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Practice Pointers: Stop the money drain!


Could careless management be costing you "at least 12 percent of revenue," to quote one expert? Here's how to find and fix the nine most common dollar leaks.


Cover Story


Stop the money drain!

Jump to:
Choose article section...1. Coding too conservatively 2. Accruing too much staff overtime 3. Scheduling inefficiently 4. Not registering associates promptly 5. Failing to collect copays 6. Forgetting about hospital services 7. Letting your fees stagnate 8. Overspending for supplies 9. Not listing all diagnoses

Could careless management be costing you "at least 12 percent of revenue," to quote one expert? Here's how to find and fix the nine most common dollar leaks.

By Deborah A. Grandinetti

You may not be able to stop reimbursements from declining, but some things that affect practice income are within your control. If you look closely enough, you may find a number of areas where you can pocket dollars that are now being lost needlessly. Indianapolis practice management consultant Michael D. Brown says that physicians "easily lose at least 12 percent" of their revenue through carelessness.

Here are nine key areas to explore. The practice management experts we consulted say these are the most common money-losing mistakes primary care physicians make.

1. Coding too conservatively

It's natural to want to reduce your risk of an audit. But needless downcoding was the top problem each of our experts cited when asked about the typical ways primary care physicians lose money.

Every time a northern New Jersey physician uses a 99212 when he can legitimately claim a 99213, for instance, he's out $15. If he does that routinely over the course of a year, the potential for lost income is enormous.

Practice management consultant David C. Scroggins has done coding checkups for many of his clients. "It's amazing how often doctors downcode on evaluation and management services," says the Cincinnati expert, who's with Clayton L. Scroggins Associates. "I've found that one doctor out of every three or four is really in trouble. That doctor could be losing $20,000 a year. Other doctors may have one category of visits coded properly, but several others are way off."

Fix the problem, and "the money goes straight into your pocket," says Scroggins.

How do you do that? Read up on coding and attend a coding seminar once or twice a year. "In primary care, you make your money from approximately 15 codes—for new and established office and hospital visits," says Scroggins. "Family physicians may use the same four codes for established patient visits 4,000 to 5,000 times a year. These represent about $250,000 of their income. To get paid, you've got to know what the rules are."

Smart computer software—including programs that can be used with a pocket-size personal digital assistant—also knows the rules and will compute the codes for you. But use it as an aid, not as a substitute for your own efforts.

If you're too rushed to do the necessary documentation to be paid in full, invest in a system that uses voice recognition technology so you don't have to chart manually, suggests Ted Byer, a practice management consultant with Mintz Rosenfeld in Fairfield, NJ. Some systems allow you to dictate your notes into a digital recorder small enough to carry from exam room to exam room.

At the end of the day, you or your assistant can download the audio file into the office computer. The next morning, your chart notes will be in the printer, ready for you to proofread.

2. Accruing too much staff overtime

"Many physicians are unaware of how much overtime they're paying employees," says Sherry Migliore, a director of consulting for PMSCO, a subsidiary of the Pennsylvania Medical Society. But time-and-a-half pay can add up quickly, especially if employees are asked to work overtime regularly. If that's the case, you need to find more-creative ways to staff your office.

Let's say that staff members arrive at the office on time, but you're always late—and that you ask key people to stay until you finish up. Consider staggering the starting time, so that staff members who stay until you leave start their workday later.

Another way to limit overtime, says Lansing, MI, practice management consultant Gray Tuttle Jr., is to hire a part-time medical assistant to help the nurses, so they can leave on time. The disparity in salaries may make this idea more economical than paying your highest-paid employees time and a half.

If you need more help during certain times of the year—say, flu season—develop a pool of temporary part-timers you can call on as needed.

3. Scheduling inefficiently

Scheduling problems can be costly. Unless capitation is involved, you stand to lose money for each no-show. One solution: Assign a staff member to call patients the day before to remind them of their appointments. Sure, you'll be spending money on phone calls and staff salary, but not as much as you'll lose if patients don't show.

If your practice is open evenings and weekends, but appointments then are sparsely filled, consider cutting back—to, say, two nights a week—until you've got enough patient demand to justify keeping the practice open, says Sherry Migliore. Why pay for staff salaries and utilities on those extra nights?

