News Archive • Page 3 of 6 • Pathstone Partners Healthcare Consulting Chicago

Pathstone Partners: Giving Back to Make a Difference in 2024

Our Giving Back Ideology

At Pathstone Partners, the commitment to improving lives goes beyond healthcare consulting. In 2024, the team embraced its Giving Back ideology through meaningful initiatives that supported vulnerable populations and made a positive impact in the community.

Supporting Global Healthcare with Project CURE

This year, Pathstone held its biannual service event with Project CURE in Chicago. The team came together to sort through medical supplies, prepare shipments, and load containers. As the world’s largest distributor of donated medical relief, Project CURE ensures these supplies reach underserved communities in need of quality healthcare. Pathstone’s efforts directly contributed to this vital mission, helping bridge gaps in global healthcare access.

Spreading Holiday Cheer with Little Brothers Friends of the Elderly

Pathstone partnered with Little Brothers Friends of the Elderly, an organization dedicated to reducing loneliness among older adults. The Pathstone team embraced the holiday spirit, spending hours decorating festive paper bags. These beautifully crafted bags will hold goodie items, delivering joy and companionship to seniors during the holiday season.

A Commitment to Community

Through initiatives like these, Pathstone Partners exemplifies its commitment to making a difference, not just in the healthcare industry but also in the broader community. By giving time and effort to meaningful causes, the team demonstrates how collective action can uplift lives and create lasting impact.

Pathstone Partners is proud to partner with organizations like Project CURE and Little Brothers Friends of the Elderly. These collaborations reflect the company’s dedication to creating a better world, one initiative at a time. Stay tuned for more updates on Pathstone’s community involvement in the coming year!

Pathstone @ Preeminent Healthcare Conferences in 2024

A Year Of Industry Leadership

In 2024, Pathstone Partners actively participated in several high-profile conferences and events, sharing insights and connecting with industry leaders. These events reinforced Pathstone’s role as a thought leader in healthcare consulting and showcased the team’s innovative approaches to cost savings and operational efficiency.

AHRMM SME Podcast: Elevating Organizational Change

Managing Partner Joseph Jang joined the AHRMM Subject Matter Expert Podcast to discuss strategies for driving organizational change through cost savings. His expertise illuminated actionable ways healthcare organizations can tackle financial challenges while maintaining high standards of patient care.

Health Connect Partners (HCP): Supply Chain Leadership in Dallas

In May, Senior Directors Dan Ehle and Andy Poorman attended the HCP Hospital Supply Chain Conference in Dallas, Texas. The event provided an excellent platform to exchange ideas with supply chain healthcare professionals, exploring cutting-edge solutions for optimizing supply chain operations.

Becker’s Healthcare National Conference: Insights from Chicago

Pathstone Partners played a key role at the Becker’s Healthcare National Conference in Chicago, Illinois, in March. Joseph Jang and Senior Director Colin King connected with healthcare professionals, sharing expertise on tackling challenges in cost management and operational improvements.

IDN Summit: Sharing Expertise in Orlando

At the IDN Summit & Reverse Expo in April, Joseph Jang presented Pathstone’s groundbreaking knowledge on driving hospital cost savings and improving margins. The event, held in Orlando, Florida, emphasized collaborative strategies for overcoming financial pressures in the healthcare sector.

AHRMM Spring Summit: Insights on Transformation Excellence

In April, Joseph Jang represented Pathstone Partners at the AHRMM Spring Summit on Transformation Excellence. He shared valuable insights on how supply chain teams can elevate cost management efforts, driving impactful results for healthcare organizations.

HCP Hospital Supply Chain: Fall Conference in Las Vegas

Capping off the year, Dan Ehle and Andy Poorman attended the HCP Hospital Supply Chain Conference in Las Vegas. The event offered an incredible opportunity to engage with healthcare supply chain leaders, exploring innovative ideas to tackle the industry’s most pressing challenges.

Showing Innovation In A Growing Field

Pathstone Partners’ active presence at these events underscores their dedication to staying at the forefront of healthcare innovation. By participating in discussions with industry leaders, the Pathstone team continues to refine and expand its solutions to meet the evolving needs of healthcare providers.

As Pathstone Partners reflects on the knowledge and connections gained in 2024, the team looks forward to continued collaboration with industry peers and clients. These conferences not only strengthen Pathstone’s commitment to excellence but also inspire new strategies for reducing costs and optimizing operations in healthcare

Evaluating Outsourced Hospitalist Provider Relationships

Over a 6 month period of working with the client, Pathstone was able to drive $1.1M in fixed fee savings.

Pathstone partnered with a large 11 hospital health system in the southern region to evaluate the existing $11M relationship with their outsourced hospitalist provider. Two out of the eleven hospitals have an outsourced model, whereas the remainder of the health system relies on internal hospitalist resources. Given the recent leadership turnover, Pathstone worked collaboratively with the client by defining the current state, understanding previous system efforts, and future goals.

