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Thursday, October 22, 2009

How do RT departments make money?

How do RT departments make money? To answer this question, I think I'll take a backward step and ask a slightly different question: How do hospitals make money?

Unless the patient is paying out of pocket, the admitting diagnosis is what determines how much money the hospital makes on a particular patient visit. According to "Egan's Fundamentals of Respiratory Care," each patient is designated a specific Diagnosis Related Group (DRG) based on the diagnosis.

The Healthcare Financing Administration assigns a set reimbursement for each DRG. Thus, according to Egans, "Because the amount remains fixed for each admitting diagnosis, hospitals know in advance exactly how much reimbursement they will receive... Hospitals that can provide care for less than the fixed rate can keep the difference, thereby realizing a 'profit.'

"On the other hand, hospitals whose cost of care exceeds the fixed rate must absorb the cost and thus take a financial loss. By placing hospitals at risk financially, this system provides a powerful incentive for cost efficiency."

The best way to cut cost is to use the fewest procedures needed to make the stay as short as possible.

This in mind, the RT department really doesn't make any money off the therapies it does, unless those therapies get the patient better and fast.

Now, considering I believe that about 80% of the bronchodilator breathing treatments we do are not indicated, it's amazing to me that no one ever cracks down on this. I imagine what keeps this RT Cave intact is the RT Cave bosses not allowing admins to catch on to this in order to keep the procedure count up in order to keep your humble RT on the job.

Ideally, according to Egan, the goals of therapy should be clearly written in the patient's chart, and once they are met the therapy should be stopped. Egan notes that "To be cost effective, all therapy must be justified adn discontinued when no longer needed."

Yet this isn't usually the case. Rarely if ever have I seen an RT treatment discharged. Egan mentions that RT Driven Protocols are great here. I know many hospitals have them. Still, many hospitals that have protocols don't use them properly to discontinue therapies.

One reason is because RT departments need procedures to keep RTs on the job. A second reason is the hospital needs to meet intensity of service in order to get reimbursed. In this regard, often treatments are given even when not needed. A good examle of this are order sets wehre treatments are ordered automatically just so the hospital covers it's intensity of service bases.

So we can see how a hospital might make money. The greater question is: So, how do RT departments make money? I don't have an answer to that. Do you?


Dan said...

I always thought that patients admitted for a particular procedure (CABG, appendectomy, etc) were on DRG because their "care path" is well known, but other admitted diagnoses (CHF exacerbation, etc) that can vary are paid FFS (Fee for Service). The DRG cost is for 3 hots and a cot/RNs. Doctors charge their own fees, and I always understood that mid-level providers (such as RTs)could charge for their own assessments and treatments.
It's worth asking your billing department, or doing some deeper research, and I will try to find some sources for you.

Rick Frea said...

Thanks. Sounds like a great idea.