The HCAHPS Reimbursement Myth:  The Case for LEAN

HCAHPS and value based purchasing have an impact on Medicare reimbursement.

Value based purchasing reimbursement is based on the combination of the patient experience and core measures, calculated on a sliding scale. Hospitals that don’t meet national averages will not necessarily get their money back. Hospitals that exceed the national average will get a bonus.

Currently, one and one half percent of reimbursements are being held back, pending HCAHPS results.

This has caused a panic reaction. Hospitals are scrambling to initiate customer service programs to increase their scores so they can not only recoup the hold back but to get a bonus if they exceed national averages.

Is this the best use of time and resources?

Let’s analyze at this from a LEAN perspective.

Take a hospital with gross annual revenues of $65,000.000. Medicare reimbursements are $9,200,000 annual labor costs $ 23,100,000.

Based on these figures, the Medicare reimbursement at risk is $92,000.

Or is it?

 The Myth of HCAHPS Scores and the Impact on a Hospital’s Bottom Line

Reimbursement is based on  a ratio of:

30% patient experience and

70% core measures.

In reality, the amount at risk, based on patient experience, at this hospital is $ 27,600.

In reality, the maximum bonus, based on HCAHPS scores, is $27,600.

What is it costing you in terms of staff costs, training time and consultant fees to make $27,600? What is the return on your investment?

If you are focusing on HCAHPS reimbursements, you would be better off focusing on core measures. Your risk is $64,400 and your maximum bonus is $64,400.

What do these figures mean in the big picture?

Focusing all improvement activities on issues that generate Medicare generates reimbursements of $92,000.00 or 0.14% of gross revenue.

Is this the best use of your resources?

What Others Have Said…

Michael developed a LEAN program for our hospital. This involved training both managers and front line staff in LEAN and its application in every department. Two LEAN projects were conducted in an effort to reduce inventory. There was a reduction of $135,000 in pharmacy inventory and $200,000 reduction in OR inventory."
Richard E. D’Alberto, FACHE
President & Chief Executive Officer
Laurens County Hospital

"Michael is a great speaker. He is inspirational and knows his trade."
Lynn Yarbrough

"Great quality- appreciate his openness to field question on the spot"
Rita Jones
CEO, Dundy County Hospital

"Michael is an outstanding, knowledgable speaker, keeps the flow going an involve the audience well."
Stephen Stewart
CEO, Artesian Valley Health System

"I like the process in implementation"
Brad Langdorf
VP Clinical Services, Community Hospital

“Michael is an excellent speaker. Content is exciting and educational.”
Mollie Heisel
Human Resource Coordinator
Brown County Regional Health Care
“Very good; usable; informative; real; encouraging”
Valerie Gigolyk
Loewen Windows

“Without your personality, coaching and spirit, we wouldn’t have made it so far.”
Ann Corrigan, RN
VP of Patient Services
Henry County Health Center

“We are utilizing the information on a regular basis. It has been exciting to see this growth.”
Pat Hales , Director of Quality and Educational Services Misericordia Health Center

“Excellent speaker- funny yet seriously important to improve our daily lives.”
Rebecca Ricartti, HR Director
Pacific Alliance Medical Center

“Michael is fantastic. Keeps the learning Entertaining and interesting.”
Stephen Stewart CEO
Artesian Valley Health System

“Great. Enjoyed the session.”
Curtis Hawkinson CEO
Community Memorial Healthcare

“Very clear and concise presentation. Always includes stories that make you think.”
Heather Greenwood, Med Tech
CHI St. Alexius Health

“Michael is a great presenter and presented he content in a manner that made it interesting and useful.”
Lynne Yarbrough, OR Director
Johnson Regional Medical Center

“Knowledgeable and energetic.”
Valerie Hangman, QI Coordinator
Providence Medical Center

I was impressed by the content and the clarity of the speaker.”
Jennifer Russell
Government of Manitoba

“Excellent quality, excellent information & keeps his agenda enthusiastic and timely.”
Terri Davis, RN
Providence Medical Center

“Dynamic speaker who leads the group to discover the answers for themselves.”
Jeff Dolan
Canada Cases Ltd.

“Mike is inspirational. A Great Motivator.”
Glen W. Buckler
Two Small Men with Big Hearts

“You have to see Michael Bayer’s presentation.”
Lois French

Investors Group

“Excellent speaker with an important message”
Rob Vineberg
Regional Director General
Citizenship & Immigration Canada

“Excellent speaker- funny yet seriously important to improve our daily lives.”
Rebecca Ricartti,
HR Director
Pacific Alliance Medical Center

“Fantastic! My cheeks hurt from laughing so much, yet I also gained so much knowledge too! Thanks!”
Daiva Griese
One Legacy

“Excellent, worthwhile. It was as good as it gets.”
Stephanie Bloodworth
Case Manager, New Directions

“Fantastic speaker. Great for any industry.”
Ron Farmer
Personal Banker, CIBC

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