Improving a nationwide medical supplies distributor's denial rate by 25%
Ten percent of submitted claims by a nationwide medical supplies distributor to skilled nursing facilities were denied due to data entry errors. As a result, the company’s cash flow was compromised since the claims’ appeal process took four times as long to receive payment. In addition, “bad debt” increased with denied claims, introducing a heightened risk of the claim turning into a write-off. Finally, since the full team was engaged in managing the denied claims, the distributor’s operating expenses skyrocketed.
Service Line:
Digital Transformation & IT Strategy
Industry:
Healthcare
Region:
North America
Goal:
Improve back end team efficiencies
Strategy:
Position company to out-compete other suppliers in the industry
Results:
$300k in EBITDA savings and processes in place to scale
The distributor knew that the time was right to address their claims process given upcoming regulation, margin pressure, and consolidation in the industry. Manifold’s engineering capabilities, expertise, and problem-solving mindset made the distributor’s choice easy.
Manifold started with a customer-focused and data-driven root cause analysis, prioritizing and systematically addressing recurring problems that drove denied claims. The three-month analysis engagement:
- Mapped processes and conducted a gap analysis
- Mapped current state and designed target state for claims processing workflows
- Mapped out the customer journey for current and target state
With an eye to ensuring strong ROI, Manifold also estimated the cost savings resulting from the reduction in staff expenditure and amount of non-conforming claims.On the technology side, Manifold’s flexible engineering team quickly:
- Designed, built, and implemented analytics-based workflows to automate processes
- Built a multidimensional data mart for time-series analysis
- Built a high-performing rules engine to automate decisions
- Developed a minimum viable product (MVP)
- Developed a product roadmap to identify and prioritize product improvements
- Created parallel data processing workflow to optimize batch throughput
- Built Excel workbooks with live pivot tables for executive reporting
Today, the distributor is strategically positioned to out-compete other suppliers throughout the industry. Upon rolling out the solution, the denial rate for claims improved by 25%, releasing new cash flow and saving the distributor an immediately business process improvements. In addition, business intelligence revealed opportunities for additional process improvements that the company is actively investigating.
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