Healthcare financial management : journal of the Healthcare Financial Management Association
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Clinical observation units were created to avoid questionable admissions and short inpatient stays that were likely to result in Medicare payment denials. With the rise of managed care, these units also can contribute to ensuring optimal reimbursement by helping manage patient flow. Hermann Hospital, a facility affiliated with the University of Texas, Houston, initially opened an improved observation unit in 1992, but recorded a 13 percent Medicare payment denial rate and operating losses of as much as $20,000 per month during the first five months of the unit's operation. ⋯ The problems identified included missed opportunities for admissions, inappropriate admissions, and extended stays. The facility took corrective measures based on the quality team's assessment and corrective measures developed by the utilization management committee and quality teams. The clinical observation unit now sustains a zero denial rate and steady revenue increases resulting from improved utilization of the unit.
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Healthcare delivery systems must plan their physician integration strategies carefully to align the interests of their diverse physician constituents. Primary care physicians and specialists often have conflicting agendas, and physician integration attempts by healthcare systems frequently create networks of competing organizations with conflicting goals. Systems have a variety of options to choose from in implementing physician integration, including PHO- and MSO-related strategies. In every instance, however, the main goals should be to build a tightly structured primary care physician network that has an appropriate level of specialist participation and to avoid alienating physician specialists, who still generate significant fee-for-service volume.
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Physician practice managers are faced with the challenge of developing overall practice budgets, identifying strategies for the practice, and negotiating profitable managed care contracts. To accomplish these objectives, they need to understand and manage the costs associated with practice operations. Practices that have used cost accounting methodologies to identify their operational costs in greater detail and have developed methods to effectively manage their costs are likely to be more attractive partners to health plans and better positioned to thrive under managed care.