The incumbent hospitalist group dominates the rural local market and has been a long-term partner with the client for 10+ years. Given that many of the physicians have relocated and settled in the local area, additional consideration and sensitivity was needed given their livelihoods.

Given the variation in staffing models, Pathstone aligned on two simultaneous approaches to determine the best future state for the two hospitals:

Request for Proposal: Send out bids to national competitors to evaluate the current outsourced market
Insourcing: Hold internal discussions around feasibility of hiring internal resources given current labor market and health system priorities

Pathstone’s clinical purchased service consultants formed a comprehensive team of stakeholders throughout the organization consisting of key leaders and operational owners within: Operations, Supply Chain, Finance, and Revenue Cycle. Recurring touchpoints with this team and other subcommittees generated the necessary momentum and buy-in to achieve maximum value and sustainable success.

Pathstone’s original business case provided insight into the financial business relationship and the historical performance of the incumbent, including recurring missed SLA metric targets and lack of expectations.

Within each of the identified 2 approaches the Pathstone team utilized a collaborative approach to tailor a solution that fit within the client’s department and organizational goals and objectives:

Request for Proposal

Bids from national suppliers helped provided visibility that the fees associated with the current local incumbent was not market competitive
This provided leverage in incumbent negotiations and allowed the client to request realistic financial targets

Insourcing

A make / buy analysis provided insight into pros and cons of insourcing

Considerations included: labor market, geographic location, training resources, management resources, billing and collections, operational workflow.

Over a 6 month period of working with the client, Pathstone was able to drive $1.1M in fixed fee savings by staying with the incumbent. In addition, to help enhance service levels and meet the client’s expectations, the client and supplier agreed to a $800K incentive payment tied to meeting key service level metrics, paid quarterly. This incentivized the medical directors of the physician group to entice their providers to provide better quality services in exchange for a higher salary and bonus.

Leveraging Healthcare Coding Supplier Relationships

Health Care Financial Consultant Medical Coding

All suppliers reduced their rates for all service lines of coding that more closely aligned with expectations.

A large academic medical center in the Midwest utilizes 4 different outsourced coding suppliers across the health system that did not have co-terminus contract renewal dates. Fees also differ across these suppliers for the same services at the same hospital locations. Though select suppliers proactively decreased rates upon contract renewal, rates still did not reflect the market. It is understandable that rates increase when a new International Classification of Diseases (ICD) is released given the learning curve and increased complexity, but it is expected that rates decrease over the years as coders learn and become more acquainted to the new ICD version.

Upon partnering with our healthcare technology consultants, the health system’s goals included improving standardization of current services, lowering the cost of coding services across the full system, and improving quality of service. Incumbent negotiations were conducted with all 4 suppliers to allow them to address the system’s goals.

All suppliers recognized that there were other discussions being held with incumbents, so if they did not address the hospital’s goals, there was potential to lose the partnership. Multiple rounds of negotiations were conducted prior to selecting finalist(s) for the health system.

Conducting incumbent negotiations allowed for the health system to continue leveraging their historical relationship with each supplier. There are instances where coders have been with the health system for multiple years and developed a relationship with the providers.

All suppliers reduced their rates for all service lines of coding that more closely aligned with expectations, especially given that ICD-10 had been implemented for multiple years.

During COVID-19, there has been an extraordinary labor shortage for qualified coders. However, there was also less inpatient and outpatient volumes given the decreased non-necessary visits. Hospitals did see steady emergency department patient volumes, as many OP and IP coders shifted to ED coding.

Select suppliers also implemented tiered structures based on actual volumes. The higher the volume in the month reviewed, the lower the rate for services.

The Impact of Data Analytics in Healthcare

Health Care Financial Consultant Cost Reduction 02

Collecting and Organize Data

There is a wealth of information available that healthcare organizations can leverage to streamline efficiency and revolutionize patient care — thanks to an abundance of raw data. The key is to collect and organize this data into an easy-to-interpret format and leverage it to improve current processes and procedures.

In particular, studying healthcare data analytics helps facilities identify where they can cut costs to improve their bottom lines. Keep reading to learn more about the positive financial impact of implementing and studying data analytics in your healthcare organization.

What Is Data Analytics in Healthcare?

Data analytics in healthcare is the act of compiling, categorizing and interpreting previously disorganized data to learn from and use it to optimize a healthcare organization’s operations and services. In short, it’s studying data-derived insights to improve operational efficiency and patient care. The most notable uses of data analytics in healthcare include:

Forecasting real-time trends.
Automating processes and procedures.
Making data accessible and easier to understand.
Revolutionizing patient care.
Driving healthcare innovation.
Advancing medical research.

