Consolidating HIM Services: Lessons Learned From the Business Office

Vol. 17 •Issue 2 • Page 16
Consolidating HIM Services: Lessons Learned From the Business Office

Centralization of business offices has provided tremendous opportunities for health care organizations and the revenue cycle. Now it’s time for corporate HIM directors to take a look!

For over a decade health care financial professionals of multi-hospital systems have sought to obtain operational and economical benefits through the consolidation of same functions. Other factors driving consolidation include standardization and compliance.

Traditional targets for consolidation have been business office, payroll, legal, accounts payable processing and material and/or contract management.

In some cases, multi-hospital health care organizations found that a complete and total consolidation of services was too radical of a change. Similarly, organizations have encountered technical disparities across their various locations. Because of these and other challenges, a “regional” or “center of excellence model” for service consolidation in health care has emerged. But how does this apply to HIM?

This article takes a look at consolidation in other departments, specifically the centralized business office. By learning from their peers in revenue cycle and patient accounts, corporate HIM directors can gain valuable insight into the analysis, planning, implementation and monitoring of a centralized health information department (CHID).

CBOs: What Have We Learned?

Centralized business offices (CBOs) first appeared on the health care scene in the mid 1990s.

Two types of CBOs have emerged: full function business offices, either in one central location or with regional locations and centers of excellence. Full function consolidation centers generally consolidate an organization’s business offices into one “central” or two or more “regional” centers to perform the business office function for all the sites providing services.

Under a center of excellence model, a specific site is designated to perform a more narrowly defined function or a group of functions. An example of a center of excellence might be a center that just performs physician billing for the entire region or organization. In either case, the CBO is provided with the highest level of technical support to perform their services.

The CBO model is expected to achieve the following benefits as outlined in the article “Why business office consolidations can fail– multi-hospital systems” by Mary Jean Barrett1:

  • Improved public relations and community image through consistent and efficient account processing and patient communications;
  • Enhanced position for third-party negotiation concerning timely claims processing, collection fees, purchasing and so forth because of the consolidated operation’s size;
  • Improved projecting of cash flow, contractual adjustments and bad debts;
  • Improved revenue through increased controls related to lost and late charges;
  • Tighter control over receivables management, primarily because locating all system employees in one facility allows closer supervision;
  • Increased consistency in account processing through increased supervision and standard policies and procedures; and
  • Increased employee productivity and accuracy of processing through specialization because increased volumes allow employees to specialize on specific third-party payers, a situation that can reduce training needs and increase accuracy.

    CBO’s Impact on Revenue Cycle

    One success story in business office consolidation is Presbyterian Healthcare Services (PHS), a seven hospital, not-for-profit health system in Albuquerque, NM.2 PHS was experiencing numerous financial challenges and sought to improve operational performance while reducing costs by migrating to a CBO.

    PHS focused on improving their front-end operations, specifically collection of co-pays, pre-authorization and insurance verification processes. Through their centralization efforts, they reduced denials by almost 50 percent.

    What About HIM?

    With the rapid movement toward technological improvements, broader adoption of EHRs, remote capabilities and the reality of a community record, it is no surprise that progressive organizations are again recognizing the opportunity for centralization and consolidation, this time within the HIM space.

    According to a recent American Health Information Management Association survey, approximately 23.5 percent of organizations have established remote coding programs as a first step toward virtual HIM services.3 Most corporate HIM directors have the ability to work from home and other HIM functions such as release of information processing, deficiency analysis and more can now be performed off-site. Once records are electronic, many HIM functions can become virtual. This opens up an entire new world of opportunity for HIM, including centralization.

    The benefits of a CHID include the following:

  • Standardization;
  • Ability to better manage compliance;
  • Achieve operational efficiencies;
  • Reduce HIM costs; and
  • Increased access to coding and transcription resources.

    As centralization relates to revenue cycle performance, HIM directors can expect the following improvements and benefits:

  • Increase cash flow due to reductions in discharged not final billed (DNFB);
  • Reduction in denials due to timely filing;
  • Ability to electronically provide payers “copies of charts” that are needed to process claims; and
  • Improve accuracy of reimbursement through technology applications.

    Is Centralization Right for You?

