practice that involves analyzing every piece of the business — the revenue cycle, banking, claims, collections, etc. We mea- sure each component, look at the key indicators, and deter- mine how to be more efficient and profitable,” Mr. Steinle says.
Reports reflect financial health
While the business side of medical practice may represent for- eign territory for many physicians, being involved in financial management is vital to practice sustainability. At a minimum, physicians need to request a weekly management report from the practice manager and use it to monitor the practice’s charges, adjustments, revenue, expenses, patient encounters, and billing.
Ginger Douglas, an Austin-based practice consultant, rec-
ommends physicians meet at least once a month with the practice manager to review and address operational concerns and the practice’s financial performance. She says glancing at financial reports isn’t sufficient. Physicians need to work with practice managers, accountants, and financial staff to under- stand the data and to compare them with prior reports. For example, the income statement should list income and expenses for the current period and also list the same income and expense categories for the prior period, side by side. She says this comparative income statement allows a practice to see quickly how it’s performing now compared with the prior year and whether any revenue or expense items look unusual. In addition to income statements, the most important finan- cial statements physicians should understand and review are:
KEY METRICS AND FORMULAS
Gross collection ratio (GCR) Percentage of charge dollars collected
GCR = Total collections Total charges
Net collections rate (NCR) Percentage of collectable dollars collected NCR = Total payments Net charges
Days of gross fee-for-service (FFS) charges in accounts receivable (A/R) Gross charges are the full-dollar value, at the prac- tice’s established undiscounted rates, of services pro- vided to all patients. Using this formula will show you how long it takes, on average, to collect a day’s worth of gross charges:
Days in A/R (gross) = (Total accounts receivable) [(Gross FFS charges) x (1/365)]
Days of adjusted FFS charges in A/R Adjusted FFS charges are the difference between gross FFS charges and the amount expected to be paid by patients or payers. Using this formula will show you how long it takes, on average, to collect a day’s worth of adjusted charges:
Days in A/R (adjusted) = (Total accounts receivable) [(Adjusted FFS charges) x (1/365)]
Average service entry lag time The amount of time between the date of a service and entry of the charge into the practice manage- ment system
Average service entry lag time = Sum of lag time Number of charges
Clean claims rate The number of claims rejected by the payer or clear- inghouse or edited for missing or incorrect data compared with the total number of claims submitted during the month
Edit or rejection rate = Number of edited or rejected claims Total claim count
Denial rate The number of claims denied compared with the total number of claims submitted during the month
Denial rate = Number of denied claims Total claim count
March 2014 TEXAS MEDICINE 21
Page 1 |
Page 2 |
Page 3 |
Page 4 |
Page 5 |
Page 6 |
Page 7 |
Page 8 |
Page 9 |
Page 10 |
Page 11 |
Page 12 |
Page 13 |
Page 14 |
Page 15 |
Page 16 |
Page 17 |
Page 18 |
Page 19 |
Page 20 |
Page 21 |
Page 22 |
Page 23 |
Page 24 |
Page 25 |
Page 26 |
Page 27 |
Page 28 |
Page 29 |
Page 30 |
Page 31 |
Page 32 |
Page 33 |
Page 34 |
Page 35 |
Page 36 |
Page 37 |
Page 38 |
Page 39 |
Page 40 |
Page 41 |
Page 42 |
Page 43 |
Page 44 |
Page 45 |
Page 46 |
Page 47 |
Page 48 |
Page 49 |
Page 50 |
Page 51 |
Page 52 |
Page 53 |
Page 54 |
Page 55 |
Page 56 |
Page 57 |
Page 58 |
Page 59 |
Page 60 |
Page 61 |
Page 62 |
Page 63 |
Page 64 |
Page 65 |
Page 66 |
Page 67 |
Page 68