Predicting Monthly Cash with Confidence and Accuracy
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Predicting Monthly Cash with Confidence and
Accuracy
Steve Markesich, CPAMYale New-Haven HealthMaryland, AI - 2012
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The History
BackgroundHospital OnlyThe challengeThe evolutionTrial and errorSuccess
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The “Model”
There is no “model” – one model doesn’t work (at least not for me - I use 5)
Why more is better Works across all hospitals within system 2-3 year process to get to this point
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The Factors or Variables
Gross Revenue• Net would be better if you didn’t have to wait
Cash (historical) Posting days Days of the week Current average daily census “Hiccups” Seasonality
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Revenue cashCalendar days historical
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Revenue/cashHistorical posting days
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6 month cash byday of week (mean)
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Coming up with thenumber
THE FORECAST RECIPE:• 3 month calendar projection: $24,795,672• 2 month calendar projection: $24,284,585• 3 month posting projection: $25,763,757• 2 month posting projection: $25,126,436• 6 month daily mean projection: $23,112,500• AVERAGE: $24,616,590
• Month Projection: $24M - $25M
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Tracking progress
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6 month cash byday of week (mean)
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The results for our organization THE RESULTS THIS FISCAL YEAR
Hospital A (1,000 beds) - accurate within 1% Hospital B (350 beds) - accurate within 2% Hospital C (200 beds) - accurate within 1%
OVERALL ACCURACY WITHIN 1%
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Current routine Offer forecast on the first or second
business day of the month Track cash and trends daily Update trends five business days prior to
month end. Communicate problems you know will
impact cash as early as you identify them (but don’t be “Chicken Little”)
Previous month issues
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What I track dailyPrevious day’s
• Census• Gross Revenue• Payments• A/R
• In-House•Minimum Hold•Candidate for Billing•Active
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Flies in the ointment
Computer conversions (don’t even bother) System issues (internal and external)
• Need to identify and report within the month
External fiscal year ends The finance department Census Price increases/new programs
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Suggestions to start off Do this on your own for a while and don’t
tell anyone until you get a comfort level Be slightly conservative in your
forecasting at first and update later in month with good news
Over time, trust your instincts Be an expert on historical trends within
your organization
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Final thoughts Develop your own process and routine Have confidence in your projections or
don’t offer any Be bold when the time is right Be careful about putting your operational
managers under the gun Keep tuned into everything that goes on
in your shop
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GOOD LUCK! Now for a brief update on Healthcare
Reform…………………….
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June 28, 2012 In what was a surprise to many based on the
analysis following March’s oral arguments, the Supreme Court upheld the constitutionality of the individual mandate by a 5-4 vote.
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SCOTUS decision, cont. The one significant change to the law under
the ruling concerns states that do not expand their Medicaid programs.
Under the law as originally written, states would not be eligible for federal funds to help underwrite the expansion AND all funding received for their current programs.
SCOTUS ruled that states could not lose current funding if they don’t expand Medicaid.
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So now what? States still need to decide if they will set up the
required insurance exchanges or whether they will have the feds do it for them
States still need to decide if they will except federal money for Medicaid expansion.
Is the IRS capable of policing the healthcare decisions millions will make while also collecting the taxes needed to run the federal government?
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Now what?, cont Employers still have the option of offering or
dropping coverage. The law does push large employers to provide coverage and provide tax credits to small employers, but nobody can predict what happens to coverage as the insurance market adapts.
The act mostly extends a flawed system to more people
In many ways this is only the first step in the reform process, hopefully providing a step in the right direction that ultimately evolves into something better.
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Is the fight to overturn the law over? What can the 2012 elections potentially
do? What is the risk of focusing on opposing
the law during the campaign? What in all likelihood is going to happen
in 2013 and beyond
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Conclusion What do we do to prepare?