Whether you are employed or own your own practice, this information is essential to staying on top of your financial activity...Whether you are an employed physician or own your practice, there are four simple things you should look at every month. The items listed below are things you should keep an eye on each month to ensure that your practice is running effectively. If your employer or computer system does not readily provide you with the listed information within 5 days of the end of the month, you need to find ways to get it. In this day with, millions spent on computer technology, accepting anything less should be deemed criminal
How can you or your employer expect improvement of financial performance if they do not provide you with the feedback needed to monitor your success?
Track Your Charges
Since charges are what drive practice revenue, you should keep an eye on monthly charges. Any deviation in the amount of charges can be attributed to problems in the billing office as well as a variety of operational issues. By tracking the information on a monthly basis, you can at least account for unexpected dips in production.Track Your Revenue
Each month, you should receive a report detailing, by payor source, the total revenue you generated.
For employed physicians, you may have a guaranteed salary but if you are not covering your costs (and providing a profit to the practice or network) it is not likely your contract will continue for long. If you own your practice, you know that without a reliable flow of income, you simply cannot pay the bills.
Tracking revenue provides a glimpse into the entire process of your financial operations. By tracking revenue, you can see clues to:
1. Problems getting the claims out the door
2. Operational issues
3. Changes in payor mix
4. Changes in contracted rates
Tracking the revenue provides clues as to where problems lie within the practice. If you are not tracking the revenue, how can you identify problems that ultimately affect your salary?
Review Your Denials and Adjustments
Ever wonder why some of your claims don't get paid? Managed Care Organizations (MCOs) do a really good job of telling you why they don't want to pay for a claim. In fact, they give you an "Explanation of Benefits" detailing why you will not get paid what you expect. In addition to the standard discount(s) you offered to provide care to their members, the MCO's may decide that certain procedures should be included in the office visit. For every dollar not paid by the MCOs, they will tell you. Now, you need to make the time to see why. Nobody, including your own billing staff, has as much of a vested interest in making sure you get paid properly. To them it may only be a couple bucks and not worth the trouble to follow up. However, these little write offs along with other common denials add up because of the narrow profit margins in Pediatrics. Be diligent and understand why the MCOs are refusing to pay you money you rightfully earned.
Calculate the Ratios
Now that you have these 3 key pieces of information, you need to put them into perspective. By tracking things like this monthly, you will position yourself to actively monitor your practice:
1. Gross Collections- Shows total collections compared to the revenue you are generating. This should be tracked monthly, quarterly and annually for each third party payor.
2. Net Collections- Shows total collections compared to expected contracted reimbursement rates from payors. While a practice may charge $300 for a series of CPT codes, the managed care company may have a contract to pay you $210 when you add up the combined allowables for the billed CPT codes. As such, many practices use the Net Collection Ratio to examine the amount of payments compared to the negotiated rates.
3. Charges per Encounter- This shows the average gross charges per patient encounter. The use of this ratio is twofold- to monitor provider production and to estimate future gross charges to be used for budgeting and forecasting.
4. Revenue per Encounter- This shows the average revenue per patient encounter. The use of this ratio is twofold- to monitor provider production and to estimate future revenue.
All of the information listed above can be tracked by provider, for an entire practice or department.