New doctors setting up their medical practice have a lot to think about: construction and build out, ordering furniture, tax paperwork, hiring staff, picking a business name—the list goes on.
But the one thing that no one has told you, that has never been formally discussed throughout medical school or even during your residency, is the giant chasm you’re going to have to cross between seeing a patient and actually getting paid.
Revenue cycle management isn’t something many people would say they’re passionate about, but I am. And I have a strong case for why everyone in the field, and in particular physician owners of private practices, should be passionate about it too.
In the face of increasing conglomeration, a transition to value-based care, and an entire generation of physicians set to retire, private practices have the most to lose when it comes to revenue cycle management. Whereas hospitals can afford to put full-time employees to work on all the nuances related to reimbursement and revenue, most private practices find themselves fighting for every single dollar, sometimes scraping together just enough to keep the lights on—and sometimes, not even that.
I recently assessed the revenue cycle of three separate private practices, each solo-physician-owned, and I was very transparent with the results. For two of them, the current model was sustainable as long as they made a few changes. The third wasn’t so lucky—his only options were drastic change, an exit to a larger health system, or shutting his doors.
What little physicians are told about revenue cycle management often comes down to a simple piece of advice: renegotiate payer contracts.
Renegotiation of contracts to some feels as if it’s fully within the practice’s control and that with this sole response they are set for success. It’s an idea that gets reinforced at every conference they attend, every breakout session they sit in with. And while there are certainly times when contracts are due for renegotiation, I honestly don’t know how this became the only default tactic when revenue is bleeding.
Instead of contract renegotiations, we should be thinking of a different phrase: mindset retraining.
Retraining yourself: Look at every step in the revenue cycle
Can you tell me every touchpoint that occurs between rendering service and receiving payment? Most independent physicians will say no.
To understand where you’re losing money, you must sit down and sift through every single touchpoint that occurs from the moment the patient walks into the door. So much can happen between then and reimbursement.
I’ve seen practices eat thousands of dollars in services because a code changed or a service that didn’t require pre-authorization a few months before does now. When you’re fighting for every dollar, and you’re already waiting weeks to months for money to come in, those are losses independent practices simply can’t afford.
I’m working with a practice now where the billing department and front desk are in completely separate parts of the organization. For a claim to make it from the front desk to billing, there are at least 15 channels it must go through first. Just think of the time that adds until reimbursement, not to mention the added confusion. Another organization was losing 3% of revenue on their second largest payer because they switched to virtual credit card payments. Those payments incur a fee to process through a practice merchant credit system, meaning the practice was actually paying money just to receive what they were already contractually due.
If you don’t have the time to do a full audit, you can get reports from your clearinghouse with data that may highlight the biggest problems: top reasons for denial, slowest payers, or the most common reasons for delays. But you have to start somewhere.
Ensure your staff is constantly being retrained and cross-trained
The only reason I learned about the intricacies and potential pitfalls of getting reimbursed is because I was lucky enough to work at a smaller practice with an old-school mentality. At my practice the owners believed in cross-training. Because we were small, they wanted everyone to know each other’s jobs in the event of an unexpected absence.
I found that in each function I performed, there were administrative nuances and burdens related to revenue cycles that I would have never found out about if I’d only focused on one position. Because of this approach the practice was efficient and understood every step of their billing and revenue processes. This allowed them to optimize revenue better than any renegotiation possibly could.
New doctors just starting practices are, paradoxically, the ones that still have an old-school view of what the front desk does. There was a time when all you had to do was find the friendliest person you possibly could.
Friendliness still matters. But over time the front desk has become the front line for revenue cycle management, burdened with more and more of the responsibility for billing and reimbursement. Out of everyone in the office, it’s most critical that they understand payers, plans, coverage types, clean data documentation, referral processes, required advance notifications, and more.
Only when you’ve taken the time to ensure your staff is up to speed can you stop the bleeding. Actually, you can do more than that—you can set yourself up for optimal revenue, prepare for the transition to value-based care, and begin to think about actually innovating your revenue cycle management to unlock even better, more efficient streams. Communication, education, and focus on the revenue cycle are essential when it comes to proper management.
All you need is the right attitude and willingness to face some hard truths. Which are a whole lot easier to face than the hard decisions that might come if you don’t.
Shawntea (Taya) Moheiser, CMPE, CMOM is an author, speaker, and owner of ITS Healthcare, LLC, a healthcare consulting company focused on innovation in healthcare management. She recently spoke at MGMA’s 2019 Annual Conference in New Orleans on this very same subject.