white paper COMPOUNDING INTEREST Operational Implications and Opportunity at the Point of Care

white paper COMPOUNDING INTEREST Operational Implications and Opportunity at the Point of Care

TABLE OF CONTENTS Operational Implications and Opportunity at the Point of Care 3 The Organizational Cascade and Compounding Issues from the Point of Care 6 Proactive Strategies to Disrupt the Point-of-Care Compound Interest Cycle 8

OPERATIONAL IMPLICATIONS AND OPPORTUNITY AT THE POINT OF CARE Anyone with a money market account understands the value of compound interest. The more time you allow your deposits to sit dormant and the more resources you throw into the account, the greater your return, because you earn interest on your interest. In the healthcare arena, however, this compounding effect works in reverse, although just as relentlessly. The more time your clinical staff spends searching for patient information and repeating tests the more resources you invest in diagnosis and treatment the faster expenses mount, as each inefficiency generates additional inefficiencies down the line. Consequently, your financial returns diminish and the results can be devastating. Inaccuracies, unavailable data, duplicated tests and other weaknesses in America s current healthcare system are resulting in tens of billions of dollars in financial losses for physicians and hospitals, while exposing them on multiple flanks to increasing numbers of malpractice suits. From productivity losses to preventable medical errors, the amount a hospital pays for poor process management and information access is most heavily influenced at the point of care (POC); and, like compound interest, the impact of POC inefficiencies is hard to see without considering the larger and longer-term perspective. DO YOUR CLINICIANS HAVE ACCESS TO PATIENT DATA WHERE THEY NEED IT, WHEN THEY NEED IT? day Clinicians waste an average of 46 minutes per day waiting for patient information. USA Today reports that clinicians waste an average of 46 minutes a day waiting for patient information 1 that s time away from productive work and patient care. When compounded among all patients, this delay translates to roughly $900,000 a year per hospital, or more than $5.1 billion per year across the U.S. healthcare system. white paper / M*Modal / pg. 3

WHAT IS THE COST OF MEDICAL ERRORS THAT ARE PREVENTABLE THROUGH BETTER SYSTEMS AND INFORMATION AT THE POC? was the direct increase in the medical costs of providing inpatient, outpatient, and prescription drug services to individuals who are affected by medical errors + + = THE ERROR OF OUR WAYS Add this wasted time to the compounding cost of medical errors. The Society of Actuaries estimates these errors cost the American economy at least $20 billion a year in lost productivity, additional medical care and disability. However, almost 87 percent of this amount is attributable to direct increases in the medical costs of providing inpatient, outpatient and prescription drug services to individuals who are affected by medical errors. 2 LEGAL WHOA S Those mounting malpractice suits? According to one study appearing in the Annals of Internal Medicine, 55 percent of cases involving missed diagnoses and failure to order appropriate diagnostic or lab tests have been contributing factors. Malpractice now costs $30 billion a year; and, since 1975, direct costs of litigation avoidance have grown at more than 10 percent annually, according to Reuters. 3 The upshot is that 93 percent of physicians responding to a recent survey reported practicing some form of defensive medicine, that is, performing actions that increase cost through unnecessary diagnostics and unreimbursed repetition of services. BY UTILIZING INFORMATION TECHNOLOGY TO DRIVE MORE ACCURATE DOCUMENTATION, YOU CAN HELP REDUCE THE RISK OF MALPRACTICE LITIGATION Since 1975, direct costs of litigation avoidance have grown at more than 10% annually white paper / M*Modal / pg. 4

