Geisinger takes on compliance costs

While hospitals have long had to comply with a host of regulations, the changes in the business after the Affordable Care Act and financial pressures that have facilities doing more with less is making it more complicated than ever to comply.

For example, a recent survey by PriceWaterhouseCoopers, LLP, found that 8% of businesses have seen their budgets reduced while 36% are doing more with the same budget. This is in the face of increasing regulatory requirements on everything from medical waste to keeping an eye on the hospital's food preparation.

"For our integrated operations, compliance activities impact on the hospital, our group practice endeavors, our insurance companies, and even our research enterprises," said Kevin Brennan, executive vice president of finance and chief financial officer of Geisinger Health System. '"Our board of directors retains ultimate responsibility for maintaining an atmosphere that promotes regulatory compliance and a culture of accountability for a compliant workplace."

[Also: 40% of doctors choose fines over compliance]

Under the board, Pennsylvania-based Geisinger has developed five major bodies of oversight, each headed by a senior executive. These committees focus on research, general billing, physician coding and documentation, ancillary services and continuum of care, and, finally, insurance. They involve themselves in developing plans for new and ongoing issues. The system has a centralized compliance office with a small staff that oversees the work these other groups carry out.

"These account for about 1.5% of our system expenses, not including executives salaries," he said. "For the fiscal year that is just started, we have budgeted over $7 million out of $4.9 billion for areas where their discrete mission is regulatory compliance."

While this is an expense to the hospital, Brennan said there are advantages that offset the time, effort and money expended. That includes the peace of mind from establishing ethical and compliant business practices, accountability, and an atmosphere that encourages self-reporting.

He sees the number of regulations, and the cost of those, continuing to rise over the next 5 years. For example, the expectations around clinical information transfer and what is needed to protect it are going to increase and systems will have to demonstrate compliance with best practices. 'Okay' will no longer be enough, he said.

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Another growth area will be a greater focus on quality, especially as the Centers for Medicare and Medicaid Services pushes the change to value-based reimbursement. There will be more specific regulatory definitions of what are good and bad outcomes along with higher levels of auditing.

Geisinger has a template that they follow when looking at potential areas of focus. The first cut is whether it even applies to one of their business areas. Then they look at what kinds and how many inspections will be needed to help with compliance. Where are the educational needs and who needs to receive them?

"Every year more regulations get promulgated and it is very rare to see one go off the books," said Brennan. "The Office of the Inspector General puts out a yearly paper indicating what areas they are targeting. This is an important part of our agenda and we have to design our protocols around what they are focusing on."

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