How do you keep track of the financial health of your practice?
Providers in small private practices rely on a variety of information that makes them comfortable. Some providers will ask for all kinds of data ranging from total billing and charges per month, amount of money received every month or even weekly, total aging, collections by procedures and CPT codes, patient balances etc.
On the other hand there are providers that rely on their office managers and builders tremendously and as long as money is coming into the bank they don’t question too much.
In majority of the cases providers missed the mark entirely.
This is an age where we have data and information overload. Everything is digital, everything gets stored as discrete data and therefore everything can be reported on. Does that mean everything is useful? What information should we look at and what should we ignore?
Bits of data in isolation are irrelevant. Total charges per month and a graph of it over the year are irrelevant if not compared to the productivity and the total number of hours that a doctor puts in per day.
Absolute numbers don’t matter as much as looking at a trend over time. Keeping the total number of patients seen over time constant and the total number of hours that you put in on a daily basis as constant, if the trend indicates a downward slope on collections, that is what we should be worried about.
Similarly, ratios and percentages are more important than absolute numbers. Total revenue per patient, revenue per procedure, productivity per employee, and similar such ratios are perhaps more important than absolute numbers.
I understand that providers do not have the time to look into this in detail themselves. Most office managers are not equipped to think like business accountants. That is why you should look into experts and consultants who can help you analyze this data. If you are outsourcing your billing, many of them can provide this insight.
Remember when you bought your first EMR? Perhaps you’re still on it, or you may have changed. Each has it’s reasons. Here is what Seth wrote:
Nothing has changed more than Healthcare and in particular, Healthcare IT, EMR, EHR. We persist because Change is Fear!
In the world of EMR/EHR, implications are more than just fear. They have to do with real costs of change – cost of moving data from one system to another.
Cost of Change
Cost of Training everyone
Cost of productivity – (it takes an average of 3 months before a practice become productive on one EMR/EHR system)
Cost of Transition – moving data from one system to another
Cost of No Change (Status Quo)
How do you determine if you need to change your EMR/EHR? Here are things that determine if you need to change your system:
Seeing less patients per day than you did before EMR/EHR
Drop in Revenue (not because of overall healthcare changes)
Unhappy staff. Listen to everyone, even if you are happy with the system
How do you determine the cost of Status Quo?
This may require some detailed financial analysis. Compare the cost of change and cost of no-change. If this cost is just incremental, do not change. Think of the analysis you do when you think of re-financing a house. Money saved per month versus cost of re-financing.
I got an email this morning from someone that complained about an issue that never comes up during the EMR selection process.
Here’s what he wrote, ‘current practice management solution has switched who it uses for claims processing many times because of contract issues. ‘
When you research your system, you generally don’t ask these questions. At the best, you (of your biller) may ask who is the Clearing house, just to make sure it is a good reputable company.
The EMR industry is under so much pressure that all kinds of things are happening. Vendors are cutting costs, cutting services and you will notice ‘shortcuts’ that can affect you. Here are some situations that can have prompted this –
A complete system is quite often built with partnerships. One such partnership is with a Clearinghouse to process your claims. Vendors strike deals and negotiate pricing. In doing so, sometimes promises are made that EMR companies cannot keep in terms of volume sales. When that happens, clearinghouse wants to raise prices, renegotiates contracts that can have direct repercussions on client pricing.
A worse case scenario is one where your vendors switch partners. If they bring in a less than desirable partner for claims processing, your cash flow can be severely affected. Just as there are ‘Free EMR’ companies, there are ‘Free Clearinghouses’. Even paid EMR vendors sometimes use Free Clearinghouses because of pricing pressures.
Two quick questions can resolve that.
Who is the clearinghouse partner? Make sure it is someone like Gateway EDI, or similar company that is stable and has been around, and has a good reputation.
How long has the EMR company been in partnership with them? Is this the only clearinghouse they use, or do they partner with others also? If so, who are the others?
In short, unfortunately, this is one more thing you must have on your list to ask your EMR vendor.
Here’s an interesting statistic related to independent practices: 23% feel that everything is okay with their collections.