Group Project: Monitoring Methodology

The Entity chosen was Baptist Healthcare South Florida for years 2017,2018,2019 the stats are online
The course project will require students to select a healthcare organization and review its financial operations based on data available from various sources.  The entity may be a individual hospital, medical group practice, managed care organization, or government agency delivering healthcare services.  Once the group has selected a healthcare entity, it will obtain three years of financial statements to analyze along with appropriate literature reviews about the entity or similar entities.  The final paper will be submitted in a case study format, which includes the following sections:

Background
Issues/problems identified
Analysis utilizing ratios and other financial analysis tools
Recommendations
Implementation plan
Monitoring methodology
References demonstrating graduate-level research (only references of the highest quality grade will be accepted)

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The page count for this assignment is at least seven (7) pages plus references and title pages. Your paper needs to be submitted in APA 6th format and must have a minimum of 10 current resources four (4) of them from current peer-reviewed articles.  The final group assignment paper is submitted Canvas with each team member sharing equally in the development of the group project.

Rubric
Written Grading Rubric (AW) (1) (1)Written Grading Rubric (AW) (1) (1)CriteriaRatingsPtsThis criterion is linked to a Learning OutcomeIntroduction25.0 pts
This criterion is linked to a Learning OutcomeAccuracy25.0 pts
This criterion is linked to a Learning OutcomeRelevance25.0 pts
This criterion is linked to a Learning OutcomeReference List25.0 pts
This criterion is linked to a Learning OutcomeIn Text Citations and Paraphrasing25.0 pts
This criterion is linked to a Learning OutcomeCritical Thinking25.0 pts
This criterion is linked to a Learning OutcomeCreative Thinking25.0 pts
This criterion is linked to a Learning OutcomeOrganization25.0 pts
Total Points: 200.0Previous
 So far this is whats done but I am only responsible for the Monitoring Methdology Part
Baptist Health South Florida Financial Operations Case Study
Background
Baptist Health South Florida is the biggest healthcare organization in the region, with 11 hospitals, approximately 23,000 employees, more than 4,000 physicians and more than 100 outpatient centers, such as urgent care facilities and physician practices across Miami-Dade, Monroe, Broward and Palm Beach counties.  Baptist Health was founded in 1960 and it is well known for having centers in different areas of health care such as cancer, cardiovascular care, orthopedics, sports medicine and neurosciences, which attracts patients from all over the U.S., the Caribbean, and Latin America. It is a not-for-profit organization committed to their faith-based generous mission of medical excellence. Also, Baptist Health has been recognized by Fortune as one of the 100 best corporations to work for in America and as one of the world’s most ethical companies by Ethisphere (Navigant, 2019, Pg. 3 & History of Baptist Health South Florida, n. d.).
Issues and Problems Identified

Increased Average Length of Stay in Days

In the healthcare era in which we live all healthcare institutions are working to reduce their revenue loss by making sure patients’ hospital visits are not going to exceed the number of days required for the hospitalization. Therefore, the healthcare entity will avoid getting penalized by the Centers for Medicare & Medicaid Services (CMS) for the prolonged length of stay (LOS).  After reviewing Baptist Health South Florida financial operations, the authors were able to identify an Operating Indicator analysis by examining the length of stay in days. In 2019, the length of stay was 5.15, which is higher than what it was in 2018, 2017, and 2016. Since quality measures and penalties are affecting how hospitals are being reimbursed nowadays, assuring that the LOS does not increase is crucial.
Healthcare times have changed with respect to how hospitals are reimbursed for services rendered. Years ago, medical institutions received their payments based on the number of days and services patients received during their stay. Currently, Medicare pays medical institutions a single amount for the hospitalization depending on the patient’s Diagnosis-Related Groups or diagnosis, regardless of how many procedures the patient had or the number of resources used during their hospitalization. Therefore, it is imperative that hospitals provide services that are efficient and to avoid over-treating patients in order to maintain the DRGs incentive payments (Davis, January 3, 2020). The reimbursement that medical institutions and healthcare providers receive will depend  on an appropriate DRGs coding process. As Nunley et al. (2017) wrote, “Reimbursement is based on many factors not controlled by surgeons or hospitals, but proper DRGs coding can significantly impact the financial health of hospitals and availability of quality patient care.” Understanding that DRGs coding accurately can benefit the organization and enhance patients’ wellbeing is important, but creating a trustworthy clinical documentation improvement program to assist the healthcare team to reduce patients’ hospital stay is as crucial. As Reyes, Greenbaum, Porto, and Russell (2016) wrote, precise clinical documentation is imperative because it facilitates and enhances communication regarding patient care among healthcare team, and quality metrics reporting.
Recommendations to reduce length of stay

