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Capturing Return on Investment for Case Management Services

by Vickie Alexander Knight, RN, BS, CCM

Hospital and health system administrators commonly view case management as “just a part of overhead” or “something we have to have for
some regulatory reason.” Therefore, case management is continually challenged to prove definitively that the department shows significant
revenue to demonstrate return on investment far beyond the budgeted resources.

“The three Vs” — visibility, value and viability — are extremely VISIBILITY: REPORTS THAT INFORM AND SUPPORT IMPROVEMENTS
important to any case management department. Achieving visibility with Dashboard Reports
the organizational structure plus showing the value to the hospital equal It is important to provide data in an understandable form for the
viability for the department. To be viable in case management today executive-level person who may not be familiar with the department’s
requires a robust budget to achieve positive organizational outcomes. The work. An effective tool to accomplish this is an Executive Overview Case
ability to demonstrate the revenue case management can recover for the Management Dashboard. Ideally, this report should be distributed widely
system makes securing the desired budget and resources easier. to administrators, physicians and other key leaders to keep the
To quantify this revenue, a case management department must department visible.
meticulously compile facts and figures that demonstrate the services it At Community Health Network, the Executive Overview Dashboard
provides and the dollar value of those services. But that is just the start. This (see figure A) uses a red light/yellow light/green light system. Benchmarks
information has to be distributed regularly and widely to administrators, are established for each indicator and the light status illustrates whether
other appropriate hospital leadership, and physicians. And case the current performance is meeting the target (green light), falls between
management must collaborate continually with other hospital the benchmark target and the two standard deviation lower limit (yellow
departments and committees to reduce avoidable occurrences that light) or falls below that lower control limit (red light). This method
deplete financial resources. provides a quick snapshot of the department’s progress. The report shows
both actual and target
figures for the current period
and year-to-date in a
concise format. Indicators
are broken down into
categories including Case
Management Productivity,
Financial Targets, Case
Management Processes (i.e.,
delays, inappropriate
admissions) and Employer
of Choice (i.e., employee
satisfaction, turnover).

DRG Dashboard Report

In addition to the Executive
Overview Dashboard,
Community has a DRG
Dashboard (figure B).
It targets 12 DRGs that
administration wants to
impact favorably. This
dashboard is published only
Community Health Network in Indianapolis, IN, is a large
health system that includes five hospitals licensed for 1,400
beds and has approximately 42,000 inpatient admissions
annually. The case management department does have
software, secured by demonstrating the return on
investment for its services. Just as Community Health
Network had to do, systems without software currently can
begin collecting data on paper. Often times, this is a
necessary starting point and can also be highly beneficial FIGURE B
should software be purchased later to guide the implementation. quarterly, because it requires significant resources to compile and validate.
The first step is the identification of the appropriate data to gather. For each DRG, the report includes the number of cases for each
Secondly, the data must be organized and presented in a manner that hospital, the average length of stay at each, and the average contribution
quickly and easily demonstrates the value of the case management margin per case. Only direct costs are evaluated, not indirect. Once the net
contribution. Simply “spitting out numbers” is not sufficient. income and average cost per case is compiled, opportunity areas are


