Healthcare Quality Costs Too Much

In the last post, I mentioned the cost of a denial as $25 and that it is a waste time and money in your medical practice. If we really look at the idea, we should understand that to meet a healthcare quality standard, there is a cost associated.


There are four cost of quality categories to understand:

Appraisal costs: 

• These costs relate to audit and reviews of the processes in place. 
• These can be a waste, e.g., reviewing every encounter every time for every provider, even a simple 99213! Review yes, but every time NO! Identify the patterns of errors, use those as teachable moments, stop reviewing every transaction, and set up a random audit pattern later. 

Prevention costs: 

• These costs associate with training, new equipment, supplies, etc. 
• The goal here is to spend money preventing defects from occurring. These might include spell check, changing from carpet to a non-slip tile floor 

Internal failure costs: 

• These costs are what we did wrong 
• These include the demographic errors in claims submission, discussed in the prior post, wrong prescription, non-documentation of what was done 

External failure costs: 

• These costs are associated with an activity outside of the practice. 
• These might include an insurance company asking for additional information on a claim that we know is unnecessary, wrong supplies sent, back orders on supplies 

This is not to say that any of these costs are bad or good. The point is to have you recognize that there are costs associated with providing quality service to your patients.

The next time you think about cutting costs, don’t just say cut overtime, instead think about areas where there is waste, where you can re-focus the staff efforts, track where errors occur and work to fix them. If we accept the 25% of your workday is wasted premise we can find areas where costs are expended unnecessarily.

It is these costs, changing how things are done that can and will make a difference

The Medical Practice Front Desk Screwed Up Again

An insurance claim that results in non-payment due to a denial is a waste! Statistically we know that the cost of handling a denial is about $25. Costs start from input, maintenance of the account, receipt of the EOB, the RE-WORK, re-submission and the time value of money. If your practice has only 10 denials a week that’s $250 times 52 totaling $13,000. You’re not writing a check for that amount but you might as well.

The cost is in the re-work where staff can be doing something else with their time. Today’s cash flow has a greater percentage of patient payments than ever before.

The main source of denials is from demographic errors. Is that what your denial report shows? You do get and review a denial report at least weekly, right?!

Let’s assume it’s at the front desk. How about doing a Gemba and checking things out and you will find phone, patient questions, noise, copying, scanning, patient check in and check out and many other activities. Draw a process map and see what steps are there and who makes what decisions.

This simple step will create a picture, which should result in changes as to how this key area is handled. How about shifting staff from the denial management department to the front desk. You won’t need the staff in the back if the front is staffed correctly! This is an assumption and jumping to a conclusion. More importantly, it is intended to suggest that a look at your denials, making an effort to repair them by using Lean tools and determining that many activities can be changed.

Challenge one is to look at your denial report, identify the main source of denials, calculate the cost of processing them, evaluate the main source, use the time as a teachable moment, and things will improve.

photo credit: via photopin cc

Helpful Worksheets for PDSA and DMAIC Deployment

In making presentations and talking with many administrators over the past several months one of the things that seems to always be there is we don’t have time to do this, we really like the idea of utilizing Lean principles BUT. . . .

My response is yes, I agree but if we remember that we waste 25% of our work day by doing non-value add tasks, we have to find the time.

OK – so that’s a lot of talk but we don’t believe it.

In order to help a little further, we have created a couple work sheets that might help with your efforts. First is a guide for the PDSA deployment platform for those who choose that model. We ask questions and give space for answers.

The second is a checklist of deliverables for those who choose to use the DMAIC deployment platform. This will help guide you through key steps to achieve your project management goal.

As mentioned on several occasions it is not important to me or anyone but you as to which deployment platform you use. The key is to use one to help guide you and give you structure in the process.

The key then is to use one of these tools, find a “simple” problem and work for a quick, small win. This will prove to yourself and others that the concepts works. You can then either work on another problem or go back to the first problem and work on continuous process improvement.

To get your copy of both or either form please visit this link at the www.owendahlconsulting.com web site.

It’s Not Just to Provider

Another experience, simple treatment in office for poison ivy – my nemesis! Called my PCP and was told he could not see me but there is a new mid-level provider available later that day if it would be OK to see her. Of course that would be fine. The experience was typical – arrive at the office, hand over the credit card, wait 20 minutes and then escorted to the exam room. Treatment was as expected, a steroid shot, prescription and on my way home.

About a month later we receive a statement indicating we owed ~$190 for a level 4 office visit and that the insurance company had denied payment due to provider not part of the network. We called, staff indicated they  were aware and that the claim would be re-billed under that doctors name since credentialing had not been completed for the new mid-level. They would also look into the documentation for the appropriate level of care, they know that I am a consultant and understand the process.