Coordination of discharge planning
Multidisciplinary team involvement

Implementation plan to reduce length of stay  

Starting discharge planning on admission
Detecting which patients will likely have a longer length of stay, especially those with chronic conditions or comorbidities
Establishing a clinical documentation improvement program to provide reliable and consistent documentation, which will help the multidisciplinary care team to be more effective and reduce unnecessary delays in discharge

Monitoring methodology

Compare length of stay metric against similar organizations
Assign working DRGs during the concurrent stay

In Order to start the discharge planning upon admission and establish coordination process, it is vital to replace the whiteboards at the nurse’s stations for a large computer monitor. This type of platform can help the organization by displaying  patients’ clinical and discharge planning details, which include estimated “discharge date and destination, length of stay, and staffing allocations” (Rolls et al., 2019). In addition,  Rolls et al. (2019) stated that by incorporating this type of electronic boards, patients’ length of stay can be reduced to 4.1 per day per episode. Also, the electronic board can help the multidisciplinary team to update patients’ discharge planning information in real-time, therefore facilitating the discharge and avoid delays on patients’ hospital stay.

Increase expense of  administrative and general cost 

Administrative and general cost expenses are increasing among hospitals in general. Two of the main reasons why this is increasing are because of the current federal regulations and the multiplicity of payers.
A big drain of the cost of healthcare administrative cost is associated with the revenue cycle . Baptist Health South  needs to stay up to date and spend money on  investments associated with regulatory compliance.
Based on the Consolidated Statement of Operation from Baptist Health South  Florida, Inc. and affiliates Annual Financial Report,  from the year 2019,2018 and 2017, the authors were able to identify the expense of administrative and general cost in the year 2019 was  higher 733,753,933 dollars,  compared to the previous two years. In  2018 it was  583,394,829 dollars,  and the year 2017 was 491,676,336 dollars.   A high increase of healthcare administrative and general cost can affect the financial status of the healthcare system. Some strategies may not require high cost investments and can be part of the development of strategies and projects for future operations. 
Recommendations to reduce administrative and general cost
Reduce the cost of revenue cycle by

Hospital will create a Quality Improvement program
Case Manager will verify insurance coverage and electronically benefit at the time of admission to changes to front-end processes to eliminate errors that result in denials.
Follow the billing process throughout the system and monitor denial management and claims resubmissions.
Identify mistakes made by professionals inside the healthcare system or lack of information needed to submit a claim.

Implementation plan to reduce administrative and general cost

The Quality Improvement program team will monitor bills that are accepted or rejected.
The Hospital will have a case manager in charge of verification of insurance coverage and benefits at the time of admission of the patient.
The billing and coding department will create queries to communicate to physicians or other care providers if any errors or missing documentation is found throughout the system.
The Quality Improvement program leader will monitor the billing process and the bills that are accepted or rejected.
The Hospital will provide training to physicians and clinical workers regarding mistakes found on a quarterly basis and ways to prevent them from happening again.

Monitoring methodology

Will build a Quality control team to monitor the process and will have data available on a monthly basis to accelerate the coding and billing process
The Quality control team will make sure the physicians are correcting the errors and answering queries to be able to code the medical intervention correctly for billing purposes.
Quality control team will monitor the bills that are accepted or rejected and will record, analyze, and share information with the management team.
Implement improvement quality control monthly  training sessions to clinical staff to keep staff updated on changes inside billing and the management team.

Recommendations to reduce administrative and general cost
Reduce the cost of revenue cycle by

Hospital will create a Quality Improvement program
Case Manager will verify insurance coverage and benefits electronically benefit at the time of admission to changes to front-end processes to eliminate errors that result in denials.
Follow the billing process throughout the system and monitor denial management and claims resubmissions.
Identify mistakes made by professionals inside the healthcare system or lack of information needed to submit a claim.