Studying data-derived intelligence is helpful for every aspect of running a patient-centered, profitable healthcare facility. For example, healthcare practitioners can use data to spot trends that could cause re-admissions or assist in disease prevention. Plus, analyzing data could surge a facility’s bottom line by streamlining its operational efforts, like anticipating supply or staffing needs.

The Different Types of Healthcare Data Analytics

To study data, healthcare organizations first need special software to collect it and systems to compile it into easy-to-digest information. It’s also helpful to understand the different kinds of data analytics. Depending on an organization’s goals or pain points, one type of data analytics might be more beneficial to gather and study than another.

There are four main types of healthcare data analytics organizations can leverage:

Descriptive: Descriptive analytics is historical data that organizations can analyze to decipher whether their current systems and practices are efficient.
Predictive: Predictive analytics uses forecasting techniques like predictive modeling to make educated guesses about what might happen.
Diagnostic: Diagnostic analytics aims to diagnose what happened and why — or the factors contributing to particular outcomes — using historical data.
Prescriptive: Prescriptive analytics leverages machine learning and historical data to make predictions helpful for introducing optimal practices.

Ways Data Analytics Can Reduce Healthcare Costs

There are several ways utilizing data analytics improves patient care and boosts an organization’s bottom line. Keep reading to learn how data analytics reduces healthcare costs.

Accessible Medical Records

Going paperless with digital medical records or Electronic Healthcare Records (EHR) boasts significant cost savings for healthcare facilities. EHRs are also superb for collecting real-time clinical, administrative and diagnostic information healthcare professionals can use to anticipate a patient’s needs and further personalize their care.

For example, EHRs can prompt practitioners and administrative staff to schedule reminders and medication orders or note patient preferences and trigger warnings, thus improving the patient experience. Plus, an EHR helps streamline time-consuming clerical tasks, like data access and entry. It has the potential to reduce errors and make information accessible from multiple facilities.

Smooth, Efficient Supply Chains

Supply chain breakdowns result in lost time and revenue, but they also affect patient care. Organizations can use data analytics to assess and anticipate their supply needs. Doing so optimizes inventory management for a smoother and better patient experience.

For example, data analytics highlights trends like shipment delays and order-to-delivery time frames. Analyzing supply chain disruptions or issues reduces the likelihood of overspending and streamlines inventory management, resulting in smarter spending and prompt care.

Enhanced Security

Unfortunately, data breaches and fraud claims are all too common in healthcare. Cybercriminals are known to target healthcare organizations for sensitive information. Cyberattacks were especially prevalent during the COVID-19 pandemic when healthcare professionals felt overwhelmed and burnt out.

The effects of data breaches are exceptionally costly for hospitals and other healthcare practices. To tackle cyberattacks and data breaches head-on, healthcare facilities can study data analytics to analyze the status quo and identify unexpected changes. For example, pinpointing suspicious events like surges in network traffic might indicate fraudulent activity.

Staffing Needs

An understaffed healthcare facility affects professionals and their patients. Thus, it’s crucial that an organization can anticipate staffing needs — especially during seasons when staffing might naturally fluctuate, like the holidays or flu season.

However, it’s tricky to distinguish between overstaffing and understaffing. Overstaffing leads to overspending and understaffing negatively impacts patient care. Studying historical staffing data and seeing how the seasons and other commonplace events affect it helps organizations hire and schedule the appropriate number of staff members during times of critical need.

Learn to Use Healthcare Data Analytics to Improve Your Facility

Are you ready to use healthcare data analytics to improve your organization but don’t know where to begin? Consult our experts at Pathstone Partners! We’re a leading healthcare management consulting firm that collaborates with healthcare facilities to improve their financial and operational efficiency.

It’s our ultimate mission to empower practitioners to provide the best patient experience possible. Contact us today to learn more about how data analytics can transform the way you run your healthcare organization and provide patient care.

One of Inc. Magazine’s Fastest-Growing Private Companies in 2024

Driving Growth Through Dedication

Pathstone Partners, a healthcare consulting firm based in Chicago, Illinois, is proud to announce its recognition by Inc. Magazine as one of the Fastest-Growing Private Companies in the United States for 2024. With an impressive 3-year revenue growth rate of 84%, Pathstone has joined an elite group of organizations celebrated for innovation, impact, and a steadfast commitment to excellence.

Pathstone’s milestone reflects the remarkable achievements of its talented team, which has grown to over 35 professionals dedicated to streamlining operational costs and optimizing healthcare services nationwide. Collaborating with over 250 hospitals across the U.S., Pathstone has achieved more than $500 million in margin improvements, delivering measurable value to healthcare providers of all sizes, from academic health systems to community health organizations.

Transforming Healthcare Operations

Pathstone Partners has built its reputation by offering tailored solutions for both non-labor and labor-related operational challenges, including:

Non-labor services: Streamlining laboratory and clinical supplies, purchased services, IT systems, and pharmaceuticals.
Labor solutions: Optimizing workforce structures, reducing contract labor costs, managing overtime, and enhancing productivity.