identified. A “drill down” report of the data takes a deeper look at 17 DRG not have FTEs dedicated to this service, it is valuable to track those patients
performance indicators, things like lab costs, pharmacy costs, surgery costs, requiring follow-up after discharge as well as situations referred directly from
and so on, to determine where excess costs in this particular DRG are coming physician offices.
from. Acuity level, discharge disposition, and payer mix are also key factors in
Financial Measures
this analysis.
Financial measures include the Clinical Documentation Management
Observation vs. inpatient data is important in the DRG Dashboard, with
Program (CDMP), which was developed internally (see figure A). Work with
significant recovered revenue and visibility. Each month, Community tracks
physicians ensures that the clinically appropriate picture is documented in the
observation to inpatient conversions and upfront (emergency department)
record and coded at the appropriately weighted DRG. The CDMP program
conversions. Recovered revenue is calculated by subtracting the average APC
shows revenue recovered by case management.
payment from the average DRG payment.
Another measure is observation to inpatient conversions. At Community,
With a clinical documentation management program (CDMP) in place, it
there is an aggressive program to convert observation patients. Observation
can also be valuable to do a DRG pair analysis to show how case management
patients are reviewed twice a day, including weekends and holidays. This
is raising the case mix index. With a CDMP, the case managers guide physicians
review is resource-intensive and it is important to link the resources invested to
to document complications and comorbidities when appropriate. Capturing
financial outcomes.
the more appropriate, higher weighted DRGs has tremendous impact on the
Commercial appeals are also a financial target. Data can be collected on
bottom line. In Community’s CDMP, recovery is reported as the difference
appeals and assigned financials to further demonstrate recovered revenue.
between the initial/projected DRG and the final DRG. It is reported monthly by
Community Health case management staff appeal concurrent denials in which
site, by DRG, and by case manager.
the payer will not authorize a day of stay or an inpatient stay. Case managers
Data Supports Case Management-Led Improvements are trained to start an appeal immediately and continue to appeal to the
The important thing, after gathering data, is to translate it into a good highest level. Appeals directly impact both revenue and cash flow and the
return. How will you be visible enough to create teams that will make changes report will create a direct link between success and the resources invested by
where problems exist? At Community there is a multidisciplinary group called case management.
the Admissions Rounds Team that meets monthly to discuss case management
Process Measures
data and develop action plans to address issues. It is essential to have the
There are also Case Management Process indicators targeted by
hospital president or other senior leader on this team. Community’s
Community Health. These include system delays, external delays, avoided
membership also includes physicians, nursing management, and
delays, and throughput delays; inappropriate inpatient admissions,
management-level individuals from various areas including the emergency
observation admissions, and continued stays; avoided inappropriate
department, radiology, pharmacy and other ancillary departments.
admissions, concurrent denials, and HINN letters issued. Influencing these
In addition, Community has separate, standing meetings with hospital
measures in a positive way is resource-intensive and it is critical to measure the
administrators only to review system and physician delays, including
impact that case managers have when they ensure the process works
individuals’ names. (No printed reports identify physicians by name; codes are
smoothly. These efforts may not always recover revenue but can be
used. Also, no other departments have access to the case management
documented to contribute notably to cost-savings and process-improvement.
software application.)
Work to reduce delays is typically the most time-intensive way to recover
Community has a Utilization Management Committee, which may be
revenue. It is valuable to capture avoidable days or delays within the system, with
somewhat atypical because it consists mainly of physicians. This committee
the understanding that any delay is unacceptable because it slows throughput.
does a great deal of work with physician delays. If a physician exceeds the
Reporting components to consider for delays include the delay date, the
established benchmark number of delays in two consecutive quarters, the
type (i.e., physician, patient/family, diagnostic, placement, system), the reason,
Medical Executive Committee becomes involved. With administration
the service line involved, and the physician responsible. It is also valuable to
backing, Community’s case management director receives 30 minutes at each
note any additional comments and attempted interventions needed for
physician section meeting to go over data identified by the committee,
explanation or clarification. This additional detail is vital in deciding what
including the information about physician delays.
action to take in avoiding future delays.
Another example is a Denials Management Team that was set up to review
Often overlooked, but equally valuable in showing the positive impact of case
denial data. The team deals with concurrent denials only and does not have
management, is capturing avoided delays. This indicator represents money
the staff to get involved with others. The goal is to show recovered revenue
saved for the healthcare system through case management intervention, as
from things that happen concurrently, which is where the case manager
does the avoided inappropriate admission indicator. Finance can assist in
actually has the impact. Trends are identified in reviewing denial rates by
assigning an estimated value to these indicators. Even using a conservative
payer. For example, when denials are consistently coming from the same two
estimate, demonstrates a significant contribution to the bottom line.
payers a meeting is sought to help them understand the problems created for
the larger healthcare systems. Physician Intervention Measures
For any case management department that has a medical director, it is
VALUE: PRODUCTIVITY AND FINANCIAL MEASURES beneficial to have a mechanism to track the physician’s interventions. Software
Medical Necessity Reviews and Discharge Planning Interventions are the greatly automates this process, but it could also be accomplished via e-mail.
two primary measures of case management productivity for Community While capturing the case manager’s questions and the medical director’s
Health Network. These numbers encompass such things as how much time is responses are valuable, the more important measure is the outcome. What
spent on patients with certain diagnoses, what types of patients require the percentage of the medical director’s interventions produces the appropriate
most time, nursing home placements, family not agreeing — the types of case case management result? Some level of tracking with the medical director is
management activities that can be very time-consuming. A third variable in essential to justifying the budget for the position. demonstrating the value and
calculating productivity is Outpatient Contacts. While Community Health does viability for the future of this role.
5 (continued on page 7)

The Way I See It: A CEO Perspective (continued from page 3)

dealt with in a fair and consistent manner. Physicians are no different from the payor mix or ability to pay. We educate our medical teams to provide the same
rest of us – change is difficult. However, continuous improvement and standard of care for all patients.
therefore, change, is the rigor for a good case management program to be Perhaps the biggest challenge is creating a new case management culture.
successful. The responsibility to do this rests ultimately with the CEO and senior
Circulating through all aspects of the triangle is education – ongoing management. In my view, the Four Es framework provides a context that
education of physicians and case managers. Our case managers have supports a proactive care coordination effort.
educational opportunities about appropriate patient progress, care planning
and documentation of problems. Our medical staff is educated about what Andrew B. Leeka has been president/CEO of Good Samaritan Hospital (Los
case management is: the case management process, goals and expectations of Angeles) since 1996. He holds an MPH from the University of California Los
physician participation in a successful program. Case management is care Angeles, an MBA from California State University Northridge and an MA in
coordination. It ensures consistent quality care to all patients, regardless of Organizational Behavior from Philips Graduate Institute.

