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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…………………….

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