Sutter Health System

Case Study Analysis
Introduction
Sutter Health System located in California is a non-profit community-based system of health care. Imperatively, the system of healthcare renders services to patients and households where the healthcare providers link up resources and share specialty and experience to develop and progress the quality of healthcare. In this regard, the non-profit linkage or system instigated an interface with the main endeavor of developing revenue collection of the healthcare amenities that would be gathered from self-pay patients. The traditional or conventional payment processing system had shortcomings that resulted in the delays in the process of efficacious revenue collection of the healthcare facilities. The restrictions and confines of the system of processing were owing to the absence of accessibility to specific information in the account and the members of staff were not in a position and lacked the capability to obtain real-time data and information. The healthcare organization augmented its revenue cycle by restructuring the methodology used in its collections. In this manner, the entity was not only able to restructure its processes and procedures but it also completely transformed the manner in which dissimilar departments were accountable for patient registration as well as collections (Souza and McCarty, 2007). The main purpose of this paper is to delineate a summary of the case study that ascertain the fundamental problems and issues, outlines background information, pertinent facts, the solution undertaken together with the outcomes attained. What is more, the paper will pinpoint and elucidate the accounting practices utilized by California Sutter Health in the definition and solution of its collection issues. Furthermore, I will come up with an alternative solution centered on my individual research and analysis. Most of all, I will provide my individual opinion and perspective of California Sutter Health’s healthcare system and transformation to resolve the problems in its collection of patient payments.
Complete a summary of the case study that identifies the key problems and issues, provides background information, relevant facts, the solution employed, and the results achieved.
Notably, Sutter Health Systems is one of the biggest health care providers within the state of Northern California. The organization was experiencing a progressively rising number of days regarding the outstanding accounts received and at the same time faced a deterioration in dollars collected for the amounts of patient responsibility. The key basis or foundation for this was owing to an amalgamation of high deductible health plans that were being offered by employers together with a rising rate of unemployment owing to a deteriorating economy. Nonetheless, the healthcare organization was able to come up with a solution for increasing its straight collections from self-pay patients. In the 2006 financial year, California Sutter Health dedicated itself to providing its patient financial services personnel on both the back end and front end, the essential apparatus to augment patient payment collections. This report handed the organization the awareness and perception on the manner in which the organization’s plans to carry out a new approach of the collection for the front end to operate in an efficacious manner. To ensure that this is normalized, the personnel started working in the direction of transferring the back end functions of the healthcare organizations to the front end (Souza and McCarty, 2007).
In the first place, California Sutter Health prudently scrutinized policies and procedures to perceive whether any enhancements could be made devoid the necessity for any extra cost for a new system of accounting or a complete restructuring of the departments accountable for revenue collections. As outlined in the article, through the analysis of its revenue management cycle before the carrying out the new program, the healthcare organization was able to ascertain numerous issues. One of the issues that were pinpointed was that patient financial service members of staff could not gain accessibility to real-time data and information on important financial and operational pointers and signs such as cash collections together with accounts receivable days. Consequently, more often than not, managers together with members of staff have to wait up to the culminating period of the month to set standards and benchmarks, trace and follow the progress, or make significant business decisions. Another issue pinpointed by California Sutter Health encompassed the accounting system of the health system. The downside and key issue at hand was that the accounting system did not permit managers to separate and analyze specific data or come up with reports on demand to the level of retail necessitated. Imperatively, as pointed out in the article, rather, the region was dependent on a especially trained programmer to come up with these reports, more often than not, giving rise to expensive and pricey delays in ascertaining and fixing problems and issues. What is more, the central business off personnel of the organization also experienced suffering owing to the lack of real-time data and information (Souza and McCarty, 2007).
Subsequent to ascertaining the aforementioned issues within the organization, California Sutter Health was able to lay emphasis on a number of key benchmarks and standards including the following:
1. Billed accounting receivable days
2. Gross accounts receivable days
3. Percentage or proportion of accounts receivable over a period of 90 days, 180 days or 360 days
4. Cash collections
5. Unbilled accounts receivable days
6. Accounts receivable days for key players (Souza and McCarty, 2007).
Identify and explain the accounting practices California Sutter Health used in defining and solving its collection problems.
One of the key accounting practices that was employed by California Sutter Health in delineating and resolving its collection problems is system accountability and transparency. In the preceding periods, the organization has been utilizing the self-pay approach for collecting payments and this in the end failed to give guarantee of accountability as well as capitalizing on revenue generated. The healthcare organization assessed its level of culpability and transparency within its system of revenue collection. This kind of appraisal gave rise to the ascertainment of the key issues that could be resolved within the system. The conventional system of undertaking things failed to instigate culpability to the staff within Sutter Health that were tasked with the duty of revenue collection. As a result, the organization scraped off this conventional system and put in place a new system (Souza and McCarty, 2007).