By focusing on creating sustainable cost-saving strategies, Pathstone has become a trusted partner for organizations navigating the complexities of the healthcare industry.

A Commitment to Excellence

Earning a spot among the fastest-growing companies is not just a reflection of financial success—it is a recognition of Pathstone’s ability to adapt, innovate, and create meaningful change for its clients. As Pathstone continues to expand its footprint across the United States, its commitment to empowering healthcare providers remains stronger than ever.

Looking Ahead

Being recognized by Inc. Magazine is a significant accomplishment, but for Pathstone Partners, it’s just the beginning. The firm remains dedicated to its mission of helping healthcare organizations reduce costs, optimize operations, and improve patient outcomes.

As Pathstone continues to grow, the company looks forward to building on this momentum, leveraging its expertise to create even greater value for clients and the healthcare industry as a whole. Together, we are building a brighter future for healthcare, one success story at a time.

Minimizing Stakeholder Disruption in Office Supply Negotiations

Health Care Financial Consultant Office Supplies

The total financial impact in this category was $500K while maintaining variety for end users to be able to select items that meet their needs.

Pathstone partnered with a large healthcare system on the west coast to evaluate the full scope of Office Supplies & Related Product spend. This process began with developing an understanding of the current state including vendor landscape, previous system efforts, and future goals.

This client had success selecting one primary vendor for most purchases and beginning to assess the types of purchases permitted through that vendor; however, we identified opportunity to revisit the items purchased to further negotiate pricing and refine the permitted purchase list.

Pathstone’s non-clinical purchased service consultants began identifying incremental opportunities by breaking spend into categories that may be purchased through an office supplies vendor: Ink & Toner, Paper, Office Supplies, and Other Related Products.

Ink & Toner: Ink & Toner may be covered under a relationship with a Managed Print Services provider, through a technology value added reseller, or a traditional office supplies vendor. For Ink & Toner purchased through an office supplies vendor, we considered pursuing cost reduction on original equipment manufacturer (OEM) products, shifting volumes to remanufactured products, and shifting to high-capacity cartridges with higher page yields.
Paper: Paper also typically represents a large portion of spend in this category. Pricing is typically influenced by external factors, such as the global supply chain. Contracts may feature favorable fixed pricing on certain paper items, which presented standardization opportunities.
Office Supplies: The core of this category, health systems have a wide variety of office supply needs such as writing utensils, staplers, and binders. We evaluated average costs within each item type and set cost thresholds to eliminating the purchase of higher cost items while maintaining variety and choice for different end users.
Other Related Products: Other related products often available with office supplies vendors include furniture and breakroom supplies. These categories were reviewed to determine if purchases are necessary or if other channels existed for more effective purchasing.

The total financial impact in this category was $500K. Qualitative benefits included enabling better control and visibility of purchases while maintaining variety for end users to be able to select items that meet their needs.

Ink & Toner: Achieved $200K value by shifting remanufactured ink to OEM to maintain increased discounts and moving eligible toners to high-capacity cartridges.
Paper: Achieved $30K value by shifting volumes to paper that was contracted at a flat, competitive rate.
Office Supplies: Developed a price capping methodology to drive $270K, or 13% value across all office supply purchases.
Other Related Products: Identified targeted categories to restrict purchasing within the client portal; further evaluation of alternative products available to quantify value.

Optimizing Clinical Equivalencies for Bone and Biologics

Health Care Financial Consultant Clinical Supplies

Through collaboration with physicians and the supply chain team, Pathstone achieved an estimated ~$630K in annual savings.

A ~700 bed hospital in the Southern U.S. was facing financial challenges and tasked Pathstone’s clinical purchased supplies consultants with examining areas of spend that had opportunity to drive benefit. Clinical supplies is typically one of the largest and broadest areas of spend, with items ranging from pennies to thousands of dollars.

For higher cost supplies, there is often opportunity to achieve high savings (e.g., .25% – 50%) through converting to a lower-cost product at another supplier. Bone and biologic items (e.g., allografts, tendons) typically cost in the $1,000s and were identified as having high potential for savings. However, the more complex the supply, the more challenging it may be to convince physicians of clinical equivalency.

To begin, Pathstone wanted to isolate spend on bone and biologic items. The team limited scope to tissues, surgical meshes, and allografts and issued pricing proposals to several suppliers asking them to provide matching products with pricing when applicable. In many cases, suppliers were proposing 50%+ in savings.

The next, and more complex, step was to perform research on product specifications and outcomes to determine clinical equivalency. Pathstone leveraged a clinical research tool that provides a bevy of information with the intent of supporting product and supplier selection.

