Steve Rebagliati, MD, MBA


You may already have a financial adviser you know and trust, but you’re still personally accountable for understanding what’s happening with your own money. And this is where the right financial management software can help.

There are three elements to using financial management software, and the key to all of them is their reporting structure. Such software includes:

 with reports that describe your accounts receivable outstanding, average aging of accounts receivable, and bad-debt collection rates; 

 such as Quickbooks, Quicken, and Peachtree are useful financial management tools that can help you know where your cash is coming and going and can create specific financial reports; and

 like Microsoft Excel allows you to manipulate information to develop a deeper understanding of your financial future.

When I ran a single-specialty group with 10 physicians, I used a third-party billing service to provide the practice revenue measurements mentioned above. You may want to do the same. Otherwise, be sure that the practice management module you use shows you how long your accounts are aging by patients, payer mix categories, and specific payers.

This functionality is important to help you pick out “red flags” in your cash flow. For example, some six months into restarting my medical group (which had become insolvent under the prior owner), I noticed that one particular payer was shorting my revenues by improperly paying a substantially discounted rate. 

The billing reports made it clear what was happening and I was able to take the company to task. The reporting structure for your billing has to be robust 

 accessible to you. This is often not the case with billing companies.

Financial management software should let you take easy-to-understand snapshots of your financial position at any given time. Your three most important financial statements are your income statement (sometimes called P&L), your balance sheet, and your cash flow statement.

You will need to learn a little about each of these, and there is a tradeoff among software packages that offer different levels of reporting “cleanliness” depending upon your accounting knowledge. 

You cannot simply abdicate all of this work to an accountant. If you do, you may make the embarrassing mistake I did. Knowing that something called a cash flow statement existed, I asked my accountant to project my medical practice’s cash flow needs for the next 18 months. Of course, not knowing how to read cash flow statements, I didn’t know the assumptions that went into this kind forecasting. This led to an unexpected $40,000 shortfall one month that I had to make good on out of my own pocket. 

So my recommendation to you is to look at either Quickbooks or Peachtree and use them to generate some financial reports for yourself. 

If you want a quick and easy way to choose I would say this: If you’re willing to read a hundred pages or so out of a good financial primer for doctors (and I can recommend several), then go with Peachtree; the double-entry bookkeeping is explicit, and the financial reports are very clean and easy to understand in standard accounting terms.

But if you’re unwilling to learn even the basics, then something like Quickbooks, which integrates your bookkeeping in the program’s background and looks and feels more like a checkbook register, will do the job for you. However, although Quickbooks’ financial statements are formatted in a way that makes them easier for non-accountants to interpret, they can also lead to some odd and possibly misleading reports depending on how you set the software’s defaults.

I recommend the first alternative, coupled with a monthly meeting with your accountant. Better yet, have your accountant prepare the same reports you produce with your software package, and then compare them. That practice may result in an eye-opener that will save you from a $40,000 mistake. You can have your office manager generate the reports for you, but make sure 

What can a spreadsheet program like Microsoft Excel do for you? Excel lets you set up different models of your business. Working with your accountant and office manager, you can develop templates for the metrics that are important for judging your practice’s financial health. 

For example, have your office manager create a “sources and uses” spreadsheet. Such a spreadsheet has three parts:

The top third consists of all the sources of revenue important to you listed in rows down the left side. It’s important to customize this for what’s important to your particular situation. You can list every single patient account, payers individually, payer classes, networks - whatever degree of specificity you want, depending upon how much you want to fine-tune your revenue estimations.

The middle third consists of all the uses of your revenue. What did you spend your money on? Typically this would mirror your regular expense accounts, but it can include other categories such as anticipated equipment purchases and capital investments.

Then enter data in columns by the time periods of importance to you, usually monthly.

In the bottom third, have your office manager (or yourself) list four or five financial measurements that can best describe the health of your practice. For example, you can create a row for percentages of revenue spent on certain overhead expenses you think you might want to trim back. Or you might want to estimate the same percentages for expenses that you anticipate increasing as you grow your practice. This is a quick and easy way to get an “early warning radar” regarding where your practice is heading. You might discover early on that your expense ratios are growing faster than your revenues. Or you might discover economies of scale with improving efficiencies that signal you to grow even faster.

