How UMass Memorial Hospital Cut Claims Costs with a New RMIS

With eight hospitals, 1,125 beds and 12,350 employees, UMass Memorial Health Care is the largest health-care institution in central and western Massachusetts. In 2002, the Worcester-based hospital decided it would expand further. But not physically. Instead, it would undergo an ambitious venture to begin to self-administer its self-insured workers compensation program. At this point, one thing became clear: UMass Memorial would need to purchase a risk management information system (RMIS) to handle its vast claims load.

The hospital put out a competitive bid that included a list of key functions and technical requirements. It needed a system capable of handling workers comp claim administration, aggregating claims data into a single database, reporting injuries and incidents, and writing checks. After a request for proposal process, UMass Memorial opted to purchase a system from the Chicago-based CSSTARS, a large RMIS provider.

Enter Denise Nadler.

As head of the occupational injury management department, she had the dual responsibility of managing the new program and the RMIS tool. Together, Nadler and her team began to navigate the sometimes-rocky currents as they sought to control workers compensation costs within a notoriously complex, regulation-laden state.

It wasn’t all peaches and cream at the beginning. Like many clients, UMass Memorial assumed that a RMIS would immediately solve all of its problems out of the box with minimal configuration. But buying a RMIS is not like buying a simple application where you simply push play and it does all the work. It is not Microsoft Office. Instead, it is a highly complex, but adaptable, system that requires careful integration into a company’s existing operations.

It didn’t take long for Nadler to find out that tailoring a system to the data and workflow requirements would take some real effort on the part of her team. To begin with, she and her staff had to look at all of the medical codes to identify which were needed to create the best structure for analyzing losses.

It was a significant challenge. There are more than 200 eye diseases alone that could be coded, for example. The system certainly had the capacity and ability to code all those eye diseases. The real question was: what would make sense from a business standpoint? After all, a RMIS is supposed to enhance a risk manager’s ability to do her job, not confuse it with unnecessary details.

Designing a proper coding scheme, organizational structure and reporting system is a time-consuming—but critical—function. No vendors have the capacity, nor the specific medical training, to do this out of the box; their expertise is in system and database design. A RMIS vendor is much like a general contractor following the lead from the project’s architect. If the vendor acted as the architect, everybody would be forced to live in the exact same type of house.

In this case, Nadler was the architect. And in order to build the right structure, she had to get over some growing pains in the first few years with regard to the hospital’s relationship with its vendor. “Learning the ins and outs of our client’s business processes is the key,” said Pat O’Neill, managing director of CSSTARS Americas. “Making sure we’ve got the right people and personalities to create a good team dynamic helps make the overall process successful.”

There were also some early vendor support issues. Just as important as system functionality is the team that supports a client. Account managers and consultants need to be both system experts and, to a certain degree, experts with regard to their client needs. In the early stages, Nadler felt that UMass Memorial needed to keep getting the new personnel up to speed and that the stability of the support team needed to be improved.

It also soon became evident to Nadler that UMass Memorial had not yet figured out how to leverage the functionality of the STARS system. If properly engaged, she knew it could track and measure the hospital’s claims exposure and help reduce the frequency and severity of the claims. And she knew she had the other most important ingredient: a knowledgeable team who were highly motivated to lower costs for UMass Memorial.

With both these components in tow, Nadler realized that she had to do three things. First she had to determine exactly what the STARS system could do—not just its  major functions. Then she had to outline the department’s critical business processes, both manual and automated. And lastly she had to figure out how the capabilities of the RMIS could be used to address those business processes.

Instead of relying on accepted wisdom of past operations, the team approached the challenge with its own fresh perspective. Because sometimes, it is a bad idea to merely replicate an existing business process with a new tool or technology. Sometimes, these processes only exist to cover up for the shortcomings of the past program’s design. By starting from scratch, new efficiencies can be created and old roadblocks can be knocked down.

Creating something new cannot be accomplished overnight, but in time, Nadler and her team found the configuration that met their department’s needs. Screens and codes were configured to streamline UMass Memorial’s workflow. Medical codes were defined to help the hospital track dangerous trends in various types of claims. And to ensure immediate incident reporting, the hospital launched a browser-based platform for incident reporting, which was accessible from any computer within the system.

Then, in 2009, came another curve ball: the Centers for Medicare & Medicaid Services reporting requirements. The details of the new legislation, enacted in 2007 by Congress, may appear mundane. But the data collection, consolidation and electronic transmission mandates were a major compliance issue. Through the RMIS customization, however, the hospital was able to ensure that the new rules only added a minimal burden.

All this was instrumental in the department improving its average return-to-work numbers—which, of course, was one of the ultimate goals. Because the higher the average number of days for a worker to return to active duty, the more expensive the claim.

Nadler believed from the beginning that the impact of a good system would ultimately materialize. Nearly a decade after the decision to submit an RFP for a new RMIS, Nadler sees it as a success. According to her, UMass Memorial has saved $3 million in its early-return-to-work program over the past seven years and cut claim costs in half, as a percentage of payroll. Five years ago, the hospital spent 1% of its payroll on claims expenses; that figure was down to 0.5% of payroll as of 2011—not an insignificant sum for an employer of more than 12,000 workers.