While the team wanted to supply physicians with all relevant data points, it was important to develop a concise comparative analysis given their busy schedules. The team had the opportunity to present the opportunities to the Chief Medical Officer and the Head of Orthopedics. Pathstone developed a relatively standardized summary view for each of fifteen conversion opportunities, with more supporting data in an appendix to pull from when necessary.

The two physicians were supportive of the potential conversions but needed to hold conversations with end users that have more product specific expertise. At times, physicians can have strong preferences towards specific products for non-clinical reasons (e.g., supplier relationship). Thankfully, there was little concern with Pathstone’s proposed conversions, and any hesitations were addressed with further research.

While physician conversations occurred, the team worked with the supply chain and contracts team to ensure that current contractual arrangements would allow for conversions. Hospitals typically have a web of local contracts and GPO arrangements with high variability of terms, spend requirements, rebates, etc. For GPO contracts, hospitals often have a tiered rebate schedule in which the more the client purchases, the higher effective discount they receive. For suppliers in which the client transitioned away from, Pathstone needed to confirm that potential price increases did not outweigh savings opportunities from converting to a new supplier.

Through collaboration with physicians and the supply chain team, Pathstone achieved an estimated ~$630K in annual savings on ~$1.8M in annual spend. For suppliers in which Pathstone moved significant spend away from, there were negligible rebate implications. Moreover, the team helped the client establish a clear process for future high-cost clinical product conversions, such as orthopedic products. Some conversion opportunities were filed away for a Phase 2 that will be reevaluated after a year.

Importance of Environmental Services (EVS) in Healthcare

Health Care Financial Consultant Environmental Services in Healthcare

What Are Environmental Services in Healthcare?

A key challenge that health systems face involves healing patients in an environment in which many illnesses are highly transmissible. Environmental services (EVS), which is defined as all cleaning services that take place in healthcare settings, performs the vital service of protecting patients, visitors, and staff from infectious pathogens. While proper cleaning of clinical spaces has a direct impact on patient health outcomes, the perception of clean in non-clinical areas significantly influences patient satisfaction scores.

Why Are Environmental Services Important in Hospitals?

Patient outcomes are directly influenced by the performance of EVS while in the hospital. Hospital-acquired infections (HAIs) affect roughly 1 in 31 hospital patients and 1 in 43 nursing home residents in the United States, their impact becoming more pronounced with the rise of antibiotic-resistant bacteria.

Further, HAIs represent a significant expense to hospitals at over $9.8B annually. HAIs represent a considerable challenge to EVS systems, as not all pathogens can be eliminated using the same cleaners and methods. C. diff, a common hospital-acquired bacterium, forms spores on surfaces and cannot be sterilized with bleach alone. In order for EVS to minimize the impact of HAIs on the health system, EVS staff must understand the nuances of cleaning patient care areas relative to non-hospital janitorial work.

Environmental services personnel are integral to the success of the health systems they serve because of the effect their work has on patient satisfaction. The Hospital Consumer Assessment of Healthcare Providers and Systems (HCAHPS) survey is issued to recent hospital patients nationwide as a means to evaluate and compare hospital performance across systems. Included in HCAHPS are questions related to the quality of the hospital environment, which includes how patients perceive the cleanliness of the hospital. As a result, EVS must ensure that both clinical and non-clinical areas are pathogen free to prevent HAI transmission and appear clean to the naked eye to bolster HCAHPS scores.

What is the Role of EVS Staff in Hospitals?

Efficiency and employee education are key factors that influence the success of an EVS department. EVS staff must be efficient in cleaning rooms post discharge to make room for new admissions, but too much emphasis placed on turnaround time may result in insufficient disinfection.

Further, employees must understand their role in combating HAIs not only for the benefit of patient outcomes and satisfaction, but also to mitigate their financial impact on the system. A successful EVS department is an essential component of a successful health system, as EVS plays a key role in helping hospitals achieve their primary objective of treating patients and preventing infection.

Identifying Revenue Leakage in Healthcare

What Is Revenue Leakage in Healthcare?

Revenue leakage happens when a healthcare practice gives care but does not receive payment for the services it provided. Leakage can occur in a few ways, such as forgotten accounts receivable or missed appeals deadlines for denied claims. It impacts the revenue cycle, preventing businesses from becoming financially viable.

Revenue leakage often goes unnoticed, but its impact can be detrimental to healthcare practices seeking to grow their business and maintain a high standard of care for their patients. The longer providers take to address points of leakage, the less likely they will be to receive any reimbursement for their services.

What Is the Impact of Revenue Leakage?

Healthcare providers must keep up with expenses to secure customer satisfaction and keep their practice in business. Revenue leakage can lead to lower earnings, putting providers at a disadvantage to their competitors.

