In October 2006, Schneider-Maurer Foot and Ankle Associates, plagued with minimal cash flow and a claims denial rate exceeding 50 percent, put a machine in charge.

The two physicians at the Aspen, Colo.-based practice knew they were effectively leaving their earnings on the table, and they were tired of it. So, they hired Amy Perchick as their new practice administrator. Perchick quickly noticed that “the doctors weren’t keeping up to date, and the business billing manager wasn’t keeping up to date.” Along with letting said billing manager go, Schneider-Maurer researched and purchased a new, well-suited practice management system.

Today, that table is virtually clear of uncollected money. “Our claims denial rate and our cash flow have improved dramatically,” says Perchick. “It’s the first point in five years where we have cash in the bank, and we’re able to offer a retirement benefit to our employees. That all happened within 10 months.”

As much as Perchick would like to take credit for the practice’s financial turnaround, she attributes much of the glory to the practice management system, which has the ability to edit, or “scrub,” claims before they’re ever submitted for payment.

Most medium- and large-sized practices have a practice management system of some sort, to help schedule appointments, analyze patient demographics, bill for services, and otherwise keep a practice buzzing along administratively. However, many small practices consider investing in a practice management system to be a waste of valuable funds.

This stance couldn’t be more wrong. In fact, implementing a practice management system may be the best financial move your practice could make. Small practices in particular have far less latitude when it comes to reductions in revenue due to improper claims processing.

Think about it: Biting into a comparatively small overall budget with a high percentage of denials can cut the bottom line right down to the quick — and very quickly at that. But if you select, implement, and use a practice management system wisely, you’ll find you really can fill your practice piggybank to bursting with every one of those hard-earned pennies.

An electronic solution

For starters, look for a practice management system with a component that lets you not only manage billing but also submit claims electronically. Electronic claims submission alone can make a notable financial difference for your practice, says Pam Waymack, managing director of Phoenix Services Consulting in Evanston, Ill. “If you look at the number of claims you’re sending [by mail], not paying postage is your first savings opportunity,” says Waymack. “Second, every payer I know pushes electronic claims through faster than paper. . . . Instead of waiting 28 days for Medicare to pay, it’s 14 days until the check is in your account. There is a value to that.”

Faster payment on claims, of course, means increased cash flow for your practice. Waymack also touts another benefit to electronic claims submission: fewer errors from payers. “If the payer has to sit there and pound in a thousand claims and put in every CPT code, there are going to be errors. There are going to be transpositions,” warns Waymack. “Those are going to come across as overpayments or underpayments, which as a provider are going to cause me more work.”

Find the right package

That all said, let’s step back a moment. Just because you need a practice management system is no reason to throw your hard-earned dollars willy-nilly at the first system you find. You could end up with a system that doesn’t really help your practice. The result? A complete waste of your money and your time.

The Florida Heart Group learned this lesson the hard way. Certainly, a dynamic practice management system was a must for the practice’s four offices, 19 physician providers, and 60,000 annual office visits. Yet its old system could not identify recurring issues with denials, because the software made it difficult to run reports on a specific denial category.

“We were on a practice management system that really kind of tied our hands as far as being able to run reports that were effective and that would help us with our utilization of the system,” says Joan Bryan, 12-year veteran practice administrator for the Orlando group. “You had to do each and every single claim as an individual report. When you have a practice this large, that is very difficult.”

The practice’s new system is much more versatile, allowing Bryan to produce reports by payer, physician, CPT code or claims category, along with many more options.