Q: What actions do I take with a financial report as a Practice Manager?
A: For me, the most informative report is the ageing Accounts Receivable. Charges are growing on your A/R, your net collections are decreasing. That is a PROBLEM. And I am just covering a fewm things, you have no idea the list and how long it is. But some of the most logical things that you can do, the first thing is to review your payer mix. Practice A can be primarily Medicare, and Practice B can be primarily Blue Shield. Blue Shield is going to be making a whole lot more money from the practice than Medicare. You can close your panels if you don’t want to accept new patients with certain insurances and such. Doctors like to be fair and keep it balanced out, but reimbursements vary with the insurance companies.
Medical Practice Management and Financial Reports – Video
Another reason why your accounts receivable could be growing are denials. When the manager or the biller gets the remittance advice, study the denial trends. Is it primarily insurance is terminated indicating the front desk did not verify information, that type of thing.
You want to review provider productivity. This is true, I had a doctor, both of them they’re paid the same every week. But doctor 1 saw 50 patients and spread out the visit; doctor 2 saw 100 patients; so doctor 2 brought in a whole lot more money than doctor 1, but they both got paid the same. So, they changed it, they got paid based on the amount that they brought in. That is a very real thing.
Review internal cash controls – another huge, huge issue. I can tell you that I had a practice that balanced all the cash against the encounter forms. When we posted payments, we balanced it. But for two weeks, we received so many phone calls from patients saying, “I paid my co-payment at the time ofservice,” and yet there was no indication that the patient paid on the encounter form. To make a long story short, someone else was covering the front desk when the office manager was on vacation for two weeks and they were kind of brain dead, I think, because they just figured they would pocket the cash never thinking that if the co-payment was not posted as paid when insurance paid, they would say the patient owe a co-payment, they’d get a bill. They didn’t think it out. Needless to say, that person got fired.
The other thing is, you want to make sure all services and supplies are being captured per patient visit. That’s an occasional audit. I’m just saying something as simple as a doctor or nurse practitioner forgets to indicate that she administered a vaccine. The vaccine cost the doctor anywhere from $175 to $250 if it’s Zostavax or Gardasil. If you don’t put that down, we don’t bill it, the practice doesn’t see the money.
You want to review the fee schedule – if you bill $100, and your contract with an insurance company they allow $100, there’s something wrong. Because if you look, you’ll probably find that that service is $135 in reimbursement, but there’s no way they’re going to pay you more than what you’re billing out. So that’s a red flag. If you see they are billing $100 and allowing $100 and you have a contract, something is wrong.
You want to study how many days the claim is sitting in A/R. Are the biller doing their job, are they pilling up, or are we not paid? Then, you want to see how many write-offs there are? I don’t know if you ever heard of the Mercedes drawer but that’s where billers don’t know what to do with the denials and they throw them in the drawer and at the end of the year, you tally it all up and the doctor could probably buy himself a Mercedes Benz.
SOLUTIONS: Basically, what you want to do is take action! Review the remittance advices, review your contracts with your payers, look at alternative revenue opportunities if you’re doing everything right and still not making money. Look at your office space, reduce square footage, expand office hours, study the people in the practice that generate income and then look at the people that don’t. Are they getting paid a lot of money, are you getting your money’s worth?
Review your purchasing process, as well as the inventory and any security measures. I hate to say this about humans, but I’ve seen people walk out with staple guns and paper clips and think they own it, and the doctor is the one that’s paid for it.
You want to evaluate cost cutting measures, and if it’s costing you too much to do a lot of the billing, coding, and so forth internally, you may want to consider outsourcing. That’s what I’ve done to my business for 34 years before I joined CCO, and it definitely was cheaper for a physician to use someone, like, a management or a billing company than it was to do in-house. That’s that.
Alicia: Excellent advice!