Support Forum: INSTANT HELP! - Frequently Asked Questions

How can increasing engagement improve my bottom line?

Calculating the financial impact of reduced waiting times, reduced no-shows, increased admissions, and increased continuation can be complicated. A large and confounding factor in this type of analysis is the array of complex, payer-specific reimbursement schemes that characterize the field. As an executive sponsor or change leader, being knowledgeable about reimbursement is essential. This knowledge must be used to translate between clinical interest and business interest when setting process improvement objectives.

Reimbursement generally falls into two categories: fee-for service or capitation. In the experience of NIATx Founding Members, the business case for improving admissions and continuation is fairly clear-cut under a fee-for-service payment structure, since increased revenues have a positive impact on the bottom line. Long waiting times and high no-show rates represent wasted system capacity. Improvements to these aims eliminate waste and drive down unit costs, and benefit the bottom line no matter what reimbursement scheme is in place.

The business case for increasing continuation is clear, as long as the provider is reimbursed for every unit of service provided. A tie also exists between keeping people in treatment and the cost of admitting new clients; i.e., it’s generally cheaper to keep an existing client in treatment than to engage a new one. Under capitation, the business case for increasing continuation is not as clear; but again, high continuation rates can be a significant source of value in contract negotiations.

Mini-case example:
Perinatal Treatment Services (Seattle, WA) joined NIATx in September 2003 in a state of crisis. Their long-term residential treatment program for pregnant and parenting women was only four months into the fiscal year with a net loss of $140,000, a 60 percent continuation rate through the first four units of service, and occupancy rates below 50 percent. Kay Seim, the Executive Sponsor of Perinatal Treatment Services, engaged in a walk-through exercise to experience the treatment process through the eyes of the customer. The walk-through exercise exposed many opportunities to improve the customer experience, and a rapid-cycle change team was able to implement changes that led to an improvement from 60 percent to 85 percent continuation through the first four units of service. Now, occupancy is near 100 percent, and more women in the community are getting the help they need. Best of all, the link between continuation rates and revenues means that the program has improved from average monthly revenues of $60,000 in 2002 to more than $100,000 in Fiscal Year 2006, and the program is now squarely “in the black.”

For more information on the business case and tools to inform management about the impact of the NIATx aims on the bottom line download a copy of the Business Case Technical Assistance Report.