    Providers that have been the most successful in any type of consolidation put the time in up front by analyzing the organization’s needs and challenges. They ask themselves questions that will help determine the best model for their organization. Questions like:

  • What functions do I wish to be performed from the consolidated site?
  • What are the short-term, mid-term and long-term goals for operational and economical efficiencies and how will they be tracked?
  • What sites should feed the designated center from a logistical and practical perspective?
  • Is our organization’s cultural and technological climate best served by a centralized, regional or center of excellence model?
  • How will the center be expected to “service its customers”?
  • What type of benchmarks will be set for the center?
  • What type of reporting/meeting schedule will be developed to ensure stakeholder satisfaction?
  • How will the reporting structure of the new center work?
  • Where will its budget come from?

    To determine if a CHID is right for you, corporate HIM directors should ask themselves:

  • Where will my resources come from? An at home work force? An outsourcing firm? Both? How will I manage them?
  • How will I best use document imaging to ensure that information is available to the people providing care when they need it, even hundreds or thousands of miles away?

    And the list goes on.

    As you can see there is a significant amount of work in successfully consolidating an area of any size and scope. Once you’ve performed the up-front analysis and confirmed that a CHID is right for your organization, there are five steps to take: develop a plan, create budgets and timelines; secure stakeholder assurances; establish implantation and reporting milestones, measure performance after go-live. Let’s explore each of these in more detail.

    The 5 Phases of Successful Consolidation

    1. Analysis and Plan Development

    In this phase, all functions that are being considered for consolidation are assessed in their “current state” at all sites performing that function. Then a prospective design of how that function will be performed in its “future state” is drafted and approved. Once an agreement has been reached by the organization’s designated stakeholders, a comprehensive gap analysis is written. The gap analysis identifies what you will need and do not have to perform in your future state. From the gap analysis, a detailed work plan is developed, whereby timeframes and responsible resources are identified.

    2. Budget Development and Project Timeline

    Once a clear plan has been established for the project, a budget is established for each major component of the project. Some traditional budget components are: human resources, technology, supplies and consulting costs. A project timeline that demonstrates the projected beginning and completion of every major milestone is written. Agreement should be obtained on the budget and timeline by the committee or stakeholders who oversee the project.

    3. Development of Stakeholders Assurances

    Before moving into implementation, it is always a good idea to understand how you are going to be expected to meet your stakeholders’ expectations. During this phase, the development of comprehensive Key Performance Indicators (KPIs) and any incentives or penalties that may be applied for achieving above or performing below the established KPI.

    4. Implementation and Reporting on Milestones

    As is critical with every project, diligent project management and a routine schedule for reporting on maintaining budget and achieving milestones should be established. A steering committee should be developed and should meet at least monthly to ensure the project is moving ahead successfully.

    5. Post “Go-Live” Monitoring

    Once the consolidation is complete, it is important that an organization apply as many resources as necessary to ensure that all systems and processes are doing what they were intended to do, the way they were intended to do them. All too often, organizations fall down during this phase of consolidation. They achieve go-live only to realize 6 months later a mapping or some other type of error occurred and was not caught immediately after go-live. What would have been a painless fix if detected early has now become a major problem.

    Opportunities Abound

    Centralization still provides tremendous opportunities for health care organizations seeking to further standardize, better manage compliance and achieve operational and economical efficiencies. Centralization of HIM is the next industry trend with its progressive technological accomplishments. Organizations should assess themselves to determine if they are candidates for a CHID and if so, what model would best work for them. Then the fun begins!


    1. Barrett, Mary Jean. “Why business office consolidations can fail–multi-hospital systems.” Healthcare Financial Management, August 1990.

    2. “What Works: Financial Applications–Presbyterian Healthcare Services.” As published in Health Management Technology, December 2001.

    3. “Coding Professionals, Today, Tomorrow and the Future–A Workforce Study.” American Health Information Management Association and American Hospital Association Central Office, 2006.

    MaryAnne Pace is principal and co-founder of HealthBlueprints Inc. (HBPI), a revenue cycle consulting firm. Before starting HBPI, MaryAnne served as the corporate director of revenue cycle services for Sisters of Charity of Leavenworth, a Catholic health provider system consisting of eight hospitals in the West, Northwest and Midwestern United States. Katrina Tompkins co-founded HBPI alongside MaryAnne and has more than 20 years of experience in the health care financial management industry, specializing in financial management and business office management.