Implementation plan to reduce administrative and general cost

The Quality Improvement program team will monitor bills that are accepted or rejected.
The Hospital will have a case manager in charge of verification of insurance coverage and benefits at the time of admission of the patient.
The billing and coding department will create queries to communicate to physicians or other care providers if any errors or missing documentation is found throughout the system.
The Quality Improvement program leader will monitor the billing process and the bills that are accepted or rejected.
The Hospital will provide training to physicians and clinical workers regarding mistakes found on a quarterly basis and ways to prevent them from happening again.

Monitoring methodology

Will build a Quality control team to monitor the process and will have data available on a monthly basis to accelerate the coding and billing process
The Quality control team will make sure the physicians are correcting the errors and answering queries to be able to code the medical intervention correctly for billing purposes.
Quality control team will monitor the bills that are accepted or rejected and will record, analyze, and share information with the management team.
Analysis utilizing ratios and other financial analysis tools

Financial Analysis
Baptist Health South Florida Organization
Financial analysis is a vital component to healthcare leaders. The purpose of a financial analysis is to assess the financial condition of a business or organization and to identify the operating factors (Gapenski & Pink, 2015). Analyzing an organization’s financial analysis will determine whether the company is stable, profitable and liquid enough to grow sustainably long-term. Our group will review and analyze the financial operations of Baptist Health South Florida (BHSF) Organization for the years of 2017-2019. The financial analysis will focus on data collected from the financial statements, balance sheets, statement of operations, and cash flows. Baptist South Florida is a not-for-profit healthcare organization in the South Florida area. This financial analysis of Baptist Health South Florida, Inc. is based on unaudited financial statements of Fiscal year end and 9-month interim accounts as on 30th June for the years of 2017-2019. 
Statement of Operations
Healthcare Organizations need positive income levels to operate effectively. Hospitals need to stay profitable in order to compete in the market by improving their facilities, technology and equipment. The income statement or statement of operations shows the organization’s revenues and expenses over a period. The categories include revenues, expenses and net income. According to the financial statement, Baptist Health South Florida had an excess of revenues over expenses, or net income, of $ 179,702,365 for the period ending in June 30th, 2017.  In June 2018, the organization had a net income of $ 349,619,630. However, in June 2019, the net income decreased to $246,763,479. Net income is calculated with the following formula: Revenue – Expenses = Net Income. Due to Baptist Health South Florida being not-for-profit, the organization paid no dividends, and retained all its net income. In 2018-2019, Baptist Health expanded its service area as being from Palm Beach County to the Florida Keys by merging with Boca Raton Regional and by working towards building a new Fishermen’s Community Hospital in the Keys (Chakurda & Alvarez, 2019). After the merger, BHSF should focus on making sustainable profits revenue growth.
Rothenbuecher & Schrottke (2008) discussed that revenue growth is necessary for earnings growth which is the most reliable engine for driving total shareholder returns over the long term. After the merger, the growth rate had decreased from 48.8% (2018) to -29.5 % (2019). The leaders of Baptist Health organization should use resources to retain and attract new customers (patients) by improving patient experience and ensuring that the formerly distinct organizations present a unified collaboration to the community. The operating margin for FY 2017 was calculated as follows: net sales ($219,322,332) / total revenues (1,863,042,460) x 100 = 11.7%. The operating margin for FY 2018 is 17.3% and decreased to 10.3% in FY 2019 due to higher expenses acquired in the Merger. Figure 2 summarizes the statement of operations of Baptist Health South Florida (2017-2019). 

Balance Sheet
The balance sheet is a snapshot of the organization’s assets, liability, and equity position at a single point in time. This section on the financial statement outlines what the organization has, what the firm owns and what it owes. It tells us the most about an organization’s financial health (Gapenski & Pink, 2015). On the balance sheet, only the amount of cash represents actual money. The other assets would have to get liquidated in the amount of actual cash. According to the financial statement from Deloitte Group, BHSF’s net assets or equity has increased over the 3 years period from $3,384,404,243 (2017) to $4,175,725,831 in 2019. A business’s equity account is built up over time by retention or retained earnings. Equity is calculated by the following formula: Assets – Liabilities = Equity. For example, in 2017, Baptist Health’s equity was calculated as follows: Assets ($5,334,235,073) – Liabilities ($1,949,830,830) = $ 3,384,404,243. Refer to the Balance Sheet Chart (2017-2019) analyzing the total assets, cash, liabilities and equity for Baptist Health.