In all, inefficiencies in diagnosing, treating and documenting cases at the point of care, in addition to lack of accessible patient information and documentation, have been eroding profits at U.S. hospitals, primarily because of payer denials. According to the U.S. Government Accountability Office the aggregate application denial rate across the U.S. was 19 percent. 4 Experts have pointed out that, while the average profit margin of U.S. hospitals is less than 2 percent of net revenue, denials account for an average of 6 to10 percent of that net revenue. Once these claims are denied for lack of accurate or required information, half of the claims are never re-filed, simply because resubmitting costs are often greater than the lost revenue. 5 What is the source of these expensive practices? In large part, it s a combination of the lack of information, the inability to retrieve information that has been recorded and most of all documentation that is not being presented to the right person in the healthcare chain in the right way. HOW MUCH PROFIT IS BEING SACRIFICED DUE TO POOR DOCUMENTATION AT THE POC? Lost revenue due to denials accounts for an average of 6% to 10% of net revenue The average profit margin of U.S. hospitals is less than 2% of net revenue white paper / M*Modal / pg. 5

THE ORGANIZATIONAL CASCADE AND COMPOUNDING ISSUES FROM THE POINT OF CARE Doctors generally do a good job of communicating during the clinical care process. They document symptoms, diagnoses and treatments in their dictation; they talk to each other to fill gaps. However, when the documentation flows downstream for use by non-clinicians, the compounding effect begins to expand. As information gathered at the POC is entered into computers for billing codes and analytics, inefficiencies emerge. For example, a doctor may write a 10-page medical record about a patient with chest pain and subsequently order a CT scan to rule out a blood clot. The order for the scan may simply read, Chest pain rule out PE. The radiologist conducting the scan has none of the massive amounts of data the physician previously recorded; he only sees one line Chest pain, rule out PE. Certainly this radiologist could provide a more accurate reading of the study with a clear clinical picture, but he has no access to the details without logging into a separate system, navigating to the patient and then poring through thousands of data points. While the physician s documentation was complete, it s not reusable and is not presented to the person who needs it in the right way. These data-reuse problems are what most often spur the compounding effect of medical costs and inefficiencies. IS THE COST OF RESUBMITTING MORE COSTLY THAN THE REVENUE POTENTIAL? white paper / M*Modal / pg. 6

HOW MUCH RISK FOR MALPRACTICE LITIGATION DO PREVENTABLE ERRORS CREATE FOR YOUR FACILITY? failure to order appropriate diagnostic or laboratory tests was a contributing factor Similarly, when a physician s contact with a patient is coded for billing, the physician s diagnosis must be precise and available. A radiologist can say the patient had a broken left arm, and the doctor has sufficient information to act. Coders and billers, however, can t use this information unless the treating physician documents the words: left arm fracture. If the treating physician s words are only to be uncovered somewhere in a multi-page report, the documentation again is not from the right person and not in the right spot for payment approval. The result is that the hospital s billing system can t use the data available to it, and procedures often are mis-coded. Accordingly, payers refuse to reimburse the hospital for the billed service. Clearly, something crucial is missing from the process, and that missing piece has been technology smart systems that understand the natural language used in the physician s dictation at the point of contact and that can convert that information into a format that computers can use for instantaneous access by anyone in the patient care process at precisely the time it is needed. To date, healthcare has suffered from documenting patient information in places and manners that not everyone in the care continuum can see. The profession has not brought all the data together in one location to be able to easily examine it to see what has been documented when. All that counts in the Why can t we reuse any data in medicine? Lack of natural language processing Lack of interoperability and sharing of information Poor billing rules current system is the latest diagnosis. Technology should enable us to easily review previous patient visits and reduce duplicate and redundant work. white paper / M*Modal / pg. 7

