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 income you and your team have earned. So let’s get started!
Tip 5 of 12 – How Many Patients Do You Need to See to Cover Your Overhead and Make a Competitive Income?
Encounters per Provider/Provider Production:
a. Assessment: An evaluation of provider production should include a comparison of both encounter volume and wRVU generation against industry benchmarks. Revenue opportunity number 4 addressed instances where encounters are meeting benchmarks but wRVU are not. The second revenue opportunity occurs when both encounters and wRVU fall below the industry benchmark.
The production-based revenue opportunity is determined by identifying each provider’s encounter shortfall from the organization’s specialty-specific volume goals per provider full-time equivalent (FTE) and then converting that encounter shortfall to wRVU shortfalls by using the actual provider’s wRVU per encounter ratio. Multiply the wRVU shortfall by the provider-specific actual net revenue per wRVU to calculate the revenue opportunity per provider.
b. Improvement Action: The cause for a performance shortfall around this opportunity must be identified before establishing a solution.
A first step in seeking the cause will be to assess each provider’s time committed to direct patient care. A standard for comparison is typically no less than 36 hours of direct patient care per week for each full-time provider. The time assessment can be completed by reviewing the provider’s schedule template. The organization should get physician leadership consensus on this time standard to have an effective solution. With that standard in place, the physician specialty leaders can work with the applicable physicians and their staff to expand schedules.
The next step in seeking the cause will be to identify the average number of weekly patient encounters scheduled for the provider. Benchmark variances found in this step can be attributed to several factors, including limited demand, restrictive scheduling, above-average times per encounter, and a high-intensity service mix. Limited demand may be addressed through market development and referring physician outreach activities. If these activities do not generate the needed volume, actions to rightsize the physician enterprise may become necessary. Restrictive scheduling and extended encounter times can be addressed through provider-to-provider counseling and compensation arrangements. The last factor, high-intensity encounters, should take care of itself as the wRVU generated per encounter in a high-intensity service mix should exceed the benchmark.
A final step in the assessment will be to identify the actual average encounters per week completed by the provider. Excessive no-shows are typically the problem source when scheduled encounters meet the benchmark, but actual encounters do not. No-shows can be effectively reduced through an in-depth analysis to identify the characteristics of the high no-show populations and then conducting focused pre-service calls to address those specific populations. Another reason for a low actual to scheduled encounter rate may be excessive clinic or encounter cancellations directed by the provider. As with restrictive scheduling, this problem is addressed through provider-to-provider counseling and compensation arrangements.
If low patient volume is the issue, you also need to be very serious about marketing and take action! Here is a link to a MedCV practice marketing and patient communications article with tips and tools you should implement NOW! Although originally written during the Summer of 2020 with the Pandemic in mind, the salient ideas and practices mentioned continue to be relevant and vital to every practice to this day. Get Your Patients Back! Practices Must Communicate with Their Patients
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 6 of 12, Value-based care revenue 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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