Here's how to analyze the numbers that reveal the financial health-or sickness-of your practice.
MR. TUTTLE is a certified healthcare business consultant and a member of The Rehmann Group, Lansing, Mich. This article was adaptedfrom Medical Economics, an Advanstar publication.The author has nothing to disclose in regard to affiliations with, or financial interests in, any organization that may have an interest in anypart of this article.
Heartbeat, pulse, temperature, respirations, and blood pressure can give you a quick assessment of a patient's health status. Likewise, there are basic measures you can use to monitor the financial health of your practice. You might call them your practice's vital signs. They include data on patient volume, bread-and-butter services, revenue production, billings, and collections.
This statistical snapshot of performance makes it easy to spot trends. Is the practice growing? Based on the data for the first quarter of the year, you can see that the average monthly volume of most office-based services delivered by our hypothetical group has risen compared to the prior year. In case of a decline in such categories, knowledge of a downward trend can lead to strategic discussions: "What, if anything, should we do to improve matters?"
With a report like this, you can track major procedures, assess your business manager's effectiveness, determine whether a special effort is needed to clear up aging accounts, evaluate the use of billing codes, and periodically answer the question, "How well is my practice doing?" The answer may help you add thousands of dollars to your bottom line. Even if you don't get that result, the report will help you understand where you are and where you're going.
In primary care practice, the key parameters to monitor are new-patient visits, office consultations, established-patient visits, preventive-medicine visits, and patient encounters as a whole. Larger practices with multiple offices might track these by location.
Whatever your situation, it's important to segregate new-patient visits from office consultations. An office consultation is an encounter prompted by another physician's request for your medical opinion. In contrast, a new-patient visit is essentially a self-referral. Because consultations are generally paid at a higher rate than new-patient visits are-often, 25% higher-it pays, particularly for specialists and subspecialists, to have as many initial encounters as possible qualify as consultations.
For instance, a recently analysis of the practice of a solo cardiologist found that he habitually coded every first encounter as a new-patient visit when, in truth, probably two thirds of them had been generated by physician referrals and qualified as consultations. This meant he was giving up $25 to $35 per patient-or about $15,000 to $20,000 a year, depending on patient volume. A monthly report on your business vital signs can alert you to this type of mistake.
Another stastistic to take a close look at is the line for preventive services. That's where annual physical exams should be showing up. For years-because insurance policies covered only the treatment of illness-physicians tried to find diagnostic problems to put on claim forms to have these exams qualify as acute visits.