Practice Points: The Financial Mindset
Edition: July 2011 - Vol 19 Number 07
Author: Judy Capko
Most businesses understand the need to have a financial mindset to achieve their economic goals. Physicians, however, tend to resist analyzing finances since their primary focus is caring for patients, dealing with scheduling snafus and managing the day. They have difficulty dedicating the time to examine the financial side of the practice, despite the fact that that is what drives the engine. In reality, healthcare providers need to recognize these three areas of performance as essential to overcoming economic challenges and improving finances.
In order to capture the most charges, healthcare providers must be prudent with reviewing the very contracts that dictate reimbursement and sign on only to those that pay a reasonable rate – a rate that ensures they can make a profit. Beyond this, providers need to realize when circumstances change and it is time to renegotiate the rate. Next, it is critically important to obtain the appropriate demographics and financial data on each patient, and for providers to be timely in documenting and coding services to ensure charges are accurate, and that charges related to a patient visit, such as lab fees, are not missed. This is likely to result in better accountability and improved reporting processes.
Revenue recovery begins with taking appropriate steps to expedite payment from third-party payers and the patients. The faster a claim is submitted the faster the payment. Optimizing reimbursement from third-party payers requires an employee knowledgeable about the aspects of coding, billing and collections. Practices need a resident coder that recognizes when a claim has not been paid properly and is eager to follow up on services that have been denied.
Insurance companies make mistakes, and too many practices fail to recognize this fact.
According to Healthcare Business Advisors, 30 percent of claims in the United States are denied, and of those 15 percent are never resubmitted. Medicare denies approximately 11 percent of claims and reports that 40 percent are never resubmitted despite the fact that Medicare increases payment on 65 percent of the claims reviewed on appeal. Some experts say that 70 to 80 percent of appealed claims are eventually paid. Fighting for the money pays off!
Collecting patient balances when patients are in the office improves the payment cycle and reduces the time and effort to bring in the revenue. It eliminates the need to send out a statement and track down patients. It also allows for an open dialogue with the patient face-to-face. Beyond this, patients are far more likely to pay when they are in the office and grateful for the services they just received – a gratefulness that is sometimes short-lived.
The final step to financial success is managing costs and improving profitability. This requires a higher level of operational efficiency. Clearly defined job descriptions, proper training, and giving staff the tools to do their job better with less effort improves the way people work. There is so much advanced technology available for the average medical practice today – both clinical and administrative tools; everything from EMR to safety needles and diagnostic testing. Implementing new high-tech solutions brings amazing results in practice operations, while improving quality and patient satisfaction. Now is the time for healthcare providers to get on the technology bandwagon. Sales reps can help the practice understand the return on investment gained by efficiency, improved productivity and potential federal stimulus funds over the next few years.
Medical practices can determine areas where financial improvement is needed by analyzing business performance from year-to-year within the practice and comparing this data to national performance indicators for other practices in their specialty. The primary areas of analysis should include:
• Income and expenses
• FTE staff and staffing costs
• Productivity: Charges and adjustments
• Accounts receivable totals and days in A/R, referred to as DAR.
Certainly, sales reps are recognizing many practices paying closer attention to supply costs and looking for ways to trim them. You can make a friend when you help buyers accomplish this.
Additional areas to monitor performance might include measuring staff turnover, number of missed appointments and patient satisfaction, as these are important factors in maintaining an efficient and profitable practice.
Judy Capko is a healthcare consultant with more than 25 years experience. Her focus is practice operations and economics, staffing, practice development and strategic planning. She is the author of the popular books Secrets of the Best-Run Practice 1st and 2nd edition and Take Back Time – Bringing time management to medicine. Judy is a national lecturer for executive management and physician specialty conferences. She is based in Thousand Oaks, Calif., www.capko.com or e-mail: email@example.com.