PROACTIVE STRATEGIES TO DISRUPT THE POINT OF CARE COMPOUND INTEREST CYCLE Enterprise-wide computing platforms can do this they can put everything together, run the analytics and decision-support algorithms, and organize the data so the right person indeed sees it at the right time; but that can happen only if the data is in a format the computer understands. Most American doctors speak in English not in C++ or Java so successful computerization of physician data requires the ability to understand natural language and convert it to a computer-friendly format. Such innovation relieves doctors of translating their reports into a series of checkboxes and instead makes accessible the physician s full report, with complete background and actions relating to the patient. M*Modal has created exactly this type of smart technology that automatically brings all the patient data together, eliminating the laborious effort of manually gathering records of previous patient visits and sorting out duplicate information. Moreover, M*Modal systems create a three-tiered safety net to ensure that all the information that should be documented is recorded and is available in accurate form throughout the care process. The first tier occurs at the point of care in real time. The physician delivers a patient report verbally that the computer understands and formats, combining the new data with previous documentation for the patient. The system provides real-time physician feedback to address any documentation deficiencies at the time of report creation. At the second tier, functioning in the hospital, M*Modal Catalyst technology generates workflows in which systems examine all the patient s data that has been collected and applies multiple rules to organize HOW MUCH IS DEFENSIVE MEDICINE COSTING YOUR FACILITY IN UNNECESSARY DIAGNOSTICS AND UNREIMBURSED SERVICES? a wider array of important information and make it available to the right person or department at the right time. Whereas tier one may have employed five or 10 alerts to gather the most vital data, the second layer might apply 50 rules to capture the 50 next-most-important items. of physicians responding to a survey reported practicing some form of defensive medicine white paper / M*Modal / pg. 8

The third tier occurs during the coding process. This level employs natural language understanding across thousands of diagnoses to help ensure that the right coding is indicated for the patient encounter. At each of these three levels, M*Modal expands the likelihood that the diagnoses will be captured accurately and therefore will be more readily and appropriately reimbursed. Expressed in other terms, the technology helps ensure that the physician says the right thing at the right time to gain approval from coders. By identifying and addressing documentation deficiencies at the time of report creation, M*Modal technologies help physicians create more complete and higher quality documentation, thereby minimizing the downstream compounding effect. As value-based purchasing of care becomes more prevalent, the efficiencies offered by M*Modal technology will become even more important in preventing the compounding effect of errors. Physicians will need to spend the dollars allocated for each patient wisely, and that means avoiding retesting, defensive and unneeded procedures, and inaccuracies that could lead to lawsuits. Smart, technologysupported documentation will drive clinical care, rather than just the billing process, and the benefits of ready access to data will quickly be compounded through the healthcare system. Benefits of Addressing Optimization at the Point of Care Accelerated revenue cycles Reduced DNFB (Discharged Not Final-Billed) Lower administrative costs More appropriate reimbursement Improved efficiencies within the coding process Fewer clerical and clinical errors Decreased claim-rejection rates white paper / M*Modal / pg. 9

SOURCES: USA Today ViSi Mobile Ohio MGMA Revenue 360 U.S. Government Accountability Office Reuters The Journal of the American Medical Association BIBLIOGRAPHY 1. Byron Acohido, Hospitals lose $8.3 billion using old technology USA TODAY (2013) http://www.usatoday.com/story/cybertruth/2013/05/07/healthcare-technology-cybersecurity-privacy-patient-care/2142739/ 2. Jon Shreve, Jill Van Den Bos, Travis Gray, Michael Halford, Karan Rustagi, Eva Ziemkiewicz, The Economic Measurement of Medical Errors. The Society of Actuaries Health Section. June, 2010 http://www.visimobile.com/wp-content/uploads/2012/05/economic-measurement-of-medical-errors-2010-society-of-actuaries_201203051.pdf 3. Diana Furchtgott-Roth. Reduce the high cost of medical malpractice. Reuters Blog. August, 2009 http://blogs.reuters.com/great-debate/2009/08/06/reduce-the-high-cost-of-medical-malpractice/ 4. United States Government Accountability Office. Data on Application and Coverage Denials. March, 2011 http://www.gao.gov/products/gao-11-268 5. Proactive Denial Management. Revenue 360. February, 2013 http://www.revenue360.net/revenue360_modules/insurance-code-solution/denial-management/ WORLD HEADQUARTERS: 5000 Meridian Boulevard, Suite 200 + Franklin, TN 37067 mmodal.com + solutions@mmodal.com + 866-542-7253 2013 MModal IP LLC. All rights reserved. 1013