A reprint of a proposal and ROI justification to implement a system to
manage business office paper archives, written at the University of Massachusetts
Medical Center.
Respectfully Submitted by:
Dianna Gubber
University of Massachusetts Medical Center
Group Practice Plan
Accounts Receivable Manager
PID #9270-010 GROUP PRACTICE PLAN
The Accounting Office for the UMMC/Group Practice is unable to keep up
with the pace of the increasing demands of its rapid growth. The office
currently operates under a manual system of filing and retrieving documentation.
The primary function of the file staff is to file and retrieve Explanations
of Benefits, Charges and Operative Notes for a variety of Accounts Receivable
functions.
There are five major areas in which the manual system affects costs:
The volume of paper is one of the things that stands in the way of increasing
productivity in our office. It is estimated that the Accounting Office will
receive approximately 1,002,985 pieces of paper between Charge Documents,
Remittance Advices and operative notes. This volume has increased approximately
15% over the past year. [A study was performed here at Group Practice to
gather the data presented by an actual count of documents contained in a
random sample of boxes and then an actual count of the number of boxes of
paper.]
Document filing costs
Traditionally, documents have been stored in batches, then filed in file
cabinets and boxes. A numerical system is then assigned. Specifically,
a batch number assigned to organize the files. Operative notes are classified
alphabetically.
Listed below are the cost elements in our paper based filing system:
Labor: Creating new files, labeling, applying batch header sheets
to file into the system, collating and entering information into a batch
log book. Pulling boxes to retrieve and refile batches. Copying
requested documentation.
Supplies: File folders, dividers, folder labels, batch header sheets,
requisition slips, file logs, and filing boxes.
Equipment: File cabinets and shelving units.
Document retrieval costs
Because batches are rarely cross-referenced, the staff might have to look
under several headings to locate pertinent data. Even if the staff are conscientious
about filing methods, locating documents is still a labor and cost intensive
operation. In active file operations, the following functions are being
performed for retrieval and filing:
There are potentially 11 steps involved in retrieving and refiling requested
folders.
The labor involved in this process could be reduced by using an "open
stacks" system where requisitioners are permitted direct access to
the file storage rooms. But the number of lost documents would increase
dramatically. Open rooms at other facilities have been measured at 35% of
the folders not filed in the proper location. Of those, most were found
by spending hours looking in likely misfile locations and on the users'
desks. 10-20% of the misfiles were never located. [An accounting firm in
Worcester, Ma. that has "open stacks" for the accountants to directly
pull files reported these missing document statistics.]
Alternatively, we could use a formal secure document room where professional
archivists are the only ones allowed in the room and all documents are signed
out at a request window. This formal archive system would reduce misfiles
to as little as 1%-3%. But the labor costs to operate such a room would
be would be much higher. [Statistics are from a study of federal government
files made by the National Archives. Also, an optical disk document conversion
project at a major HMO in central Massachusetts measured 2% of the paper
documents were filed in the wrong box. In both of these cases, document
access was restricted to full time records staff.]
File personnel increased 25% from 120 -160 hours (1 Full-Time-Equivalent)
over a one year period and will continue to increase as volume increases.
Accounts Receivable staff will continue to be utilized to retrieve documentation.
Their time could be better spent in Accounts Receivable Management. Approximately
40 - 80 hours per week (1-2 FTE's) is currently being used to retrieve and
copy documents. The value of their time (burdened) that will be freed up
by using an imaging system is $52,000 per year.
Value of missing information
A study performed by a bank in Los Angeles calculated a cost of $60.00 each
to replace a missing file. [Bank Systems Equipment, August 1989.]
Combined with the typical lost document statistics reviewed above, one could
estimate the industry average cost of not having the documents' information
when needed. But to obtain first hand actual data for a Medical Center environment,
The Medical Center decided to measure the actual dollar value of lost information.
Over a two week period, the file staff filled out a form for each request
to retrieve a document from the storage rooms. The data collected documented
the total number of files requested and the results of each request:
Number of Documents Requested (in 2 weeks) | 716 |
Total Dollar Value Requested Average files pulled per day (6 day work week) Average lag time between request and pull Average dollar value per day Average dollar value per document |
$361,050 60 31 days $30,087 $501 |
Number of batches in file Number of batches not in file Percentage of batches not in file |
664 52 8 % |
Number of EOB's in batch Number of EOB's not found Percentage of EOB's not found |
643 73 11 % |
The current files average 11% of the documents missing. Based on the
two week study resulting in 73 missing documents, there are currently 146
document requests each month that go unfilled due to lost documents. Also,
disaster recovery should become more of a priority. Currently, there is
no backup system in case of fire or other damage. Essentially all of our
documentation could become missing in such a disaster.