Capturing Return on Investment for Case Management Services (continued from page 5)
Community was successful is demonstrating to both their
Savings From Within
administration and board very significant savings in five areas:
As case managers, our focus is appropriately outward – how can we improve
CDMP recovery, avoided delays, conversions recovery, appeals
patients’ care, improve processes and increase the organization’s opportunity
recovery, and length of stay/DRGs. Their bottom-line total for the
for both cost saving and revenue. But, there is also opportunity when we look
last fiscal year: $5,750,000 recovered by case management. While the
inward at our department. The reduction of staff turnover in case management
revenue potential is dependent on the size of the hospital or health
is just such an opportunity. Community Health Network calculated what it
system, being able to effectively collect and report such information
costs to bring in a new RN case manager and a new social work case manager.
is a step toward recognition as a revenue-producing department
The amounts are staggering: $45,962 and $38,970, respectively. These numbers
rather than an overhead department or cost center. And that is return
include everything — advertising the position, initial work by HR, checking
on investment.
references, doing interviews, and the lengthy training and orientation
required before the new person can begin working independently. Clearly, it is
financially prudent to keep these professionals on staff as long as possible. Vickie Alexander Knight, is director of Case Management at Community
Community launched a multifaceted effort to retain case managers. A Hospitals of Indiana, in Indianapolis, IN. Her 30-year career in healthcare has
significant budget was dedicated to newsletters, recognition events, and encompassed both the hospital and the payer side, home health, and consulting.
various other retention efforts. Results demonstrated the return on this She holds an ADN from the University of Indianapolis and a BS in health
investment. In one year, there was a 20 percent decrease in case management management from the College of St. Francis, Joliet, IL. She has served on the
turnover rate, which saved the network nearly $850,000. Indiana Congress on HealthCare.

Oncology Case Management Across the Continuum of Care (continued from page 6)
of the art activity, but also from opportunity to discuss her fears and who were discharged from the inpatient oncology unit and who kept their
feelings about her new role as a cancer patient with other cancer patients outpatient appointments to medical oncology clinic revealed 62 % compliance
in the group. during a 4-month period from May through August.
This venture in collaborative case management illustrates many benefits of
INPATIENT ONCOLOGY DISCHARGE BOOK an integrated and collaborative case management system:
The third component of collaboration, and a by-product of information 1. Shared comprehensive psycho-social assessments along the continuum
from the daily case management meetings, is the Inpatient Oncology of care and the impact these assessments may have on the team
Discharge Book. The discharge book is kept in the outpatient Medical commitment to patient care.
Oncology Clinic team room and is used to track patient flow between the 2. A mechanism to address and track compliance issues and behavior,
inpatient and outpatient areas. Special attention is focused on outpatient allowing early intervention when patterns are identified.
follow-up of patients hospitalized for chemotherapy, special procedures to 3. Advanced familiarity with patient concerns and barriers to compliance and
support treatment, complications associated with treatment and patients the opportunities they present for corrective interventions, improvements
diagnosed with cancer during hospitalization. The discharge book can be used in systems problems and improvement in patient satisfaction.
by all clinic staff to learn the reasons for admission, discharge dates, outpatient 4. Team connectedness and purpose around a common goal.
clinic follow up dates, current telephone numbers, ongoing or planned 5. The impact of collaborative case management on patients’ appointment
radiation therapy and special circumstances of discharge (shelters, personal and treatment compliance.
care homes, hospice, changes in environments for care and treatment plans).
The Inpatient Oncology Discharge Book also provides a record of whether Amelia Williams has been the oncology social work coordinator at Grady Health
scheduled outpatient appointments are being kept and facilitates early System, Atlanta Georgia for 4 years. A MSW graduate of the University of
intervention if necessary. The written communication often serves as a Wisconsin School of Social Work, Madison, Wisconsin, she has 23 years of
reference to clarify discrepancies in appointment scheduling thereby, helping experience as an oncology social worker and is a member of The Association of
to keep patients on schedule for treatment and follow-up. A review of patients Oncology Social Workers.