A lack of revenue will significantly impact a healthcare facility’s ability to maintain several aspects of its organization, including:

Staff: Healthcare practices require proper resources to maintain a team with all the talents necessary to meet patient needs, ensure smooth processes and promote detailed organization. Revenue leakage can make hiring and retaining a highly skilled workforce challenging.
Quality care: If a provider is experiencing revenue leakage, they may add more services to compensate for the missing revenue. Extra services may decrease a provider’s ability to maintain high-quality care by increasing the likelihood of burnout.
Growth: Steady revenue enables organizations to grow their services and meet the needs of an expanding community. Healthcare practices that experience inconsistent income due to leakage may need help to keep up with growth demands.
Innovation: Cash flow powers innovation, helping providers maintain a competitive edge. A decrease in revenue will prevent businesses from matching a competitor’s offer, leading to a decline in patients.
Business goals: Revenue leakage can inhibit healthcare providers’ ability to meet business goals and objectives. Proper funding is necessary to achieve high standards and goals that drive the business forward.

What Are the Top Causes of Revenue Leakage in Healthcare?

Many forms of leakage are accidental and easy to correct, but they first must be identified. Revenue leakage can come from numerous sources, from issues with a provider’s processes to how patients or payors handle payments.

Some common causes of revenue leakage include:

Inaccurate information: Insufficient or incorrect registration data may result in a denied claim or errors in billing. Any changes in a patient’s personal information may also lead to revenue leakage.
Unverified insurance coverage: Without a proper review of insurance eligibility or approval, procedures and services may be given without adequate coverage. Inconsistencies with insurance coverage may also come from errors in payor-provider agreements, halting the revenue cycle.
Pricing issues: Inadequate pricing may lead to missed revenue opportunities. Prices set too low may undermine services for what they are worth, while prices set too high may drive patients to seek care elsewhere.
Unpaid accounts receivable: Sometimes outstanding bills remain unpaid for too long, going unnoticed or becoming lost. The longer an accounts receivable goes unpaid, the less likely providers are to recover any reimbursement.
Claims denials and underpayments: Inaccurate information can lead to claim denials and underpayments, slowing the revenue cycle for a healthcare provider. Any delay in addressing these issues with insurance companies can lead to missed appeals deadlines and less revenue for services already given.
Unbilled claims: Without a dedicated team to manage claims, practices may experience a variety of problems leading to revenue leakage. Claims require accuracy and consistent follow up ensure all claims are correctly billed.
Scheduling issues: Revenue leakage can also result from missed opportunities to receive revenue. These instances include referred patients who have yet to make an appointment or gaps in scheduling that could have been filled to maximize available time and resources.
Lost patients: Previous patients who seek another provider for care instead of returning are another form of revenue leakage. Healthcare providers miss out on revenue opportunities when patients feel their needs will be met better elsewhere.
Billing errors: Manual input of data may lead to various types of billing errors, decreasing the amount of revenue providers could and should be receiving. Accidental discounts or other inaccuracies in billing will halt the revenue cycle.
Unaccounted costs: Administrative costs can sometimes be miscalculated, resulting in underpayment from patients or payors. Incomplete logs of materials and equipment used during treatment or medical procedures performed may also lead to inaccuracies in how much patients or payors are charged.

These forms of leakage are common and usually unintentional, making it challenging to track and manage potential revenue opportunities. Healthcare practices need to ensure careful follow-up to protect vital revenue streams and prevent any leakage.

Revenue management is essential in the healthcare industry. Consistent cash flow enables providers to establish themselves as trustworthy professionals that provide the high-quality care patients seek. Revenue also allows organizations to experience growth and innovation that helps them keep up with competitors and maintain a talented workforce.

Healthcare practices need to ensure they have the funds to support their services and maintain patient satisfaction. Providers have a thin margin of error to work with, making revenue leakage an essential situation to address and resolve if healthcare practices wish to enjoy the benefits of consistent revenue.

Optimizing Outpatient Physical Therapy

Health Care Financial Consultant Outpatient Physical Therapy

Staff turnover decreased resulting in $100k of wage savings.

Management at a local hospital was concerned with operations at an outpatient location providing Physical, Occupational, and Speech Therapy due to an increase in staff turnover and productivity issues, missed appointments, and a growing backlog of patients who needed appointments. Pathstone Partners was asked to assist as part of a broader engagement to develop detailed findings about the current state of operations, establish strategies to increase staff productivity, and reduce patient backlogs and the current 30% patient no-show rate.

Pathstone evaluated several different key areas to determine key strategies and anticipated benefit throughout the engagement.

First, management interviews and department walkthroughs were conducted to collect qualitative and quantitative information about the general management of the department and current pain points. The team learned that there is difficulty scheduling current resources with flexible start and end times, which has led to many FTEs falling short of their full-time status. The team also observed that patient scheduling tends to taper off in the early afternoon, with 1:00 – 3:00pm having the most open appointment times.

