Physicians and medical practice executives don’t always have access to actionable information to identify where they may be falling short in one or more key areas of financial performance. And they often don’t realize it until it’s too late — when cash flow unpredictably drops, and the backlog of unpaid claims reaches crisis mode.
But many times, the main cause of these problems isn’t a lack of discipline on the part of administrators and billing manager—it’s a lack of revenue clarity.
Do you have access to actionable month-end reporting moments after you close? More than just monthly charges, payments, adjustments and an accounts receivable ledger? Can you review and assess your practice’s financial status in 5 minutes or less? Do you know where you’re leaking money and why? Are you getting paid what you should?
If you answered “I don’t know” to any of those questions, you’re not alone. Many of the physician practice executives we talk to are spending much of their time mining financial and revenue cycle management (RCM) reports and gathering data, which leaves them little time to implement organizational change.
In many cases, by the time they compile the spreadsheets to make decisions from, the data is already outdated. Additionally, with retrospective data analysis, you’re always behind, which makes it nearly impossible to proactively evaluate and plan for changes that lie ahead.
In many cases, meaningful financial evaluation is not what you can see, but what you cannot see. To break the cycle of chasing data and playing catch-up, practices need to bring forward meaningful data that drives good decision making. Follow these five steps to let go of the vague and embrace the clear.
Step 1: Commit to improvement.
Times have changed. If you don’t have a clear and concise monthly reporting package, commit to developing one. You likely know how well your practice is faring in some key performance areas, such as Days in A/R, but do you know your net collection rate? What avoidable write-offs are affecting your cash flow? Has your payer mix changed materially? Are your payers responding as quickly as they were last month? Typically, your standard reports from your practice management system or accounting system will tell you only part of the story. If you commit to a new way forward, gaining clarity into your revenue cycle is key.
Step 2: Believe you can tackle the problem.
Once you’ve committed to a new way of doing things, you can begin to let go of what may have been ineffective and time consuming for you. Evaluate metrics that are meaningful to your practice and can lead to better decisions. Dashboards with relevant KPIs can be created in-house using readily available tools such as Microsoft Excel. However, an increasing number of practices are benefiting from more sophisticated business intelligence and reporting solutions that integrate with their practice management software and automate reporting. These systems offer real-time insight into financial and operational key performance indicators such as provider productivity, charge lag, first-pass resolution rates (by carrier), or patient no-shows by geographic location.
Step 3: Consider leveraging technology.
Once you realize that a new approach can restore clarity to your medical practice, take a closer look at what tools are available. Analytics solutions can save administrative staff several hours of work each month, and reduce or eliminate time spent gathering multiple reports from disparate sources. Automating your reporting package may allow you to reallocate resources to different areas of your practice where they can make a greater impact. Furthermore, there are AI-driven workflow automation solutions that enable billing and administrative staff to prioritize tasks more effectively and eliminate the guesswork in managing claims. Economical technology solutions can reduce the burden of reporting, and increase timely access to actionable data.
Step 4: Take action.
Once you’ve considered the costs and benefits of various solutions that enhance revenue clarity, it’s time to get moving. If you’re considering a revenue cycle analytics solution, look carefully at capabilities. Is the technology capable of pulling data from multiple sources and synthesizing it into an easy-to-comprehend, dashboard-ready format? Can it derive insights through machine-learning algorithms? Can you benchmark your practice against other medical groups? You may find that you need a third-party consultant or industry expert to review your performance metrics and provide practice-specific recommendations. A good partner will drill down into what the numbers are saying, so you know what changes to make in order to drive improvements.
Step 5: Celebrate results.
By the time you reach this step, you’ve invested in one or more solutions that help you understand performance and boost profit margins. Shift your focus to measuring progress and using the extra time to implement initiatives that drive improvements. For example, if your average days in A/R spikes among the self-pay patient demographic, revamp your collections strategy, so it’s more proactive. You should be collecting most, if not all, of your self-pay dollars up front before the patient even sees the physician. Walk into your next board meeting with a list of actions and results, not just a stack of reports. Your board will thank you.
Having revenue clarity is the key to creating a sustainable, profitable medical practice. The healthcare industry is complex enough without having to stress about whether you’ll get paid. The more clarity you have, the less you’ll worry about your bottom line.
Matt Rolfes leverages his 13 years of experience in technology and finance to drive and support MedEvolve’s growth and operational success. Matt brings to MedEvolve expertise in accounting and finance, as well as corporate development and operations experience in both public and private companies. He joined MedEvolve as Chief Financial Officer in August 2013 after serving as the Controller of Streamline Health, a publicly traded, SaaS-focused enterprise content management, business analytics and computer-assisted coding software provider. Matt holds a BS in Business Administration with major studies in Accounting and Management Information Systems from the University of Dayton.