December is a great time of year – not only because it’s the holiday season for most but because it’s a good time to evaluate and assess your medical practice. So what went right this year and how can you capitalize on those strengths moving in to next year? What went wrong and what needs to be done to fix your practice problems? Remember there is only one financial benchmarking statistic that matters – did the physician owner(s) make more money this year than last year? Ask yourself if not, why not? Why didn’t practice net income grow? If you do decide to evaluate edical practice, here are a few areas I suggest you take a look at. Part II of suggested areas to look at is tomorrow's post.
Finances Take a look at charges, collections and work RVUs for both the practice and by individual physician. Is the practice growing or are the doctors working harder to maintain the same income level?
Financial Percentages and Ratios Review the practice’s gross collection percentage, net collection percentage, and days in A/R. Assess whether all these statistics are reasonable for the practice’s particular medical specialty and compare to prior year performance.
Accounts Receivable Conduct an in-depth analysis of a current aging of the accounts receivable. Pay particular attention to A/R over 90 days old. Also take a look at denied charges that were written off – could any of these write offs been appealed and ultimately paid?
Financial Statements Taking your financial statements, look at actual revenue and expenses compared to the prior year. Why is a particular overhead category higher this year than last year? Are collected revenues lower or stagnant this year versus last year? Why?