To:

All employees, medical staff and volunteers From: Aaron Crane, Chief Finance and Strategy Officer Date: November 13, 2012 RE: Financial update: Better documentation, surgery scheduling boost revenue As discussed in prior communications, in February management developed a financial improvement plan in response to sharp volume declines experienced over the last year. Thirty- one projects have resulted in year-to-date savings of more than $8 million. Our last financial performance update discussed variation-in-care initiatives. This update highlights two major projects involving staff and providers from across our health system. In addition to improving how we do our work, these teams have successfully increased the amount we are reimbursed for the care we give by $321,000.

ICD-10 and clinical documentation

This project addresses two major steps we must take. First, we are not capturing all of our patients co-morbidities and second, our clinical documentation would not meet the upcoming ICD-10 standards which require much more specificity than the current ICD-9 version does. Coding for co-morbidities. Co-morbidities are other conditions a patient has in addition to the reason the patient is being seen. For example, a patient may be here for heart surgery but also has diabetes. For the coding needed for billing and reporting to be accurate, the documentation about the patient, including his or her co-morbidities, must be specific and complete. When done correctly, the codes will reflect the care we provided and how sick the patient actually was. Coding with ICD-10. ICD (International Classification of Diseases and Procedures) is used to classify diseases and other health problems, and plays a role in how much we are reimbursed for the care we provide. In the U.S., ICD also classifies inpatient procedures. We are required to implement ICD-10 on October 1, 2014. The transition from ICD-9 to ICD-10 will be complex, in large part because the new system has nine times the number of potential codes. Accurately and completely documenting, and then coding, all of our patients co-morbidities and procedures is vital to a successful transition to ICD-10 in less than two years. Connection to quality reporting. Ratings companies, such as Consumer Reports and HealthGrades, rely on hospital coding to develop their quality rankings. Organizations ranking low on these lists will often say there was a problem with the documentation. To the public, that just sounds like an excuse. We have two ways we can ensure we rank highly: make sure we are providing great care and make sure we are accurately and thoroughly documenting it, including all co-morbidities. The team. Seven teams of Salem Health professionals are working on this project: IS analysts, physicians, outpatient clinics, payer contracting, finance, health information management,

patient financial services, lab, imaging, cath lab, professional billing, and access services, just to name a few. Making changes. The team worked with a consultant to identify the gap between what we are doing and what we need to do, including identifying specific medical and surgical specialties needing help. We hired Dr. Claire Norton, a former hospitalist, as the Medical Director for Continuum of Care. Additionally, five Clinical Documentation Specialists have been hired and trained. We are also recruiting for a Coding CDI Knowledge Expert, which is a coding subject-matter expert. Dr. Norton and the CDSs help providers completely and accurately document patients co- morbidities during the hospital stay. Post-discharge, they work closely with the inpatient coders, who must review the documentation and apply coding rules and principles to the final assigned codes. Dr. Norton has been meeting with physicians to show them the opportunities and to help them set up templates in Epic to support them. Results. Our first results came in September. We had expected an increase in reimbursement to the tune of $50,000. We achieved $121,000! Projecting growth with this level of success suggests as much as $3 million in increased reimbursement over the next year. Just as important, we will be accurately documenting our patients conditions so their healthcare records reflect the severity of their illness and the complexity of their treatments and outcomes.

Surgery scheduling
The surgery scheduling project was created to ensure we have all the correct information relating to a patients case prior to surgery. Historically, weve gotten most information, but in a fragmented manner with some information missing or inaccurate. This resulted in an annual net revenue loss of $1.1 million. The team. This cross-functional team includes surgery scheduling and administration, pre- surgical screening, access services insurance verification, care management, Kaizen promotion office, and continuous improvement. Also participating are the office management staffs for Dr. Maurice Collada and Willamette Urology. The work. The groups first test of change includes new tools and workflow for receiving and processing the information needed to schedule a surgery. The new process involves several quality checks and ensures the accuracy of information that is received. Information is consistently shared with all of the teams prior to surgery and the number of contacts to our patients and physician partners is minimized. The team also created tools to ensure that patients are appropriately screened for care management concerns and ensuring that patients do not have medically unnecessary days in the hospital.

Results. The biggest impact so far has been to bring together a team that was historically operating as individual silos. Each team was doing a great job individually, but opportunities were missed because they were not working together. Since they have begun to work together they have developed standard work and shared understanding of one anothers work. This collaboration has led to changes in our workflows regarding medical necessity denials and payer-required consent forms, resulting in a revenue increase of approximately $200,000 since May. Future work. The current test of change will run for about two months, with the team checking and adjusting the process as needed. Then the team will begin to partner with other physicians to create a plan for roll out to all physician offices by the end of September 2013. The work of these two teams has brought in an additional $321,000 so far. They also brought together individuals from many areas of Salem Health, including the medical staff. In the future, you may be called on to participate in groups like these. When you are asked, please jump in with both feet. These collaborations make things better for our patients and for one another; and they help improve our financial position, making us more successful now and in the new world of healthcare reform. Questions? Remember to submit questions under the Financial Challenges link in the new Tools and Resources module on the intranet, so they can be answered for everyone to see. If you are reading this email at work, you can follow this link to the financial Q&A page: http://home/news/fin.html