Optimizing Your Practice Cashflow Has Never Been More Important – Here is How

Practice Cashflow

12 Part Series: MedCV Practice Financial Management – Insights & Tips You Need to Know About to Quickly Maximize Your Income

In the coming weeks John Rezen, FACHE, MHA and the MedCV team will be providing short “2-3 minute reads” you can sink your teeth into on what you can do to assess and improve your practice financial performance in 12 essential areas. Each one of the series can quickly add CASH to your bottom line just by having your practice “work smarter” for you. Even if you are not directly responsible for the management of your practice, knowing this information will help you make sure you are making the income you deserve.

Financial Improvement

As hospitals and medical groups emerge from the COVID- 19 economic shutdown, they will be faced with significant pressure to improve their financial performance. The following checklist of performance measures should help physician enterprises identify financial opportunities and accelerate their improvements.


  1. Allowable fee per wRVU
  2. Net insurance collection rate
  3. Personal pay collection rate
  4. wRVU per encounter
  5. Encounters per provider FTE
  6. Value-based care revenue


  1. Staffing minutes per encounter
  2. Average staff pay rate per hour
  3. Providers’ pay per wRVU
  4. Service costs-to-revenue
  5. Supply and drug costs-to-revenue
  6. Overhead costs-to-revenue

Tip 1 of 12 – Allowable fee per wRVU

  1. Improve Contract Rates:
    a. Assessment: Recurring contract negotiations with payers is necessary to make sure you are receiving appropriate rates for your services. Multiple factors play into the success of these negotiations including, the payer’s and the provider’s market leverage. Provider operational excellence demonstrated in service and quality metrics typically lead to greater market leverage and improves your negotiating position. An assessment of this opportunity involves comparing commercial carrier allowable schedules to Medicare rates. Each group of services; E&M Visits, Medicine Services, Surgical procedures should expect to see different percentages of Medicare. These rates will also vary by geographic region. Accordingly, an accurate evaluation of the magnitude of this opportunity will require a good understanding of your market and your service mix. Also, some commercial payers do not provide allowable schedules so in the absence of these schedules, the assessment will involve subtracting contractual adjustments from charges to identify allowed amounts. Under this second type of analysis you must insure you have a disciplined revenue cycle accounting system where only allowable based reductions are coded as contractual adjustments.

    The amount of this opportunity can be projected by identifying the percent of Medicare allowed for each service group and comparing it to industry benchmarks. The percent difference multiplied by the total allowed charges in each service group will identify the revenue opportunity for each commercial payer.

    b. Improvement Action: Initiate contract negotiations with each commercial payer where there is a revenue opportunity.  The projected opportunity level for each payer should help in setting priorities for the contract negotiations.  Determining the magnitude of opportunity for each payer and the commercial payer mix are first steps in preparing for these negotiations.  You must also understand your market leverage relative to the payor’s.  Additional preparation steps include, agreeing on a range of acceptable results, establishing your negotiating tactics, and agreeing on how far you will take the negotiations to achieve your goals. You must make sure you have sufficient managed care resources within your own administration or from the hospitals with whom you are affiliated to successfully conduct these negotiations. If not, there are a few vendors that provide this service who likely have better insight into appropriate contract rates.

Stay tuned for Part 2 of 12, Insurance Revenue Cycle Management next week. If you can’t wait that long, no problem, just contact John for the full 12 part series. Again, it’s in your best financial interest to make sure each of these 12 Key Performance Indicators are optimized, you understand them, and take action, even if the action you take is to share the series and your new found business insight with your group or hospital administration.

John Rezen

President & CEO
Value Health, LLC

MedCV Advisory Board Member

3 thoughts on “Optimizing Your Practice Cashflow Has Never Been More Important – Here is How

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

This site uses Akismet to reduce spam. Learn how your comment data is processed.

%d bloggers like this: