Abstract

At SMDC Health System in Duluth, Minnesota, dollars in accounts receivable (A/R) had increased in the discharged, not final billed (DNFB) portion of active A/R over 12 months. By reducing delays in documentation, coding, and billing, gross A/R could be reduced by two gross days revenue outstanding (GDRO). Tools used to understand the problem and evaluate improvements included brainstorming techniques, the 5 Whys, and a PICK chart. As a result, lead time was improved 44% from 8 days to 4.6 days. This resulted in a reduction in gross days revenue outstanding by 2.75 days, improving cash on hand by over $5 million. The financial benefit on interest income annually was $152,831.