What’s inside:
In this article you can read how:
- Many US hospitals operated on negative margins in 2022.
- Revenue optimization is critical for the financial recovery of the healthcare sector.
- The surgical setting is a high priority area for improved data capture as a route to increased OR revenue.
- New technology is providing an opportunity to optimize case value and increase surgical reimbursement.
Healthcare providers are hoping that 2023 will be an easier year than last year, which is now officially the worst financial year since the start of the pandemic.
In 2022 around 50% of US hospitals finished the year with negative margins, with a slight upturn in December when the operating margin index recorded its first positive result of the year, albeit at just 0.2%.
According to the latest Kaufman Hall Report*1 the pressures on healthcare providers include:
- Rising expenses
- Reimbursements that don’t reflect rising expense costs
- High labor expenses due to a competitive market and an increase in contract staff
- Increased lengths of stay
- Increased outpatient volumes that could be lost to ambulatory centers
The recent American College of Healthcare Executives annual survey of hospital CEO survey*2 found that for financial challenges,
“Most CEOs (89 percent) ranked increasing costs for staff and supplies as the most pressing, followed by operating costs (66 percent)”
The Kaufman Hall Report predicts that the financial pressures are unlikely to recede, so how can healthcare providers plan for a financially stronger 2023?
Optimizing case revenue
Many medical devices and implants are high value items. According to a 2018 report*3 US hospitals spent around $200 billion on medical devices – 6% of the total US healthcare spend. Medical and surgical supply costs were calculated at $27.4 million for the average hospital in 2018, and the projected growth for 2025 is $44 million. With such significant costs at stake, hospitals, health systems and surgery centers need to ensure that their healthcare systems optimize implant tracking.
Financial Facts and Figures
| 2022 Hospital Margins | In 2022 around 50% of US hospitals finished the year with negative margins |
| 2022 Hospital Operating Margin Index | The only positive result was for December 2022 with an operating margin index of just 0.2%. |
| Cost medical devices in US | In 2018 US hospitals spent around $200 billion on medical devices – 6% of the total US healthcare spend |
| Predicted Rise in cost of surgical supplies | By 2025 the medical and surgical supply costs for the average hospital are predicted to rise to $44 million |
| Charge integrity | 1% – 3% of net charges are lost due to charge integrity leakage. |
| Financial pressures on hospital CEOs | 89% are facing financial pressures relating to staff and supplies.
66% are concerned by high operating costs. 63% by are challenged by Medicaid reimbursements. |
Because of a financially fraught 2022, many healthcare providers are implementing new initiatives in 2023 that are designed to offset rising costs and improve financial performance.
Maximizing case revenue is an important element of any healthcare financial strategy, and as with any process, there are critical points. Charge capture at the point of care is a key element of revenue cycle management, but the task of capturing full and accurate billable charges at the point of care is far from straight forward.
Charge capture systems
Charge capture is an internal process that pulls together all the items needed for medical billing. Information will be compiled from across the organization, at all the points that the patient received billable care.
The surgery setting offers particular challenges for healthcare providers due to the fast-paced, unpredictable environment, and the common inefficiency of many OR charge capture systems.
Many healthcare providers are still relying on keyed-in surgical data, which is known to be time-consuming and error-prone. Even when there is a point-of-use data capture system in place, staff will often have to revert to keying in information not recorded, such as the expiry date, lot, and serial number. Additionally, electronic systems often struggle to routinely capture, identify and record all items used in surgery.
System exceptions are a regular and frustrating occurrence that result in manual workarounds. All too often, when there are data-capture or item-identification failures, these products are at high risk of remaining undocumented – a disaster for both patient safety and case reimbursement.
It is this surgical data-capture problem that is most responsible for charge-capture challenges in OR and procedure rooms.
Clinical Revenue Integrity
Surgical revenue leakage is a common failing for many hospitals and ambulatory centers. According to the HFMA (Healthcare Financial Management Association)*4 as much as 1% of net charges are lost due to charge integrity leakage – other sources claim the figure can be as high as 3%. The HFMA states, “These issues, which cost health systems millions of dollars annually, are too substantial to overlook.”
The recently-published ACHE annual survey*2 highlighted that 43% of hospital CEOs were concerned about revenue-cycle management – converting charges into cash.
As part of their work to identify and manage surgical revenue leaks, hospitals often implement post-surgery documentation audits as a way to validate surgery records. This revenue integrity process involves multiple staff and can take many hours, after which there will likely be corrections to case data and the addition of missing items.
Accurate charge capture starts with full and complete item capture in surgery. This process is inefficient, and it necessitates post-surgery activity to review and correct the surgical records.
