Medical staff office professionals tell us far too often that they would like to buy an automated tool for managing credentialing, but they have to justify it — or even worse — determine the return on investment (ROI) first. They sound like someone who’s just had a sinkhole appear in their front yard. In contrast, others believe they know where to start, citing potential savings on couriers, faxes, postage and paper.
Unfortunately, both perspectives fail to recognize the value of credentialing and credentialing software. We need to stop being apologetic or shortsighted about the information technology requirements of the work medical staff office professionals perform. The Affordable Care Act’s focus on quality of care has opened the door to justifying improvements in process and technology in the medical staff office. Now, people need to step through it and provide hospital leaders with well-reasoned analysis that demonstrates the connection between the work in the medical staff office and quality care.
I don’t want to dismiss the savings opportunities I mentioned earlier (they are real savings after all), but we need to focus on the more significant benefit medical staff offices provide – increasing an organization’s revenue. See below for how to calculate revenue saved based on the time it takes to credential a physician. You’ll need to decide what the opportunity is for your organization and plug in the appropriate values.
Here’s the simple equation: Increased revenue = charges per day (in dollars) x credentialing time reduction (in days) x number of new appointments (annually)
Assume that each physician has charges of $2,500 per day (again, feel free to insert your own number). Now, let’s assume you reduce credentialing time by one day and you have one new appointment annually — reappointments don’t count!
Increased revenue = $2,500 x 1 day reduction x 1 newly appointed physician = $2,500 annually
Now, let’s consider a calculation that may be more realistic. Maybe your organization spends 45-60 days credentialing a physician and you believe automation with credentialing software could reduce that by 10 days. You appoint approximately 50 physicians annually.
Here’s the equation for this example: Increased revenue = $2,500 x 10 day reduction x 50 newly appointed physicians = $1.2 million annually
As you can see from the examples above, reducing credentialing time for physicians creates a significant opportunity to increase revenue. A full ROI analysis will show even more opportunities.