Physicians and other providers may graduate with an incredible amount of training behind them, but one thing that isn’t traditionally taught is medical practice financial benchmarks – know-how and what it takes to get a new practice underway – and make it profitable. It’s probably a safe bet that more than a few providers have no idea what a business plan is, let alone having implemented one that will help take them through the stages of their practice’s growth from opening day to retirement.
For physicians who have been practicing for 20 or more years, the medical landscape has changed greatly, compared to even a decade ago. Technology in particular has made reporting more accessible but payer regulations and the amount of data needed also makes reporting more complex. View changes as opportunities for growth: financial skills that were once left to office managers or other administrative personnel have now become part of a successful provider’s skill set. Instead of resenting these changes, look at them as challenges and opportunities that can be used to boost revenue as you gain more control over your income and expenses.
Not surprisingly, the areas many providers struggle with the most are those of accounting and finances, areas which are becoming more important as margins thin due to rising costs. There are additional skills that providers will need, such as how to successfully negotiate a managed care contract. Below are several suggestions for taking charge of finances and improve your fiscal health:
Start With a Business Plan
Be sure to build in some flexibility as you set goals for 5, 10, 20 years and beyond. The healthcare world will continue to change and evolve and your plan needs to be able to change with it. To begin, you’ll need to gather your team to plan the following tasks:
- Assess needs, both immediate and anticipated
- Develop attainable goals for both the short and long term
- Identify and plan a strategy for meeting the practice’s needs and goals
- Implement the strategy
- Monitor progress and results
Be proactive in meeting challenges: if your numbers show that revenues seem to be sliding, for example, tackle them as soon as possible. Dealing with problems as they arise can help ensure that small issues won’t turn into major headaches down the road.
Emphasize Charge Capturing
Your plan should specifically include processes for charge capturing, which includes the correct medical codes linked with the services or procedures performed during a visit. Emphasis needs to be placed on educating clinical staff on the importance of using accurate documentation and charge capture to the A/R department and billing accuracy. If you need help with this, it can save time and money to partner with an outside professional billing service to ensure that claims are sent “clean” and on time.
Get to Know Your Revenue Cycle Management
You will also need to consider these four methods of payment when developing financial management strategies affecting the revenue cycle:
- Per episode
- Per visit or per diem
- Fee-for-Service (note that this last factor is being used less frequently due to increased emphasis on value-added care)
Familiarize yourself with accounting and other revenue cycle reports to know where your practice stands. The following are among the reports you should review regularly:
- Income statement and balance sheet
- Accounts receivable and payable – remember that the older the account, the less likely there will be payment, so stress the need for timely billing and follow-up.
- Cash flow
- Departmental costs including location and provider
Practice management reports, such as billing and collections summary analyses, should also be among those to be read and analyzed regularly. Understanding your organization’s revenue cycle is critical for financial stability by receiving timely payments while reducing billing staff burdens and administrative costs low.
Become Financially Educated
If you can’t manage financial reports, you won’t have the information required to make critical financial decisions needed to maintain a healthy practice as capital investment to plan for your future.
You can take a class or go online to find other ways to learn the finer points of handling finances and interpreting data in reports and other information. One anesthesiologist did just that when he took over a practice’s leadership and was faced with sorting through and interpreting pages of data. While you don’t need to get an MBA or write books as he did, learning enough about finances to identify reported line items and why they’re included can prevent fraud and improve your practice’s efficiency.
Identify Claim and Other Forms of Abuse and Fraud
Fraud, which involves knowingly and willfully billing payers in an attempt to defraud for money, has been one of the most troublesome areas of concern to both practices and payers, especially regarding Medicaid, Medicare and any other federally or state-funded programs. The most common abused and fraudulent areas include billing for equipment not provided, for services not rendered or upcoding charges for a higher rate of reimbursement as well as unbundling combined charges.
Managing Payer Contract Negotiations
Remember that managed care reimbursement makes up at least half of most practice’s revenue, so a thorough understanding of claim filing guidelines (which will usually differ among your various payers) including reimbursement rates, endings as well as effective through dates, terms of payment and any other applicable provisions. It may help to enlist the aid of an expert to navigate the complexities of negotiations.
Partner with an Experienced Practice Management Team
Working with a trusted partner such as M-Scribe can help give you a better picture of where your practice stands by helping to clearly define needs and goals, as well as create a “road map” that will get you to your financial destination. Contact M-Scribe at 888-727-4234 or email for a free analysis of your practice’s current and anticipated revenue cycle processes. Our experienced management personnel can show you proven ways to save on expenses as well as boost revenues while remaining compliant of the latest government and payer regulations.