The implications of inaccurate surgical data
Hospital leaders understand that relying on inefficient and ineffective barcode systems and manual data-entry processes has an impact on the accuracy of surgical charting.
When surgical charting is incomplete or incorrect, it has a large negative impact on the organization:
- When POU data capture is unreliable healthcare providers cannot trust the accuracy of surgical records.
- Organizations often resort to carrying out regular post-surgery audits by busy, high-level staff – who need to figure out if the chart is complete and make corrections before the case is submitted for reimbursement.
- Inaccurate patient charting represents a patient safety risk that is non-compliant with FDA Regulations
- Documentation errors may lead to under-reimbursement, payment delays or declines.
- Lack of accurate usage data obscures the inventory vision of hospital materials management staff, resulting in purchasing errors, high wastage, and a bloated inventory.
- Lack of case data leads to difficulty analyzing case costs, is a barrier to optimizing clinical improvement, and affects business performance.
It is clear that inaccurate utilization data is an organizational issue with a big financial impact. By addressing the causes of bad data at the point of care, healthcare organizations will be able to achieve data integrity and optimize charge capture.
New technologies are providing alternative ways to automate item and charge capture in procedural and surgical spaces.
Nurse-centric technology is key
But it’s not enough to simply have a technical solution for the problem.
The solution needs to be easily adopted.
Clinical staff are apprehensive about the introduction of new technology that may work well in theory but is hard to learn and cumbersome to use.
Intuitive, simple-to-use tools are more likely to be successfully adopted by busy nurses.
If systems are slow, clunky or trigger too many workarounds for nurses then the risk of documentation failures is high.
Fast and accurate data capture at the point of care is vital, yet most systems fail to deliver a workable solution.
What’s needed is a tool that delivers data integrity, while also lightening the clinical workload.
A system that gets the job done – without the need for any workarounds.
One that can cope with substitute items, trunk stock and products that may not be in the hospital system at all, or may have updated information in their coding that no longer matches the hospital’s records.
And that’s a tall order.
Item Identification relies on an up-to-date Item Master
One of the sticking points of existing technology is the difficulty of identifying items used. This is commonly caused by the data-capture tool being reliant on the hospital’s Item Master.
The hospital Item Master is the source of truth when it comes to all stock items. It requires constant updating in order remain relevant – but maintaining the Item Master is close to an impossible task.
When non-stock items, substitutes, trunk stock and stock items with new UDI codes are scanned at the point of care, these items routinely trigger a system exception error when they don’t find a match in the Item Master.
IDENTI Medical decided that a new approach was needed when it started designing the next generation of surgical data capture technology.
Automating surgical charge capture
‘Snap & Go’ has been developed with two main objectives:
- Achieve data integrity at the point of use
- Reduce the workload of nurses tasked with capturing, identifying, and recording utilization
IDENTI’s new POU data capture tool is a workable solution that is easily adopted by any size health organization. The system uses image-recognition and AI technology to achieve quick item capture, followed by automated item identification and documentation onto the EMR.
This new tool results in full itemization and charge capture with minimal nurse effort.
Features include:
| Feature | Benefit |
| Ease of use | Clinical-friendly, simple to use – full item capture, identification and documentation in 3 seconds! |
| Small consumables | The system can ‘read’ handwritten implant sheets, ensuring that small consumables are recorded and appear on medical billing. |
| Item identification | Item identification is automatic via access to a global SKU database. No reliance on the hospital’s Item Master. Quite the opposite – all non-listed items are noted and sent back to the hospital in a handy report for Item Master maintenance. |
| Interoperability | Seamless integration between Snap & Go’s cloud AI system and hospital systems, such as the EHR and ERP. |
| Clinical integration | Costs and care are not ‘siloed’. Streamlined workflows reduce the admin burden on nurses, enabling improved surgical flow and increased focus on patient care. |
| Charge Capture | Close to 100% itemization and charge capture during surgery, allowing for accurate and timely claim submission and the optimization of recoverable net revenue. |
| Inventory Control | Timely and accurate usage data informs the procurement process preventing stockouts, surpluses and waste. |
| Data Insights | Metrics, reports, and data insights provide leadership with the tools to accurately plan and manage medical inventory. |
New technology is automating item identification during surgery
Snap & Go is the next generation of surgical data.
No more barcode scanning, system exceptions or frustrating manual workarounds.
When point of use data capture is simplified and naturally integrates into clinical workflows, organizations are able to strengthen their revenue integrity.
Contact us if you want to achieve full item and charge capture at the point of care.
*1 Kaufman Hall | National Hospital Flash Report (January 2023)
*3 Physician preference items: what factors matter to surgeons? Does the vendor matter? – PMC (nih.gov)
*4 Avoiding the High Cost of High-Capture Leakage (hfma.org)
