Sutter Health Care Case Analysis

Topics: Patient, Health care provider, Health care Pages: 6 (2359 words) Published: December 17, 2012
Sutter Health
Cheryl Poole
ACC 281 Accounting Concepts for Health Care Professionals Instructor: Nyalambi Mulwanda
December 17, 2012

In 2006 Sutter Health began the process of trying to find a process that would increase its upfront collections from self-pay patients. Sutter Health started with its patient account representatives, collection, and other areas of the central business unit to transfer many of the back end process to registration. Was the approach that Sutter Health took helpful? This paper will show the reasons, methods taken, and the results that Sutter Health took to improve their bottom line and make them one of the most effective in the country. In 2006, Sutter Health, one of Northern California's largest providers, committed to giving its patient financial services staff on both the front and back end the necessary tools to improve patient collections. The financial report gave insight to how Sutter’s plans to implement a new way of collection for the front end to run effectively. To make the norm, the staff began working towards transferring back end functions to the front end (Souza, M. & McCarty, B. 2007). This paper will illustrate the steps taken, and the results of the training and new collection processes that were successfully in making the Sutter Health Approach one of the most effective. Sutter Health is a not-for-profit network. Sutter Health along with the communities they serve decided to join together to help ensure that they would be here for the next generation of physicians and hospitals in Northern California. Serving Sacramento area for more than half a century, Sutter Medical Center, Sacramento first began operation in 1923. The original facility, known today as Sutter General Hospital, was a private, nonsectarian hospital incorporated by a small group of physicians. The first satellite hospital in California, Sutter Memorial Hospital, opened in 1937. In an effort to increase collection Sutter became committed to giving the staff on both the front and back end the tools they needed to improve customer collection and the bottom line. “This plan started in 2006 with the patient account representatives, collections, and other departments of the central business office. The new process was to eventually transfer back end function to the front end to make the point of service more normal” (Souza, M. & McCarty, B. 2007).  Accounts receivable days for the nine hospitals were reduced from 65 to 59 days. Each one of these days equals $13 million, which means the health system was able to collect an additional $78million. In analyzing the report Sutter realized that there were several problems with its revenue management cycle that needed to be corrected before implementing new procedures. * PFS staff could not access real-time information on key financial and operational indicators such as A/It days and cash collections. As a result, managers and staff often had to wait until the end of the month to set benchmarks, track progress, or make important business decisions. * The hospitals' accounting system did not allow managers to isolate and analyze select data or generate reports on demand to the level of detail required. Instead, the region relied on a specially trained programmer to develop these reports, often leading to costly delays in identifying and correcting problems. * The central business office staff also suffered from the lack of real-time information. With access to only a list of the outstanding accounts assigned to them, account representatives could not prioritize effectively or monitor their progress. In turning this situation around, Sutter decided to focus on a handful of primary benchmarks: * Gross A/R days (less capitation and credit balance accounts) * Cash collections

* Unbilled A/R days
* Billed A/R days
* Percentage of A/R over 90, 180, and 360 days
* Major payer A/R days

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