St. John Health Strengthens Its Mission through Revenue Cycle Excellence
In early 2003, St. John Health, a member of Ascension Health’s regional healthcare system, experienced a $70 million gap in its $1.8 billion budget.
Increasing costs for pensions and malpractice insurance, cuts in Medicaid reimbursement, and a confluence of other one-time charges were contributing to a “perfect storm” of financial losses across the board. The provider believed that if it could incorporate industry leading practices, attack specific areas of poor financial performance, and standardize revenue processes and business practices across all eight of its hospital business offices, it could bring in more revenue more quickly.
The Solution:
St. John selected Capgemini as its partner based on its industry experience, collaborative approach, and ability to impose on the project the necessary discipline St. John needed to hold its executives accountable for results. Capgemini provided direction to the revenue cycle transformation process, knowledge of industry leading practices, and a focus on process redesign. Capgemini’s IT capabilities were crucial in providing bolt-on technology to complement St. John’s legacy systems, and to ensure that the redesigned business processes were properly supported by enabling technology.
The Result:
All of the project’s redesigned processes were adopted and modified where necessary to fit specific needs. St. John achieved its optimistic objectives within the estimated timeframe: a $30 million improvement in cash and a $30 million improvement in operating margin.
A year after implementation, the organization enjoyed a reduction in overall billing delays as well as a 9% improvement in Accounts Receivable (down from an average of 66.6 days to 47.7 days—an industry best for the region). Management of and access to health information greatly improved, while Discharged Not Final Billed (DNFB) accounts boasted a nearly 50% decrease.
“I am very pleased with the way this turned out…. I believe I’ve got a much stronger group across multiple offices, people that get along better, are more focused on metrics than they were before, and an enhanced revenue cycle that has received greater recognition from senior management as well as the board.”
-- Paul VanTiem, Executive Vice-President and COO, St. John Health
How St. John Health and Capgemini Worked Together
St. John found in Capgemini a partner who was flexible enough to accommodate independent perspectives and solutions, and who could take a broad view of the revenue cycle and see more than just back end collection processes. Among Capgemini’s first steps in the revenue cycle transformation project was to establish a joint steering committee that included St. John’s Chief Operating Officer, Chief Financial Officer, and Vice-President of Finance.
Initially, Capgemini took the lead in guiding the project as a whole, providing a specialist to direct each implementation team and monitor each sub-process. But as the project progressed, the Vice-Presidents of Finance of each hospital assumed leadership and responsibility for specific components of the revenue cycle. At the same time, a project management team of senior executives from across St. John began overseeing sub-processes, managing risk and resolving problematic issues with Capgemini personnel supporting and advising them.
Aware of the diverse perspectives, Capgemini helped all levels of St. John’s employees appreciate the need for standardization, change, and ultimately consensus. Key to the collaboration’s success was the use of in-process metrics, developed to measure where the project was succeeding or underperforming. Knowing how the project was progressing helped both companies redirect efforts or develop alternative plans.
Post-implementation, St. John and Capgemini leveraged their collaboration further by enacting ongoing monitoring and evaluation of the provider’s financial condition. St. John anticipated additional cost savings were imminent as the revenue cycle processes and business practices standardized across the entire health system.