Statement of Cash Flow
Statement of cash flow reports the sources from which the business had obtained funds during the past year and how it used them. It helps analyze the liquidity and long-term solvency of an organization. It is organized in three sections including cash flow from operating activities, cash flow from investing activities and cash flow from financing activities (Gapenski & Pink, 2015). Under the statement of cash flow section, cash coming into the hospital (inflows) demonstrates as positive numbers, whereas, cash being spent (outflows) demonstrates as negative numbers (Gapenski & Pink, 2015). As noted in the financial statement, the statement of cash flows was intended to explain the change in the amounts at the beginning and end of the period titled “cash” or “cash and cash equivalents” in the statements (Schmutte & Duncan, 2019). Net cash flow from operations increased to $ 468,055,480 in 2019 compared to the years prior (2018)    $ 167,316,791 and $ 110,095,346 in 2017. According to the financial statement from Deloitte Group, Baptist Health began 2019 with $ 146,779,645 in cash and equivalents, experienced a net cash outflow of $ 2,722,665 during the year, and ended the year with $149,502,310 in cash. This concludes that Baptist Health’s operations are profitable and the cash flow from operations were used to purchase property and equipment, Acquisition of surgery centers and physician practices and repayment of debt. The healthcare leaders at Baptist Health must analyze the statement of cash flows to determine whether the organization’s operations are self-sustaining by generating the cash flows necessary to pay its expenses. 
Ratio Analysis
Ratio analysis combines data from the balance sheet and the income statement to create single numbers that measure various aspects of financial performance. Ratios are grouped into four categories including liquidity, profitability, debt management and asset management (Gapenski & Pink, 2015). Liquidity ratios measure the liquidity position of the organization by suggesting how much liquid assets a firm must pay off its current obligations or liabilities that mature in less than 1 year. For example, current ratio measures how much current assets organizations must pay off its short-term liabilities. It is calculated as follows:
Current Ratio =  Current Assets
                          Current liabilities
Sections
FYE Sep 2018
As on 6/30/2019
Current Assets
$ 670,376,084
$ 679,176,597
Current Liabilities
$ 749,510,668
$ 806,896,958
Current Ratio
0.89:1
0.84:1
Current ratio under 1 suggests that Baptist Health South Florida, Inc. would be unable to pay off its short-term obligations. The hospital has $0.84 against a liability of $1 which suggests the firm may face liquidity issues. Current ratio varies from industry to industry but a ratio of 2:1 is considered acceptable.
Return on Assets
Another ratio analysis to interpret profitability is Return on Assets (ROA) which measures how effectively assets are being utilized to generate total return (Gapenski & Pink, 2015). This ratio is calculated as follows:
ROA = Net Income
            Total Assets
Particulars
FYE Sep 2018
As on 6/30/2019
Net Income
$ 349,619,630
$ 246,763,479
Total Assets
$ 6,263,907,136
$ 6,421,636,115
ROA
5.58%
3.84%
The higher the ROA, the more efficient an organization is using its access. The higher the ROA, the greater the net income on each dollar invested in assets and the productive the assets (Gapenski & Pink, 2015). ROA of the hospital has decreased from 5.58% in 2018 to 3.84% in 2019. Such a decreasing trend is not taken favorably by the management and other stakeholders. Only positive and improved indicators are happily accepted by the stakeholders. Another measure is to compare this as well as all other ratios with the hospital industry average.
Asset Turnover Ratio
A ratio analysis to interpret asset management is asset turnover ratio which measures the utilization of all the firm’s assets (Gapenski & Pink, 2015). This ratio is calculated as follows:
Assets Turnover = Total Revenues
                               Total Assets
Particulars
 FYE 06/30/2017
FYE Sep 2018
As on 06/30/2019
Sales or Revenue
$ 1,863,042,460
$ 2,242,647,821
$ 2,642,508,202
Total Assets
$5,334,235,073
$ 6,263,907,136
$ 6,421,636,115
Asset Turnover
0.34:1
0.36:1
0.41:1
The above ratio shows that an investment of $1 in assets yields only 41 cents in revenues which is apparently quite insignificant. The hospital either should add either more operations to enhance revenues or reduce its investment in assets. 
2017
2018
2019
Net Income
$179,702,365
$349,619,630
$246,763,479
Growth Rate
N/A
48.8%
-29.5 %
Expenses
$ 1,859,306,117
$ 2,262,656,955
$ 2,418,832,576
Net Patient Service Revenue
$ 1,808,517,435
$ 2,165,894,299
$2,550,534,757
Operating Margin
11.7%
17.3%
10.3%

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