A Guide to Using Scorecards in Revenue Cycle Management

December 14, 2020

With over 20 years’ experience working with dozens of hospital business offices, the greatest common weakness we see at Health Talent Solutions is a lack of individual discipline and accountability for individual roles in the revenue cycle.

Picture yourself on a flight to Hawaii and the captain interrupts your inflight movie to announce “I have got some good news and some bad news.   The bad news is all the instruments (gauges) have stopped working, so we are hopelessly lost.  I have no idea how much fuel we have left or which direction we are heading.   The good news is we are making great time!”

Does that sound familiar?

That is how hospital business offices can end up after a few staffing changes, reorganizations, consolidations and systems upgrades.  You feel you cannot accurately measure the pulse or predict future cash flow from your team.   To take that pulse, you walk around your hospital and talk with five members of your team across various points in your revenue cycle including patient access, coding, billing, follow-up and health information management.  In the process you waste your time and that of others and after all of those discussions, what you are left with is a lot of subjective opinions and little hard data. 

The challenge is that only factual information can provide the basis for consistently driving a better bottom line.

We need to measure our data and use it wisely. Many of you will know of Pearson’s Law: “When performance is measured, performance improves. When performance is measured and reported back, the rate of improvement accelerates."   

The concept of driving better results through a simple dashboard or scorecard is not new. In fact, the idea has been around a long time. Dale Carnegie wrote of a great example used by Charles Schwab, when he was running Bethlehem Steel in the early 1900s. When one of Schwab’s managers had a team that was not producing as much as other teams, Schwab asked the manager how many r batches of refined steel were produced on their last shift.  The manager replied “six” and without saying a word, Schwab took a piece of chalk and wrote a massive figure six on the floor and walked away. 

When the next shift came on, they inquired as to what that meant.   The next morning the six was replaced by a seven.  When the day shift returned, they were all motivated, upped their game and produced ten batches.  In short order, Schwab turned this mill into Bethlehem Steel’s top producing mill. 

The unfortunate reality is that most individual roles in the revenue cycle do not have a scorecard.  This lack of leading activity-based indicators to review regularly (even daily) hurts performance and makes accountability and solutions to issues unclear.  Some might rely on an aged trial balance (ATB), an unbilled report or a profit and loss statement to tell the score, but those are trailing indicators. It’s data that comes after the fact and, of course, you cannot change the past.

THREE SCORECARD MUSTS:

The numbers should be 3-7 daily or weekly activity-based numbers, not high-level P&L or data found on your ATB.  It is a scorecard, not a P&L, to show you if you are on track from a strong P&L.  What are activity-based numbers?  Here are some examples:

  • The number and value of primary clean bills submitted each day or week, alongside the number of and dollar amount (value) of unclean (rejected, denied, etc.) each week. 
  • Number of days revenue discharged, not final billed (DNFB).
  • One category for patient access is the percentage of co-pays and deductibles collected as well as customer satisfaction as it relates to patients understanding their benefits.

Post Scorecards for all to see. 

Understand they evolve overtime and each team member must buy into and own their Scorecard.  On average, our experience tells us it takes 30-60 days to fine tune this process.

The goal is not perfection. The scorecard process will bring about an organizational shift.  Your leadership team will become much more proactive and efficient and will improve at solving challenges because they will have hard data on hand that not only points out problems but also predicts future ones. To truly solve a problem as a manager you must know the source of that number in your own scorecard; therefore, you can go directly to the root cause and further improve individual accountability and clarity with your staff.    

Furthermore, this process will tell you if you have the right people or enough people in the right seats.  Great team players embrace scorecards and accountability, whereas those who lack the capacity for their role will be uncomfortable with or exposed by this process. That is exactly the point.   

All roles require a certain level of maturity, skill, intellect, knowledge and emotional intelligence or what we call “capacity”. Scorecards objectively measure the capacity of the person in role to produce the needed activity to succeed in that role, so the mission is accomplished and vision for the organization is realized.  

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