Using tools like this enables you to automate financial data and report it in a form you can use to make important strategic decisions, such as when to bring in new physicians, or when to add new benefits or training for employees.

Financial management software is to practice management what the discovery of fire was to the caveman. Learn to use it wisely, and you’ll eat steak as often as you want. Use it foolishly, or ignore tending it, and you’ll get burned.

Steve Rebagliati, MD, MBA, is a practicing physician. He offers these resources, ideas, and tips for using information technology to increase revenues, decrease hassles, and free up time, so physicians like you can succeed in a changing world. He can be reached at 

This article originally appeared in the May 2006 issue of Physicians Practice.

Articles

Steve Rebagliati, MD, confesses to one of his most costly mistakes - and explains how technology-aided practice management can help you avoid the same error.

The Tech Doctor: My $40,000 Mistake


How do electronic medical records help you make money? The key word is throughput. 

If you can't raise prices - and between the strained Medicare system and commercial managed care there is little hope of that - the only way to keep up, let alone advance your position, is to see more patients faster or drive down your costs. 

The right EMR helps you do both, provided you can actually get data into your system. 

Let's compare EMR input models in terms of their mobility, power, and ease of use. The basic options currently are: 

A single personal computer/workstation in every patient room; 


A handheld device such as a PDA (personal digital assistant); or 


PC workstations typically have keyboards that require manual data entry. On the plus side, they permit users to access patient labs fairly rapidly via full monitor display tabbed windows. Handheld devices are most useful for specific niche tasks or for when you want to capture data in real time by working off a checklist. So you might use a PC workstation for a robust, server-based EMR, but use a PDA if all you want to do is capture enough patient encounter data to generate a diagnosis and a billing code or write a prescription. 

Verbal input into medical records remains the most traditional and familiar method of data entry. While the average touch-typist physician might type as many as 50 words per minute, dictation is twice as fast. Most EMR systems will input transcriptions into patient records, allowing you to easily retrieve dictated notes. Other technologies will learn how to understand your voice, subsequently allowing you to dictate directly into your computer via voice recognition technology. 

Let's evaluate some concrete examples of interfaces. AcerMed is one example of a company whose EMR interface can run on a tablet PC. It's almost as easy as carrying a clipboard and a lot more flexible than using paper. 

A physician can carry a tablet from room to room, entering her chart notes in real time. A tablet PC's desktop is oriented to classic history, physical, and SOAP formats with appropriate templates for clinical charting. 

With AcerMed's product, you can use a stylus to point and click on templates that fill in a note you then can print out in a narrative format. This EMR, like many, also incorporates Dragon Naturally Speaking voice recognition technology, allowing you to point your cursor to a specific part of a note and then dictate your observations in real time. The Healthmatics EMR has similar mobility. Their desktop interface resembles Microsoft Outlook's folder format. 

Both products incorporate triage and workflow features that flag where patients are within their check-in processes. These are two good examples of how far EMRs have come in terms of ease of data entry. Workflow needs for ease of use and efficiency are resulting in giving users the ability to converge records, moving toward products that combine tablet PCs with Web-based interfaces. However, there remain significant differences between products' "look and feel" and their ability to integrate transcription and voice recognition options. 

Once you enter patient information into one of these devices, a key determinant of the usefulness of that information lies in a product's flexibility of output and inclusion or exclusion of certain functions. 


For example, does your vendor let you download key reports to a PDA you can carry around in your lab coat? It's nice to have a list of patients scheduled for hospital rounds that includes their admission date, room number, referring physician, key clinical data (allergies, medications, past medical history, problem list), as well as a charge-coding PDA "assistant" with physician-specific coding and modifiers at hand. This makes it easier to access and modify critical patient data in time-constrained situations (such as rounding on patients in more than one hospital before rushing to your clinic to start your day). 

The comparisons that follow are examples of three different approaches vendors have taken on the issue of mobility for ease of use. 