Conversely, if you don't lack for patients, you may be able to open another appointment slot or two per day by rearranging your schedule. This can easily bring in another $100 to $150 per physician, says Gray Tuttle. One effective way to do this is to look back over several months' worth of visits, analyze the kinds of encounters you typically have each day (lengthy ones for new patients, quick revisits, emergencies, etc.), and change the way you allocate time slots.*

For instance, Tuttle suggests that some practices can free up time by scheduling several 15-minute visits when the practice first opens, and interspersing the longer appointments throughout the day.

4. Not registering associates promptly

If you hire a new physician, get the registration process with payers rolling as early as you can. Four months prior to the start date is about right, says David Scroggins. If you start too late, the doctor won't have the provider information he needs to begin billing some commercial and government payers.

The staffer in charge of the enrollment process should ask for the application form in writing, then follow up by phone if it doesn't arrive in 30 days. Once the application is submitted, she should follow up every 30 days to make sure the plan will pay for patients the new doctor sees beginning on the first day.

The application will ask for the practice entity's tax ID number, as well as the new physician's provider number, says Scroggins. This isn't a problem for established practices, but physicians who are leaving to strike out on their own will need to acquire an entity tax identification. They also need to provide a street address for the practice—which means they should have an office address before they register.

5. Failing to collect copays

Make sure the people who work your front desk are conscientious about collecting copays at the time of the visit. Failure to do so can cost your practice as much as $20,000 a year, says Sherry Migliore.

If your practice misses the opportunity before the patient leaves your office, it may not be worthwhile to mail out a bill. McKeesport, PA, practice management consultant Stanley Pollock estimates that it costs $6 to $11 to send a bill out manually.

Put your payment policy in writing and share it with new patients at the first visit. Since some patients will still show up at your office without cash or checkbook, be ready to accommodate credit cards.

Even if your staff stays on top of collecting copays for routine services, you may be missing the boat on copays for preoperative, postoperative, and prenatal services. Let's say the patient comes in 10 days after an operation so you can check her stitches. While this is traditionally part of a global fee package under fee-for-service arrangements, most HMOs allow you to charge at least a copay, says Mary Jean Sage, a practice management consultant in Arroyo Grande, CA. Just be sure to check your HMOs' policies.

6. Forgetting about hospital services

How well do you remember to tell your billing office about the hospital services you provide? Without a good system for capturing these charges, they're likely to slip through the cracks.

"I can't tell you how many times we find that physicians neglect this," says Migliore. One of her ob/gyn clients reports inpatient services by calling the billing office from the hospital as soon as he finishes a procedure. Other physicians make it a point to carry small index cards at the hospital. They use these to document their services, and then turn them over to their billing clerks.

You could also be cheating yourself with ancillary services you order in your own office, says Michael Brown. To remedy this problem, assign one person in your office to check the chart of every patient who was seen that day, to make sure that the practice bills for all ancillary services. This individual would also be responsible for tracking payments for such services.

7. Letting your fees stagnate

When was the last time your practice updated its fee schedule? You should be doing this every year and making sure you charge at least what Medicare pays, says Migliore. Practices that don't revisit their fee schedules annually can lose revenue from cash-paying customers.

It's a good idea to analyze your costs for the past three years, and compare those figures with changes in reimbursements from each payer during that time. Migliore says that payers will sometimes meet your increases for certain services provided that you document how much your costs have risen.

8. Overspending for supplies

According to practice management consultant Stan Pollock, clinical supplies should run no more than 4 percent of your gross; clerical supplies should run 2.5 to 3 percent. But a lot of practices overspend here. He's even seen cases where practices pay for supplies but never receive them, because no one is keeping track.

If you plan ahead and buy in bulk, you'll save. "Let's say that you save 10 percent, or $1,000, buying your table paper in bulk. If you can save $1,000 on each of 10 different products for your office, that's $10,000," says Pollock. The trick is to track your inventory needs over six to 12 months, so you can buy ahead for that period.

9. Not listing all diagnoses

You could be cheating yourself out of future income if you don't list on encounter forms all the diagnosis codes for capitated patients with multiple conditions. "We see this a lot," says Migliore. "Some physicians figure that since the patient is capitated, why bother? But if you don't document all of the conditions, the payer won't know how sick your patient population is and won't develop accurate statistics on your practice." If you take a few minutes to list all relevant diagnoses, however, you could get a better capitation rate next time around, she says.

*For more tips on scheduling efficiency, see "You mean I can see the doctor today?" March 20, 2000.

The author is a former Senior Editor of Medical Economics.


Deborah Grandinetti. Practice Pointers: Stop the money drain!.

Medical Economics


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