Practice Financial Management – Insights & Tips From MedCV That You Need to Quickly Maximize Your Income
Hospitals and medical groups are finally shaking off the economic fallout of the Covid-19 Pandemic, but now historic inflation and looming economic uncertainties continue to place significant pressure on them to improve their financial performance. That’s why John Rezen (FACHE, MHA) in collaboration with MedCV have brought back this series of 2-3 minute reads on how You can assess and improve your practice financial performance in 12 essential areas. Each installment will help you and your team quickly add cash to your bottom line by allowing your practice to work smarter and harder. The following checklist of performance measures will help physician enterprises identify financial opportunities and accelerate their improvements. Below are the 12 topics, to read a previous segment, click on the name/link. The current segment is in Blue and upcoming segments are in Black.
- Staffing minutes per encounter
- Average staff pay rate per hour
- Providers’ pay per wRVU
- Service costs-to-revenue
- Supply and drug costs-to-revenue
- Overhead costs-to-revenue
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 the income you and your team have earned. So let’s get started!
Tip 3 of 12 – Patient Portion Pay Management
- Personal Pay Revenue Cycle Management:
a. Assessment: There are two groups of patients covered within this opportunity. The first are patients with insurance who owe a share of the fees through co-pays, deductibles, and co-insurance. The second are the self-pay patients who have responsibility for the total fee. Establishing a functional personal pay net collection rate metric for both groups of patients will depend on the organization’s financial resolution system. Based on best practices, payment expectations should be established for patients prior to receiving services and, if applicable, the patient should also be offered a pathway to seek financial assistance. Under this optimal system each patient’s net collection rate would equal the amount collected divided by the cumulative amount agreed to during the financial resolution process.
A conservative value for the revenue opportunity on this factor can be identified by subtracting the actual self-pay net collection rates from 92% and multiplying the difference by the total expected patient net revenue (direct personal pay plus charges transferred to patients)
b. Improvement Action: Patient financial resolution should be made a pre-service requirement when possible. Pre-service resolution provides for price transparency and sets payment expectations for the patient prior to receiving services. As a first step, make sure policies and procedures for physician service payments are addressed in the Organization’s Financial Assistance Policy. Next, establish standard processes for the pre-service assessment of patient insurance and benefits, projecting the services to be provided and the patient’s costs for those services. You must also develop policies and procedures for agreeing with patients on payment amounts and methods. Clear pathways for helping patients to seek financial assistance must also be established. With the above system in place the clinic managers should set performance standards on daily Time of Service (TOS) payments and monthly patient collections. To meet these standards daily TOS and payment plan goals should be established in advance by reviewing the patients, their balances, and the expected services to be provided each day. Next, variations in actual performance compared to the goals should be evaluated and serve as individual performance factors for your registration staff.
As a physician, if this sounds like a lot of work and maybe even has your “business anxiety level” up a few notches, you are not alone. The great news is that your role in this should just be to make sure it gets done and that those who are going to be responsible and accountable for this can explain and report details about what the plan looks like and its status to you.
Share this article with your practice manager, group administration, or hospital administration to make sure they are working on this or see what resources they have to get at this work. If they need help in getting started, they should consider connecting with John Rezen at Value Health. The key is to be able to have your baseline, you would expect your team to report to you the improvement(s) made and the results.
Stay tuned for Part 4 of 12, Improve wRVU per Encounter 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.
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