Annual physicals are important for your patients, enabling you to monitor their health, offer them proactive steps to stave off potential problems and prevent emergency scenarios.
But as a healthcare provider, are you considering the financial health of your own practice and giving it a comprehensive once-over on a regular basis to ensure it’s optimized for revenue and efficiency?
For most practices, the answer to that question is “no,” because they’re often too busy trying to keep up with daily tasks — and sometimes falling behind on those. They’re then faced with trying to stay current with ongoing payment reform, new regulations and the fact that the healthcare industry is changing dramatically, as healthcare consumerism is on the rise.
Today’s practices are leaving more money on the table than ever before. On average, a five-provider practice with 3,000 patient visits per month will lose 650 hours of productivity — totaling $15,000 annually — just addressing billing issues and handling patient phone calls. Add in other issues related to the full revenue cycle — from the front desk to the back office, and the clinical side of the practice — and the losses continue to rise.
Auditing Your Practice’s Financial Health
For your practice to stay in tip-top shape, you need to start conducting financial health audits at least quarterly, if not every month. Key vital signs you should monitor include:
- Days in Accounts Receivable (AR) — This is the best overall measure of the health of your AR. Days in AR reflects the number for days of AR outstanding, based on the practice’s average daily charge volume. AR lags can be impacted by claim rejections and denials, incorrect coding and posting processes, credentialing issues and appeals.
- Net Collections — The adjusted (or net) collection rate is a measure of a practice’s effectiveness in collecting reimbursement dollars, calculated by dividing payments by adjusted charges for the period being analyzed. Net collections can be impacted by denials and rejections that are not properly followed up on; increased patient liabilities, such as high deductibles; procedures not covered by insurances; and inaccurate or outdated coding templates, to name a few factors.
- Average Collections Per Visit — This measurement looks at the amount of money generated for each patient encounter, calculated simply by dividing revenue by number of visits during the period. The amount collected per visit also is impacted by higher deductibles, as well as changes in the mix of procedures and payers. Comparing this to industry benchmarks can help you determine whether your practice may be missing out on revenue opportunities.
- Clean Claim Rate — Clean claim rate measures the percentage of claims that are fully resolved by the insurance on the first submission. Claims that are not “clean” require rework which results in delayed and potentially reduced payment. Most unclean claims (denials and rejections) are preventable and can typically be remedied with a change in processes, policies or behaviors related to benefits/eligibility, coding, delayed claims follow-up or changing medical policies. To alleviate these issues, you should categorize and total denials by the associated CARC and RARC and make needed adjustments in processes.
- Posting and Claim Lags — Posting lag is the number of days between the date of service and the date the charge is billed, while claim lag is defined as the date of service to the charge billing date. These lags can occur because of the provider coding process, held charges and the difference in dealing with office visits and procedures, or office and hospital charges can lead directly to delays in payment. Significant lags can even lead to lost revenue from claims passing timely filing deadlines.
- Patient Experience — From Google to Yelp, today’s patients are used to easy access to information online and instant responses. They’re savvier, researching and choosing practices that can meet their demands. Your practice will need to take proactive steps to attract and keep patients. Among the ways to improve the patient experience are providing a variety of ways to schedule appointments and pay bills and the ability to communicate with their healthcare provider and seek guidance outside of traditional business hours.
By regularly assessing these financial vital signs, you can gain a greater understanding of practice’s revenue health and develop a prescription for the appropriate actions you can take to effectively manage the revenue cycle.
About the Author
Kerry Brown is a senior director of Revenue Services for Greenway Health, a leading health information technology and services provider. As a member of the leadership team at Greenway, Kerry oversees the daily billing operations of revenue services for customers, ensuring compliance with divisional established policies and protocols, adherence to government and insurance payer policies and assurance of customer conflict resolution. In addition to her daily responsibilities, Kerry provides thought leadership on key healthcare topics and issues, pulling from her 10 years of experience exclusive to revenue cycle management. Kerry has also routinely represented Greenway at MGMA, HIMSS and other industry-specific conferences.