Staff schedule reviews and staffing to demand analyses were conducted to further evaluate operational challenges. Findings showed that staffing is not equally allocated throughout the week, PT/PTA ratios vary by day, lunches are scheduled at the same times, and a majority of first shift staff staff generally arrive 30 minutes prior to appointments on any given day. Assessment times are currently scheduled randomly throughout the day, and PTAs are not “first up” for non-assessment scheduling. Furthermore, busy days and non-busy days are currently staffed similarly, creating challenges.

The Pathstone team leveraged this information to make several recommendations to the hospital management team. First, we recommended expanding Saturday hours to both allow staff to work up to their full FTE status and to accommodate the current patient backlog that usually builds on Saturdays.

Additionally, patient scheduling adjustments, weekly (and daily) staffing to demand processes, and skill mix realignment has led to significant improvement for the outpatient facility.

By revising staffing schedules and developing assessment blocks where PTs are available, the facility increased throughput by 10%, and created 6 more appointment slots per week. Double scheduling patients during high no-show times (weekday mornings), adding a 24-hour auto-dialer to remind patients vs. the current 72-hour manual reminder process, and adding a $50 no-show penalty saw an additional 15 appointment slots created per week and reduced the vacancy rate from 30% down to 5%.

As the outpatient facility settles in with these new processes, staff turnover decreased resulting in $100k of wage savings, utilization (+10%), revenue (+10%), and productivity (+15%) all increased, and the hospital system achieved a total financial benefit of $350K.

Guide to Different Types of Healthcare Contracts

Health Care Financial Consultant Contracts

Contracts are the glue holding every operation together within the healthcare industry.

They connect employees and employers, suppliers and buyers, ensuring each party remains protected. Whether dealing with hiring, your supply chain or equipment, contracts can be long and complex and require time and effort to ensure they’re structured in your best interest. Understanding the different types of contracts and how they work is the first step to an effective contract management operation.

Supply Chain Contracts

Healthcare organizations depend on countless materials and products to complete daily tasks. Some of the most common products used throughout healthcare centers and hospitals include syringes, defibrillators, sterilizers, gloves and masks.

You can create supply chain contracts to secure these raw materials, products and services from reliable suppliers. These written agreements guarantee the supplier will provide specified goods or services for a pre-determined period at a fixed cost. They also outline delivery schedules, consequences for failing to adequately buy or supply and termination conditions.

Types of Supply Chain Contracts in Healthcare Facilities

Healthcare professionals use expensive instruments daily, and they might have equipment lease contracts rather than buying items outright. This strategy provides additional flexibility and security to obtain the required tools at a more convenient price. However, there are other solutions healthcare providers might employ to get the resources they need. Common types of supply chain contracts found within healthcare facilities and organizations also include:

Purchase orders: A purchase order is a binding contract the buyer produces detailing what they want to purchase from a supplier. This document includes information like quantity, payment terms and delivery.
Service agreements: These contracts are lists of all the services a supplier agrees to provide. It also outlines pricing, timelines and the rights afforded to each party.
Distributor agreements: Distributor agreements are formed between suppliers and merchants. The seller, or distributor, agrees to market and sell specified providers’ products for a fixed fee.

Labor Contracts

Standard labor agreements are legal contracts outlining the terms and conditions of employment at an organization or company. These documents vary by company and position and provide explanations of employee responsibilities and duties, employment terms, compensation and benefits and conditions of termination.

Commonly used labor contracts in every industry include:

Union contracts: A single, written agreement between the employer and a group of employees agreed upon using collective bargaining. These documents detail wages, hours and scheduling, time off, working conditions, advancement and more.
Non-union contracts: Customized documents that employers and individual employees negotiate. Individual employment agreements state conditions of employment and are often subject to governmental regulations.
Independent contractor agreements: Contractors are not employees and agree to perform specific services for a company in return for payment. These contracts outline the scope of work, compensation, deadlines and partnership length.

Special Healthcare Labor Contracts

Labor contracts are required for every employee within your organization. Which one you use depends on their position and union status and must meet all state and federal employment laws. However, there are special circumstances in which you must utilize other contract types, such as hiring a physician.

Many states prohibit medical facilities, like hospitals, from employing physicians directly. Detailed physician employment contracts or independent contractor agreements are often necessary.

They include schedule expectations, wages and benefits, on-call requirements and a restrictive covenant outlining non-compete conditions. If you are hiring for the role of medical director, a separate contract is also required and includes similar information.

Purchased Services Contracts

A lot goes into running and maintaining your healthcare facility. It takes time, effort and money to provide patients with the care and attention they deserve. Partnering with outside companies will ensure your operations are sustainable and run smoothly while saving you money. These partnerships are usually called purchased services and are part of your non-labor spending budget.

