source of revenue for the Health Bureau, was scheduled to be reduced this year and will continue to decrease in the coming years. The Cook County’s approximate share of IGT monies is currently at 38% of the IGT monies the Trust Fund collects from the state and federal agencies. This formula must be reassessed and the County portion increased immediately. Concurrently, the Cook County Health Bureau’s portion of the collected Cook County tax revenue has continually diminished over the past 10 years. Furthermore, the Health Bureau has been mandated by Cook County Board to maintain the present levels of healthcare services as well as address new demands for healthcare with diminished financial resources. In the midst of these many challenges, the Health and Hospital Committee found extremely troubling the apparent lack of any type of Health Bureau management plan to address the Health Bureau organizational and financial crisis. Committee Recommendations Page 11 Conclusions It is the recommendation of the Health and Hospital Committee to President Steele, that she take concrete steps to ensure sound leadership, and a return to accountability by the Health Bureau leadership. We encourage President Steele move decisively to change the Health Bureau leadership and implement the short and long term recommendations the Health and Hospital Committee has outlined in this report. The formation of a Strategic Advisory Council will help facilitate the transformation of the Bureau from its present state to a more Performance-Based Business Model, as well as assist in the development and implementation of a Strategic Business Plan. We believe that if these measures and recommendations are implemented we will begin to see good governance emerge, and it’s manifestation will be strong leadership, transparency, responsiveness, accountability, effectiveness, and efficiency. Respectfully Submitted, Luis R. Munoz, M.D., M.P.H. Jorge Cavero, M.D.
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