Another accounting practice that the organization utilized is cost reduction. Based on accounting principles, it is necessitated that establishments and entities have to utilize cost reduction approaches or profit increase. There was a movement in the decrease of costs and expenses of operations and at the similar time increasing the cash flows of the entity. In that regard, the system of revenue collection became amalgamated and integrated. The wide-ranging and all-inclusive training program on the prevailing patient financial services members of staff was purposed to decrease the costs of employing officially educated and trained personnel who would meet the requirements and be eligible to utilize the new tools. What is more, these officially educated and trained personnel would have demanded a greater compensation and remuneration. The management of California Sutter Health was able to perceive this and come up with the widespread training program (Souza and McCarty, 2007).
California Sutter Health program made it certain that the efficacy and efficiency of operations. The accessible resources were made the most of the management together with the personnel to give the guarantee that the output was maximized. The efficacy of California Sutter Healthcare was scrutinized and assessed and the key issues identified. The metrics of performance assessment together with record management were guaranteed that they operated to their ideal and most optimal magnitudes.
Develop an alternative solution based on your own research using three to five academic sources from journals, professional organizations, and websites.
An alternative solution to the problems being experienced by California Sutter Health could be taking the approach of reducing the time taken for settling the amounts in the accounts receivable. That is, the organization would be able to solve this collection problem by diminishing the time taken by the patients that have been provided with health care to settle their debts. This approach is pivotal to reducing bad debts for the organization. A fitting methodology that can be taken by California Sutter Health encompasses standardizing medical charges and bills, which would be able to facilitate the reduction of costs incurred for remunerating staff administration. It is imperative to note that this system of standardization would give the guarantee of employing a single claim submission time limit or closing date together with rules and regulations for payment posting. The inference of this is that the healthcare entity would be able to gather its payments prior to the provision of services in the endeavor to diminishing bad debts. This alternative system of billing would provide Sutter Health with the benefit of the payment of services on the addition of the expenses of all the services that would be used by the patients. This is imperative for the reason that the conventional system of billing that was employed by Sutter Health increased the prospects of patients evading their payments and as a result increasing the organization’s bad debts. Through this alternative approach, the time period of collection for the clients who have a greater likelihood of defaulting on payments would be diminished. It is important to note that bad debts are associated with lengthier spells of payment settlement (Herbert, 2016).
In accordance to a report published in the Becker’s Hospital Review (2011), so as to properly diminish bas debts within the organization, it is imperative for the healthcare organization to later the processes starting before or at the point of service. This takes into account dealing with the process from the initial patient encounter starting the procedure of controlling and diminishing bad debt. In this regard, the alternative for Sutter Healthcare in the problems of payment collection, the organization ought to conduct insurance confirmation and substantiation completion and basically communicated to the patient. More often than not, a mean rate of approximately 10 percent of all the claims filed are denied owing to the lack of complete information or the provision of imprecise information. In this regard, if the healthcare organization, in this case Sutter Health conducted effective insurance eradication, it reduces the aging of the accounts receivable.
The inference if this is that the organization has to make certain that collections come to be a normal aspect of patient pre-registration or patient registration. The imperative aspect of this alternative is that failure to undertake this gives rise to greater patient-due payment amounts to become aged to bad debt devoid of proper communication ever coming around with the patient. The practice of solely shifting accounts to an early-out seller cannot be deemed the sole solution of controlling bad debt. Carrying out an upfront policy for patient payment collections, even within the organizational emergency room subsequent to medical screening, is a very imperative requirement. Therefore, the collection of patient payment amounts that are due when the services and provided increases the level of cash on hand for the medical organization and also at the same time diminishes bad debt. As a result, the alternative that California Sutter Health ought to undertake is the reduction of bad debt immediately, upfront procedures must be scrutinized and steps taken to control accounts receivable starting at the point of service. Failure to transform the outmoded policies and procedures will go on causing the bad debts to increase (Becker’s Hospital Review, 2011).
State your informed opinion of the approach used by California Sutter Health, and provide support using concepts from your research and personal experience
Bad debts diminish funds and money accessible for important investments in personnel, technology, and facilities. What is more, the management of bad debt takes a lot of time and resources and also ends up being financially taxing on the healthcare organization. In my own opinion, the approach employed by California Sutter Health was not ideal or efficacious in any manner. In the contemporary, the health insurance setting is transforming at a dramatic and fast-paced rate. As a result of this, healthcare organizations are as a result coping with decreased payments and a number of patients end up being incapable of paying for their healthcare, which gives rise to bad debt. The transformation process undertaken by California Sutter Health was suitable for rectifying the prevailing problems within the organizations. In accordance to Abrams (2017), one of the fundamental approaches that hospitals and healthcare organizations can partake in the management of their bad debts is through the precise and accurate classification and accounting foe expenses that are in fact bad debt. In addition, in my individual opinion can partner and work in tandem with financial establishment to augment revenue collection via more inventive payment options. What is more, through this affiliation, hospitals and financial establishments can offer resources that make it possible for patients that are great need to establishment of payment plans that the healthcare institutions lack in the management internally.
Eligibility and Authorization Verification

