Sometimes you have to cut, but don’t cut too deep

When cutting expenditures, be careful you don’t put your patients and agency at risk


By Anthony W. Minge, EdD

Nearly a year ago, I wrote an article on preparing your department for the next recession. While I’m not tooting my own horn, we seem to be driving our ambulances into a deep financial valley. Although the Dow-Jones continues to perform relatively well, a multitude of economists are predicting that we will be deep in the throws of a recessed economy by the end of 2020, and potentially headed straight into the next depression.

COVID-19 and the recent bust in the oil markets have certainly done their part to cause dramatic financial impacts across all areas of the economy, and relatively no EMS service has been unscathed.

Cutting expenses can improve sustainability when done correctly, however, here’s a word of caution: just like with a tracheotomy, be careful where you cut and don’t cut to deep. (Photo/Getty Images)
Cutting expenses can improve sustainability when done correctly, however, here’s a word of caution: just like with a tracheotomy, be careful where you cut and don’t cut to deep. (Photo/Getty Images)

I’ve recently informally surveyed a number of EMS agencies from every aspect of the profession and the majority report that transport volumes have declined significantly over the last few months. When volume goes down, revenue goes down. And when revenue goes down, the natural reaction is to cut expenses. Cutting expenses can improve sustainability when done correctly, however, here’s a word of caution: just like with a tracheotomy, be careful where you cut and don’t cut to deep.

The negative impact of cutting training budget

As ambulance services start to reduce spending, the first target area is often travel, closely followed by training and education. The pandemic has taken care of reducing travel budgets. Conferences and training sessions have been cancelled industrywide, at least through the summer, freeing those funds up for use elsewhere. Savings will already have been noticed in these areas and it appears travel is going to be reduced throughout 2020, making this a non-factor item for some time.

However, training must go on. Deep budget cuts in education can have extremely negative implications on EMS. Taking lessons from Stephen Covey’s “7 Habits of Highly Effective People,” leaders have to continue to sharpen the saw. Caregiver skills must be maintained, regardless of how the dollar is performing. Though the number of patients being transported has been reduced, there are still critical skills required to tend those being encountered. Risk goes up as skill levels diminish and this can be detrimental to the patient and the organization.

Although the COVID-19 curve has flattened, there is still need for concern and precaution. Return to a normal state (whatever that is) will not be a reality for some time. While this limits in-person courses and conferences, there is good news. Virtual seminars and training opportunities are readily available, with the offerings almost doubling weekly. Even better; many are free. Online learning cannot replace the hands-on training that some skills require, but is good for keeping the mind sharp. Online seminars and video are perfect for review and update of recognizing signs and symptoms, medication dosages and protocols. Even if there is a cost associated with virtual attendance, your department will recognize a savings in travel and other expenses associated with attending an in-person event.

Remember, the mind is a muscle requiring regular exercise or it will atrophy. Caregivers must maintain skills and be up-to-date on the latest techniques and advancements. Failure of the service to provide training means they must find it on their own or do without it. Both can be detrimental to the agency, because:

  1. Employees start to feel that an organization which has no interest in training its personnel does not put much value in them
  2. Undertrained employees are a liability

In addition to clinical training, online learning can support non-patient-care aspects, such as documentation and compliance, and the support services areas of the industry. The rules and regulations governing compliance and billing continue to evolve. In fact, many temporary changes are in place due to the pandemic. Training is a must if services are to stay abreast of modifications, knowing when and how to apply the updated regulations.

Finally, this could sound crazy, but now may actually be the time to spend a little money, especially on some areas that may not receive a lot of regular attention. When times are good, we get fat and happy. Volumes are up, money is coming in and all is well ... supposedly. This is when mistakes are overlooked, things slip through the cracks, and the agency moves into an at risk position – at risk for errors that could result in lost revenue, refunds, reprimands, fines and even more rigorous punishments.

Some areas to put some additional focus into right now are:

  • Contract reviews
  • Claims compliance reviews
  • Documentation training
  • Revenue cycle management/billing office performance

Contract reviews. Ambulance services often engage in a variety of contractual arrangements. Most of these are in some manner linked to payment for services provided. These agreements may be with commercial insurance payors, hospitals, nursing homes, hospices and others. Contracts change, update and expire over time and need regular review to ensure the obligations are being met. For example: A facility contract may have a built-in rate increase at the beginning of the fiscal year. As the timing did not correspond with the beginning of the calendar year (when many other payor rates are adjusted), it was overlooked and the ambulance agency may be shorting itself by not billing at the correct current rate.

Claims compliance reviews. Whether times are good or bad, ambulance services need to engage an external party to do regular claims reviews. Errors related to coding, mileage, charges, beneficiary signatures and more can be very costly. It is foolish to think that governmental payor audits will decrease during a recessionary period. On the contrary, state and federal agencies are going to be looking for ways to offset cuts to their own budgets, focusing on non-compliant billing practices that result in recoupments and fines.

Documentation training. Good documentation is a critical element of compliance. Regular education regarding the fundamentals and essentials of high-quality documentation will pay dividends. Not only can it reduce compliance errors, it can actually improve and/or speed up the billing process resulting in better and more timely revenue outcomes.

Revenue cycle management reviews. Whether billing functions are internal to the organization or outsourced, regular thorough performance reviews are advisable. Reviews can identify a variety of factors impacting accounts receivable. A professional review of revenue cycle performance should minimally focus on billing timeliness, payor performance, denials and write-off management, and appropriate follow-up. Employing an agency to thoroughly examine all aspects of an agency’s revenue lifecycle can provide assurances of best practices and compliant performance and/or identify opportunities for improvement and mitigate risk.

In times of uncertainty, it is natural to look for the quickest and easiest ways to reduce spending. However, it is advisable to carefully examine where cuts will be made and any potential downstream impacts. You have most likely heard the old saying, “you may need to spend money to make money.” Being cautious when cutting expenses could save a bundle on costly errors. Here’s a new saying you may want to remember as we venture further down the road of recession: be careful when cutting expenses otherwise you may cut your service’s throat.

Read next: What’s next? How EMS can survive the economic downturn

About the author

Anthony Minge, EdD, is a senior partner at Fitch & Associates. He has extensive experience in public safety and healthcare finance. Prior to joining the firm, Anthony was the business manager for Northwest MedStar in Spokane, Wash., one of the largest air medical programs in the Pacific Northwest. He holds a Doctor of Education degree in organizational leadership. Contact him at aminge@emprize.net.

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