The dollar value of each document shown in the table above is the amount
charged on the claim that was not paid. The most common reasons for non-payment
are co-insurance (especially spouse policies and automobile policies) and
re-insurance. These non-payments are usually resolved in favor of The Medical
Center once the proper documentation is sent to the correct third party
payer. Procedure code disputes also occur and these often can be resolved
in our favor. Overall, approximately 80% of the dollar value of each document
can be collected.
The impact on the Medical Center for missing documents needed to resolve
disputed non-payments is astounding. The data indicates that 146 documents
per month are missing. Assuming the these missing documents average the
same value as the found documents ($501 each), there is a probable loss
of $58,517 per month (146 x $501 x 80%) or $702,000 annually using the current
filing system!
Value of faster access to information
Cash flow is directly impacted. We currently average in a pre-appeal FSC
$1,500,000 in receivables and process about $900,000 or 60% of the appeals
each month. Many of these appeals are 5-6 months old due in part to the
time wasted searching for missing Explanation of Benefits and that the file
staff's significant and growing backlog. An additional 20%-25% of appeals
could be processed each month presuming that the document retrieval backlog
is eliminated and more staff time was available to clear up the FSC.
By simply eliminating the 31-day document retrieval lag, we will be able
to generate appeals one month sooner than the current process. This should
result in payments arriving one month earlier. At the current volumes, the
$900,000 processed each month would arrive one month earlier. Assuming a
conservative 6% per year long term interest rate, the earlier payment is
worth 0.5%, or $4,500 per month. The total benefit of collecting more timely
payments will be $54,000 in interest per year.
Cost of space
Additional office space will be required to maintain the current filing
system. The files currently use about 800 sq ft, valued at $14 per sq ft.
An imaging system with its optical cartridge storage will require less than
100 sq ft. The net savings is $9,800 per year.
Overall Goal: To effectively and efficiently install an automated
file storage system in a cost justified manner, improve file retrieval time,
reduce labor and associated costs, minimize missing or lost files.
Operational efficiencies
Archiving documents
Proposed Strategy
Purchase a system to scan, store and retrieve documents pertaining to billing
and collection processing. Documents will be available over the U Mass Medical
Center DECNet or Banyan ethernet, protected by standard user name and password
security.
The selected Document Management System is a fully automated, easy to
use, paperless office system that dramatically reduces the time and space
required to store and retrieve documents. With this system documents are
filed merely by placing them into the scanner's automatic document feeder.
Once the documents are electronically stored, they can be retrieved and
viewed in seconds. By taking advantage of new breakthroughs in laser technology,
we are able to store 17,000 pages of files on a single 5 1/4 inch optical
disk. Approximately 60 disks per year will be utilized.
Not only will this system greatly improve our work flow and reduce manpower
requirements, but it will also assure that files will easily be found.
Networking
The System will allow us to file, route and retrieve any file within seconds,
all from one desktop, through an entire integrated network. The document
management technology provides a platform for developing an office environment
in which all personnel, from clerk to administration, have simultaneous
and instant access to any office documents. Its flexibility eliminates the
paperwork bottleneck and shrinks storage requirements, thus reducing operating
costs. The system will allow us to plan the entire document retrieval needs
at the start, but install only the basic network system and expand with
a phased in approach.
The basic operations include the ability to scan documents, index each entry
with key words and store all the information securely on optical disks.
The system can then transmit any document in seconds to a high quality display
workstation, PC, printer or fax machine.
The system can grow from an economical two workstation solution to a multi-user
networked environment including communications to additional locations.
The modular approach of the system means multiple scanner, printer and retrieval
workstations can be added as needs change and grow.
Alternatives
Why store the files optically?
It accomplishes all of our objectives and a few that were not originally
sought.
The payback is less than one year.
Multiple users can access the system concurrently.
Not subject to inherent paper or film handling problems such as rips and
tears, misfiles, smudges and deterioration of handled documents.
Why not use microfilm?