Reporting
Patient Information Entry






Denial management
Revenue Cycle Management

Charge entry
Payment posting
Accounts receivable
Claim Submission













Based on the research undertaken, the illustration above is a proper depiction of the revenue management cycle that is deemed suitable for California Sutter Health in the management of its revenue. This accounts receivable format is designed to increase the revenue collection for the organization. This starts out by obtaining patient information entry regarding how they plan to pay their charges and fees. Secondly, the organization should assess the eligibility of the patients and thereafter conduct the authorization verification. The following phase is the reporting of the information obtained regarding the patient payment verification. The subsequent phase takes into account denial management. This is an imperative stage for the organization in its entirety in order to ascertain the different patients that are unable to make their payments and avoid the prospect of bad payments. This will facilitate the payment of accounts receivables and ensures that the payment periods are reduced to a suitable and short time.







References
Abrams, M. (2017). Unintended consequences: Strategies for hospitals to tackle growing bad debt as patient out-of-pocket costs expand. Becker’s Hospital Review. Retrieved from: https://www.beckershospitalreview.com/finance/unintended-consequences-strategies-for-hospitals-to-tackle-growing-bad-debt-as-patient-out-of-pocket-costs-expand.html
Becker’s Hospital Review. (2011). How Can a Hospital CFO Reduce Bad Debt Right Now? 5 Responses. Retrieved from: https://www.beckershospitalreview.com/finance/how-can-a-hospital-cfo-reduce-bad-debt-right-now-5-responses.html
Herbert, K. (2016). Hospital Reimbursement: Concepts and Principles. Productivity Press.
Souza, M., & McCarty, B. (2007). From bottom to top: how one provider retooled its collections. Healthcare financial management: journal of the Healthcare Financial