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Predicting Monthly Cash with Confidence and Accuracy

Predicting Monthly Cash with Confidence and Accuracy. Steve Markesich, CPAM Yale New-Haven Health Maryland, AI - 2012. The History. Background Hospital Only The challenge The evolution Trial and error Success. The “Model”.

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Predicting Monthly Cash with Confidence and Accuracy

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  1. Predicting Monthly Cash with Confidence and Accuracy Steve Markesich, CPAM Yale New-Haven Health Maryland, AI - 2012

  2. The History Background Hospital Only The challenge The evolution Trial and error Success

  3. The “Model” There is no “model” – one model doesn’t work (at least not for me - I use 5) Why more is better Works across all hospitals within system 2-3 year process to get to this point

  4. The Factors or Variables Gross Revenue Net would be better if you didn’t have to wait Cash (historical) Posting days Days of the week Current average daily census “Hiccups” Seasonality

  5. Revenue cashCalendar days historical

  6. Revenue/cashHistorical posting days

  7. 6 month cash byday of week (mean)

  8. Coming up with thenumber • THE FORECAST RECIPE: • 3 month calendar projection: $24,795,672 • 2 month calendar projection: $24,284,585 • 3 month posting projection: $25,763,757 • 2 month posting projection: $25,126,436 • 6 month daily mean projection: $23,112,500 • AVERAGE: $24,616,590 • Month Projection: $24M - $25M

  9. Tracking progress

  10. 6 month cash byday of week (mean)

  11. The results for our organization • THE RESULTS THIS FISCAL YEAR • Hospital A (1,000 beds) - accurate within 1% • Hospital B (350 beds) - accurate within 2% • Hospital C (200 beds) - accurate within 1% • OVERALL ACCURACY WITHIN 1%

  12. Current routine • Offer forecast on the first or second business day of the month • Track cash and trends daily • Update trends five business days prior to month end. • Communicate problems you know will impact cash as early as you identify them (but don’t be “Chicken Little”) • Previous month issues

  13. What I track daily • Previous day’s • Census • Gross Revenue • Payments • A/R • In-House • Minimum Hold • Candidate for Billing • Active

  14. Flies in the ointment Computer conversions (don’t even bother) System issues (internal and external) Need to identify and report within the month External fiscal year ends The finance department Census Price increases/new programs

  15. Suggestions to start off • Do this on your own for a while and don’t tell anyone until you get a comfort level • Be slightly conservative in your forecasting at first and update later in month with good news • Over time, trust your instincts • Be an expert on historical trends within your organization

  16. Final thoughts • Develop your own process and routine • Have confidence in your projections or don’t offer any • Be bold when the time is right • Be careful about putting your operational managers under the gun • Keep tuned into everything that goes on in your shop

  17. GOOD LUCK! • Now for a brief update on Healthcare Reform…………………….

  18. June 28, 2012 • In what was a surprise to many based on the analysis following March’s oral arguments, the Supreme Court upheld the constitutionality of the individual mandate by a 5-4 vote.

  19. SCOTUS decision, cont. • The one significant change to the law under the ruling concerns states that do not expand their Medicaid programs. • Under the law as originally written, states would not be eligible for federal funds to help underwrite the expansion AND all funding received for their current programs. • SCOTUS ruled that states could not lose current funding if they don’t expand Medicaid.

  20. So now what? • States still need to decide if they will set up the required insurance exchanges or whether they will have the feds do it for them • States still need to decide if they will except federal money for Medicaid expansion. • Is the IRS capable of policing the healthcare decisions millions will make while also collecting the taxes needed to run the federal government?

  21. Now what?, cont • Employers still have the option of offering or dropping coverage. The law does push large employers to provide coverage and provide tax credits to small employers, but nobody can predict what happens to coverage as the insurance market adapts. • The act mostly extends a flawed system to more people • In many ways this is only the first step in the reform process, hopefully providing a step in the right direction that ultimately evolves into something better.

  22. Is the fight to overturn the law over? • What can the 2012 elections potentially do? • What is the risk of focusing on opposing the law during the campaign? • What in all likelihood is going to happen in 2013 and beyond

  23. Conclusion • What do we do to prepare?

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