Vendors with well-defined, limited functions that translate well to PDAs. Examples include: 

AcerMed - This product uploads patient visit schedules and allows charge capture on its PDA portal (

Vendors who use larger platforms and exclude PDAs. In this case, vendors seem to have come to the conclusion that less is not more and that below a certain screen size there's not a lot of value to adding PDAs when tablet PCs are almost as portable. Examples include: 

Z-charts - These are totally paperless EMRs for ambulatory surgery centers (

www.zchart.com/zCHART_hardware_techspecs.pdf

CureAccess - These are Web-based and require laptop or standalone PC and Internet access (

http://cureaccess.com/download/CUREACCESS_Brochure.pdf

Vendors who use Web-based interfaces and claim usability in hand-held devices but refer more often to tablet PC platforms. Examples include: 

www.eclinicalworks.com/eclinicalworks6-7.php

    In researching this subject I found more than 100 vendors claiming to have developed "the ultimate EMR" with varying degrees of mobility for ease of use. While impossible to describe each of these in detail within this space, I hope these examples give you some idea of the variability in such devices' portability. 

EMR costs vary widely in this fragmented, hypercompetitive environment. From a larger vendor you can expect implementation costs of roughly $50,000 for a two-physician group and maintenance costs that vary between $5,000 and $10,000 or more per year. Lower-end products (robust, but with fewer features) can run much less - roughly $1,000 per physician with negotiable maintenance fees. 

How do you know which EMR to choose? The decision is a tough one. There are about 70 choices out there; however, the top 10 vendors make up about 50 percent of the market. 

You can see how record model, data entry method, and the scale of your supporting vendor all impact your decision. I'm collating a mountain of data on this topic and will be distilling it down into a special report I'll soon make available. To review it, go to 

This article originally appeared in the April 2006 issue of Physicians Practice

Steve Rebagliati, MD, reviews different methods for EMR data-entry.

The Tech Doctor: EMR Data Entry


As a physician, you are painfully aware of how much your profitability depends on a good payer mix - having as many patients insured by more profitable payers, or demographic segments where the collection rate is substantially higher than for other segments. Simply put, you need more of the higher-paying patients. 

The same demographic characteristics that make certain payer mixes advantageous correlate with use of the Internet; more affluent groups have better access. That makes it an ideal marketing modality for physicians. Traditionally, physicians have "advertised" via conventional mass media like the Yellow Pages, radio, and even billboards. Marketing via the Internet can deliver your message to more lucrative targets instead of everyone. 

One can lament this as "skimming cream," but someone will do it, and those who are successful can cater not only to the well-heeled but have more resources left over to treat more disadvantaged patients. 

And online marketing doesn't have to be overly complicated. One way to get a bigger presence on the Web is through Google. Everyone by now is pretty familiar with Google's place as the top search engine in the universe. But Google is also the leader in helping businesspeople reach the right eyes. 

Google offers two main ad services of interest to physicians: Google Adwords and Adsense. Google Adwords lets you place online ads that you pay for, but which can be highly targeted to your desired patient segment or service line. The beauty is that you only pay for ads that work. And you only pay for ads targeted to people who actually want your service. This represents an entirely new phenomenon in advertising. 

In the past, when you forked over money to pay for that half-page Yellow Pages ad, you knew it might increase your access to new patients, but you would never know by how much, nor would you be able to track your return on investment. The same is true for other mass media. Google Adwords, however, lets you control how much to spend per search term, how much you'll spend per day, and can even let you rotate ads so that you can find which one works well.

It also lets you place your ads by region, so potential patients in your area are the only ones who see it. Or you can advertise worldwide, which might make sense if you're a plastic surgeon whose patients can afford to fly over your competitors to come to you. It's all up to you. 

Don't underestimate the power of this tool. Not only can it get patients looking at you, it can also define what they want and what they're willing to pay for. Market research that used to take months now takes hours, at a fraction of the cost. And you can apply these same methods to learn more about the insurance companies and employers that you depend on for patients and payment. 

