Case Study: Community Hospital Business Management

Aspen Valley Hospital Increases Days Cash on Hand From 73 to 426

“We have a true partnership with MedAssist. I have been in the healthcare industry for 30 years, and I have never experienced a partnership so strong.”
— Terry Collins, CFO, Aspen Valley Hospital

Aspen Valley Hospital

Aspen Valley Hospital District (AVH) is a critical access facility located in Aspen, Colorado. AVH offers a full range of services and has board-certified specialists in 25 different fields of medicine. On an annual basis, AVH records $82 million in patient service revenues through 1,800 admissions, 330 births, 600 inpatient surgeries, 900 outpatient surgeries, 31,000 outpatient registrations and 9,200 emergency room (ER) visits.

 

The Challenge

AVH management identified staffing and ineffective processes as the cause for decreasing cash and increasing receivables and write-offs.

 

The Solution

AVH partnered with MedAssist and First Consulting Group (FCG) to provide a full business office outsource solution to reduce AVH accounts receivable and increase cash.

 

The Results

Days cash on hand increased from 73 days to 426 days and net days and write-offs were significantly reduced.


The Situation

Because of its location in a resort community, AVH faced inordinate challenges in recruiting and retaining the skilled employees required to support the complex processes associated with healthcare receivables management and processing. As a result, AVH had an even greater challenge maintaining business office performance at or above industry standards.

AVH’s business office performance began to suffer, claims processing slowed, accuracy was impacted and payer denials increased dramatically. In addition, cash flow dropped and receivables increased, causing a dramatic change in receivables from fiscal year end 2004 and 2005.

 

The Challenge

While patient revenues for the two periods were basically flat, billed receivables increased 13%, accounts aged greater than 151 days increased by 50% and total receivables increased by 35%. AVH management immediately identified staffing issues and ineffective processes as the cause. With the continuing deterioration of receivables and decrease in cash collections, AVH leadership identified reinventing the revenue cycle processes as the highest priority. In order to validate and correct the performance issues, FCG identified the immediate need for dedicated resources to address AVH receivables. FCG evaluated the billing and collection follow-up processes and identified opportunities to accelerate AVH cash collections. FCG partnered with MedAssist, an experienced receivables management solutions provider, to assist in redesigning the revenue cycle, including billing and collections. FCG and MedAssist identified performance metrics and created reports to reflect current and historical performance. Utilizing MedAssist’s full business office outsource solution, the Premier Partnership Program (P3), FCG and MedAssist immediately evaluated the resources needed, organized staff and addressed receivables.

Days cash on hand was a key indicator tracked by AVH to measure financial performance. As a result of the focused receivables initiatives, days cash on hand increased from 73 days to 426 days (6/12) and net days in accounts receivable were reduced from 111 to 35 (6/12). The chart below records the marked improvement in AR quality.

Receivables prior to partnership
Receivables post partnership

The Solution

The number of net days in accounts receivable for AVH has dramatically reduced since contract execution. During the clean-up of accounts, we reduced AVH's number of net days in accounts receivable while decreasing the number of write-offs. While focusing on receivables initiatives, we increased AVH's number of days for cash on hand while minimizing the number of write-offs.