Healthcare Financial Management Services
For effective healthcare financial management, whether it be a solo or a group practice, you must have continual access to important financial information. The practice’s finances generally can be summarized by preparing a practice statistical report, a balance sheet, and an income statement on a periodic basis (usually monthly). By using and analyzing these reports, a practice administrator, or physician can evaluate the current financial health of the medical practice.
Medical practice performance can be tied directly to the numbers it produces. Poor statistics usually indicate poor performance somewhere in the practice. This is how you know that there is or could be an existing problem in the medical practice. Good statistics indicate good performance; it is that simple.
Remember this one axiom: NUMBERS DON’T LIE. If a medical practice (or any other healthcare provider for that matter) is not able to meet or achieve certain statistical benchmarks, you can rest assured there is some problem that warrants your investigation. This is why it is so important to monitor financial statistics on an ongoing basis.
As you read this, please keep the concept of benchmarking in mind. Benchmarking is basically goal-setting, and all medical practices and other healthcare providers need it. For the medical practice, determine where the practice should be in terms of financial statistics and numbers and where it should stand financially day to day, at the end of the month, and at the end of year. For example, should the practice’s overhead be 50 percent of collections? Should only 15 percent of practice receivables be over 90 days old? Should the net collection percentage always exceed 90 percent at any time? Benchmark the medical practice! By constantly monitoring these benchmarks, you can ensure the ongoing financial success of the medical practice. It is preferable to monitor financial statistics and benchmarks on a monthly basis because, if a problem is detected, you will want to address it immediately.
To properly manage the financial aspects of a physician medical practice, you should be quantifying and analyzing the following on an ongoing basis:
Healthcare Finance Management
- Gross Collection Percentage
- Net Collection Percentage
- Days in A/R
- A/R Ratio
- A/R in excess of 90 days old
- Is this year better than last year?
- Clinical/Procedure/Ancillary Encounters
- Provider Work RVUs
- Charges by Payor
- Collections by Payor
- Payor Collections by Physician
- Referring Physician by Physician
- E/M coding comparisons
- New to Established Patient Ratio
- Average Wait Time in Reception Area
- Front desk collection success – Copayments; patients with A/R balances
- How quickly visits/procedures are billed
- How long does it take to get paid by payors
- Percent of scheduled patients vs. available visit/surgery/procedure appointment times
- Percent of insurance eligibility verifications vs. total scheduled patients
- Recall visits vs. recalls available
- Average number of missing charges vs. services rendered (actual & CPT mistakes)
- Percent of denied/rejected claims vs. total claims filed
- Percent of denied/rejected claims appealed successfully vs. total denial/rejections
- Average days between receipt of payment and payment posted
- Average number of unpaid claims resolved by day per collector
- Compare to prior year
- Compare to industry benchmarks
- Review charges/collections by payor
- Gross collection percentage by payor
- Days in A/R by payor
- A/R aging by payor
- Reimbursement rates to Medicare rates (what % Medicare)
- Reimbursement rates to other payor rates
- Cost accounting by CPT code
As you can surmise, information is king. Without it, it is very difficult to manage a medical practice, to identify problems within a practice, and to provide solutions to practice problems. If you need help with the financial management of your physician medical practice, please call me at 281-379-5988 or email me at firstname.lastname@example.org.