Immediate Availability. With microfilm, processing may take two weeks.
Meanwhile, paper files must be maintained that we have paid to replace.
Usually, the processing period is the busiest retrieval period. With optical
filing, the document is stored immediately and ready for instant retrieval.
Security. With optical disk filing we never have to release our filing
information to anyone.
Logical Storage. With optical disk filing systems, related documents
can be stored in the same cartridge. With microfilm, related documents may
be stored on different rolls of film requiring manual intervention.
Networking. With optical disk filing, each department can have its
own workstation to scan, view and/or print documents.
Sorting Source Documents. In order to store related documents on
one roll of film, the documents must be sorted prior to filing. This may
require holding the documents to wait for a complete set. This need does
not exist with an optical disk filing system.
Print Quality. Image quality with microfilm is poor, often the images
are barely readable. With optical disk storage, images are high quality.
Microfilm Printing Expense. Printing from microfilm can be expensive.
Documents printed on photo paper are expensive due to the cost of the paper.
Printing microfilmed documents on regular paper requires additional equipment.
Image Management. With microfilm, we must wait until the film is
processed to determine if the images are legible. If a bad image is found,
we must film the entire roll or find the bad documents and send them in
the next batch to be redone. This whole process requires work and management.
With optical disk filing, images are inspected as they are scanned, insuring
quality.
Off-Site Processing. Microfilm processing requires someone to pickup
and deliver the film for processing. This requires the cost of a courier,
mail, or someone's time. With optical disk filing, this is of no concern.
Facsimile. Optical based images can be directly transferred via facsimile
without being handled. Microfilm images, however, must be printed and entered
into a facsimile machine to be transmitted.
Durability and Backup. With microfilm, it is possible that an entire
roll could be lost or damaged in processing. With optical disk filing, the
entire disk can be backed up on a regular basis which makes lost files highly
unlikely.
Easy to Use. Quality control steps with microfilm make the task labor
intensive and time consuming. Optical disk filing is simple and easy.
Labor savings
Due to the increasing filing and retrieval requirements, staff has increased
by 25% during the past year. The demands made by the collection process
are requiring more complex file documentation handling. It has been necessary
to utilize other staff members to accommodate the present demand. The present
file area will not accommodate more personnel due to space limitations and
the space requirements will continue to expand if a more automated system
of storage is not implemented.
The manual file and retrieval system requires some file preparation at the
time the files are first inserted into the file. It additionally requires
extensive preparation time when the file is requested due to the nature
and/or structure of the file. With the Document Management System, the files
cannot only be retrieved faster and take less floor space, but also can
be viewed page by page and only the required data needs to be duplicated
or reprinted. When the file request is completed no additional work effort
is required to re-prep the file and return it to the file.
The Document Management System will reduce labor requirements by 1 to 1.5
persons related to the file retrieval process. We can utilize this staff
in billing and collection where they are most needed.
An additional benefit is the increased morale of file room personnel and
the reduced training time needed for potential replacements to the file
staff team. Discussions with the staff of existing installations of Acordex's
imaging system indicate that the installation process was a pleasure and
operators enjoy using the system. Like our staff, they hate the task of
pulling and refiling paper documents.
Five vendors were evaluated during our first RFP. The purchase was not
awarded to the winning vendor due to an internal budget freeze and changes
in department management.
The second RFP went to the winner of the first, plus two additional vendors.
Both RFP processes resulted in the same selected vendor: Acordex Imaging
Systems.
Acordex's Document Management System was chosen for:
In summary, given the following:
1. The Accounting Office operates under a totally manual system and will
be unable to manage paper processing to expedite Accounts Receivables and
other documents required;
2. Cash Flow is directly impacted as described on pages 4 and 5;
Value of missing information savings: $702 K
Value of faster access to information savings: $54 K
3. Labor costs are extremely high and will continue to increase;
Document retrieval cost savings: $52 K
4. Space utilization and disaster recovery, although placed as a
low priority, are much improved;
Cost of space reduction: $9.8 K
It is recommended that the Accounting Office take steps toward purchasing
Acordex's Safekeep Imaging System. A system
such as this would decrease costs and improve document recovery, storage
capacity, and capability. The items listed above will conservatively produce
an ROI of a few months!
Dianna Gubber
Group Practice Plan
University of Massachusetts Medical Center
Worcester, Ma.