Purchased services agreements are the contracts between your organization and outside businesses. They include information regarding contract terms, scope of services, pricing structures and scheduling. Standard outside services many organizations choose to outsource include:

Laundry and linen
HVAC
Marketing
Rehabilitation services
Specialty equipment
Legal services

Types of Purchased Services Medical Contracts

Your healthcare business depends on the services you source from outside businesses and contractors. Outsourcing activities like coding, transcriptions and billing collections require managed services agreements (MSAs) and outsourcing agreements. These examples of healthcare contracts outline the promised service, payment structures, liability protections and timelines. They can also include penalties, fines and exit strategies.

Professional service agreements (PSAs) are another form of purchased services contract that aims to reduce company expenses. Facilities like hospitals often use PSAs to enlist the help of specialized physicians such as anesthesiologists, radiologists, hospitalists and many other professionals.

These professionals remain independent from the business while adhering to a contract tailored to fit the needs of your business or organization in return for payment. You can create them for a single service provider or a whole department, varying in term length, schedule type and responsibilities. These contracts tend to be more complicated, yet they can be extremely powerful when they are done right.

Informational Technology Contracts

As technology has continued to advance, it has become a staple of the healthcare world. Healthcare companies everywhere depend on cutting-edge technology and software to treat patients effectively and deliver reliable services.

Technology contracting is critical to these companies acquiring the resources they need. Most applications, software and information-based technology require licensing agreements detailing necessary fees, the duration of the agreement and prohibited activities.

Examples of Healthcare Informational Technology Contracts

The healthcare industry is extremely reliant on innovative technology to continue meaningful growth. With this, you may see various types of healthcare contracts, including:

Software licensing agreements: This is a legally binding contract between your healthcare organization and a technology company permitting the use of specific software. It defines where a purchaser can install the software, how to use it, how much it costs and how a party can terminate it.
Software development contracts: These agreements enlist the help of developers to design and implement custom programs and applications to expand business offerings and capabilities. A software development contract offers an overview of the project details and expectations, including the timeline, expectations, budget and other information.
Information technology outsourcing (ITO): ITO agreements are legal documents describing all the work to be handled by a third-party partner. You can establish relationships with vendors for infrastructure management, data center services and application development and maintenance.
Data use agreements (DUA): Providers use DUAs with patients when transferring protected health information, like limited data sets and identifiable data. This contract establishes both parties’ rights, responsibilities and obligations regarding permitted use, ownership and liability.
Application service provider (ASP) agreements: Healthcare companies can work with vendors to obtain the right to use their software or application. Instead of licensing and receiving a copy of the software, organizations rely on vendors to operate and manage the software on their behalf, often charging a usage fee or subscription.
Business process outsourcing: Organizations choose to streamline their technological supply chain by subcontracting specific jobs to third-party service providers. Popular online sectors that healthcare facilities create agreements for include finance and accounting, human resources and customer call centers.

Pharmacy Contracts

Drugs and medications are heavily regulated at the state and federal levels. Contractual agreements are used between healthcare organizations and pharmacies to protect each party’s rights and meet legal restrictions.

Pharmacy contracts are legal agreements between pharmacies and healthcare organizations. These detailed documents establish the terms and conditions regarding various operations, including purchasing, dispensing and paying for drugs and related services.

Types of Pharmacy Contracts

Pharmacy contracts will likely vary from pharmacy to pharmacy, and they are heavily dependent on provided services. Essential terms covered within these types of medical contracts include the scope of services, pricing, confidentiality, compliance and termination. Whether you run a pharmacy or work side by side with them, you should be aware of the following contracts you might encounter:

Manufacturer rebate agreements: Also known as vendor rebate agreements, these arrangements act as incentives to increase manufacturer sales while offering businesses reduced price points. This contract details the conditions a healthcare organization must meet before they receive a rebate check or future discount.
Group purchasing agreements: Specialty healthcare entities and pharmacies can enter into group purchasing organizations to secure supplier discount pricing. Organizations use these agreements to increase their buying power and negotiate with manufacturers, vendors and suppliers.
Pharmacy benefit management (PBM) contracts: These documents facilitate the relationship between pharmacy benefit managers and employers, health plans, labor unions, wholesalers and other organizations involved in healthcare. PBM contracts describe the manager’s role in processing and paying prescription drug claims and outline pricing areas and unique exclusions.

Choose Pathstone Partners to Handle Your Healthcare Contracts

Legal contracts come in all shapes and sizes within the healthcare industry, facilitating integral services that businesses and organizations rely on to succeed. Understanding how each operates and how to navigate through each situation accurately is crucial to your growth. It will ensure you’re capable of effectively helping and caring for customers and patients.

Pathstone Partners is devoted to providing your business with a broad spectrum of exceptional healthcare consulting services to manage all your medical contract needs. We have a long history of working with healthcare organizations of all sizes, identifying challenges and capitalizing on opportunities to enhance performance. Our healthcare consultants have unrivaled expertise to oversee contracts across all your business ventures. Get in touch with us to get started today.