I am the Quality Manager for all of the Community Health clinics at a local county
hospital in the Dallas/Fort Worth, Texas area. I interviewed the Executive Director of
Network Business Operations. She is well-versed in all things finance. We started our
interview by going over her background, how she got into finance, and how she chose
to work in finance in healthcare. We started the interview and went question by
question.
1. Discuss the concept of revenues including net patient revenues and operating
revenues. Provide examples of each.
Each year our organization hires an outside company to come in and reevaluate the
market schedule and they make recommendations for charges. Operating revenue has
nothing to do with encounters, meaning that it is not generated by services given to the
patient. Examples of operating revenue are supplemental funding, grant funding, and
government programs. Supplemental funding for our hospital comes a lot from
uncompensated care. We get funding based on the population we serve. We are at a
disadvantage when it comes to receiving funds and we do not have a high commercial
population where we can collect a lot of dollars, so government programs will give us
supplemental funding. Whereas the patient revenue cycle is happening in the
background. Some example of patient revenue is insurance, self-pay, deduction, and
contract background. Depending on patient revenue, you get to net patient revenue
which are the funds that come through the door.
2. What are contractual allowances and how does this impact the organization’s
bottom line?
Our hospital has negotiated certain contracts with the insurers or the payers. For
example, we will bill $200 for a particular service. Of the $200 the insurer will pay us
$100 and the rest is like an allowance. It is the difference between the fee we charge
and the contracted payment that we have with the insurer. The remaining $100, we are
not expected to come from the insurer. Our managed care department negotiates these
contracts every year. The bottom line is going to be reduced by this amount because
you never expected that to be paid. You know that you will get the contract so you can
count on that in your bottom line. This contractual allowance is going to be your
guaranteed rate based on the contract and anything else you collect from the patient
above that is extra. Which if they pay will positively affect your bottom line.
3. Discuss wage, patient care supply, depreciation, administrative, and other
operating expenses.
These are all the expenses that hit us in running the day-to-day options. Wages are
considered salary, regular rate, overtime, shift differential, and benefits. The money
paid for work provided.
Patient care supplies are all the supplies used to take care of the patient.
Pharmaceuticals are also looped in patient care supplies.
Administrative-type payments, like an administrative fee. An example of this is our
hospital has a separate employment arm for the physician group. Some physicians fall
under the hospital and other physicians fall under directly for a particular physician
group. None of the salaries are paid through the hospital they came from the physician
group, but the physician group falls under the umbrella of our hospital. With this
physician group, we pay for this service, we pay for them to oversee our payroll, and
benefits and that is the administrative fee we pay.
Depreciation comes into play with the equipment. Where we are looking at the useful
life of the equipment. This is similar to car depreciation. Useful life is 5 years. The idea
is to show the value of the equipment. The finance department has asset accounting
and they have systems where they keep up with inventory and depreciation.
4. What is bad debt and how is it managed within your organization?
When we have provided patient care, they receive a service and we bill them and they
can’t pay for whatever reason. This happens a lot with self-pay patients or
underinsured patients. We bill them at a discounted rate and they cannot pay. After you
try to collect in-house if unsuccessful they will send it to an outside collection agency for
a fee. Then the contract states how many times they try to collect. If they cannot collect
from the patient JPS will write that off at bad debt.
5. What is charity care?
We are unique in charity care because we are a public county hospital. We offer JPS
connection, which is our in-house discounted insurance program for a $5 co-pay. We
also offer medication vouchers, bus passes, medical equipment, charity rehabilitation,
and Uber transportation
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. Grant funding.