And this is only scratching the surface. Once you choose your keywords for your ad, Adwords lets you test different ad copies against each other for effectiveness. The service provides a robust reporting capability, and you can manage multiple ads and campaigns with multiple budgets. The versatility of this tool grants you leverage that previously was open only to Fortune 500 companies paying seven-figure retainers to Madison Avenue advertising agencies. Now you can manage a worldwide advertising campaign from your desktop for a fraction of the cost.

Google Adsense, on the other hand, is not so much a marketing tool as a way to make a little extra income. If you realize that patients use the Internet to research topics of interest to them, there's no reason why they wouldn't go to your Web site for some of that information. 

Through Google Adsense, you can automate a process whereby Google places advertisements of interest to your patients on your Web site. Every time someone clicks on a Google Adsense ad to learn more, Google pays you a commission. Bear in mind you are not being paid for referring a patient to another physician. You are being paid for allowing Google to use your Web site as a billboard. 

The wonderful thing about it is that you can provide your patients with a valuable research tool that costs them nothing. The advertisers pay Google for their ad placement; it doesn't cost you or your patients anything. This is the closest thing I know to having a money machine in your practice that generates revenue day and night, even when you sleep, while providing a valuable service. 

I have to caution you that there's no get-rich-quick opportunity. Like anything else, you have to know how to use these tools strategically. You also need to check the regulations and laws applicable to your particular practice situation. However, this kind of expertise is so valuable that it behooves you to learn more, or to hire a Web master who knows how to apply these tools. Otherwise, you're just leaving money on your clinic floor for others to pick up.

Steve Rebagliati, MD, MBA, is a practicing physician. He offers these resources, ideas, and tips for using information technology to increase revenues, decrease hassles, and free up time, so physicians like you can succeed in a changing world. He can be reached by e-mail at 

This article originally appeared in the March 2006 issue of Physicians Practice

Move over Yellow Pages, Google has some exciting - and affordable - tools for marketing your practice.

The Tech Doctor: Put Internet Marketing to Work


Sure, you use technology to schedule appointments and manage billing. But what about using it to communicate with patients, and even to improve their access to your practice? Patient-directed technology is one of the most exciting topics for today’s physician because of the leverage it can provide for actually increasing profits and decreasing liability. I’ve spent the last two years - and thousands of dollars - studying this subject and getting information from the best vendors and researchers in the business. The possibilities are so exciting that I actually teach a year-long course for physicians on this subject. 

But here, let’s focus on my three favorite strategies: 

Using your practice’s Web site as a true patient resource to free up staff time. 


Developing a secure e-mail communication system for patient questions and follow-up. 


Creating e-zines and other forms of electronic marketing. 

The dot-coms have come and gone, and the World Wide Web is about 10 years old now. Despite this, it’s astounding how few practices use their Web sites for a true competitive advantage. There’s no reason be intimidated and settle for creating just a brochure Web site, yet that’s what most practices do. It’s fine to put up a page with your practice location, photos of practitioners, and basic contact information, but if you stop there, you’re selling yourself short. 

One of the greatest values of a Web site is its interactivity and ability to engage visitors and capture contact information. In an era in which payer mix may make the difference between prosperity and insolvency, you can’t afford to let assets like your Web site go to waste. So offer online appointment requests, prescription refill requests, interactive forms for new patient information, physician-patient e-mail (more about that later), or even online bill paying. Of course, you also have to make sure people come there. 

Here’s a little-known secret about search engines and Web sites. Searches done on Google or other engines with one or two keywords usually mean the visitors are doing research but have no serious buying interest. Searches done with three or more keywords, however, almost always indicate the searcher is ready to buy. 

So if your medical group picks a Web site name with three keywords or more, you are likely to pick up new patient prospects who are actually looking for someone like you. For example, if you incorporate Denver Women’s Health Clinic into the URL - denverwomenshealthclinic.com - you’re likely to come up high on the search results whenever someone searches on these keywords. Whoever finds you will visit your Web site. 

Domain registration is a simple but critical step in building and maintaining your Web site. Simply put, it’s the manner in which real estate on the World Wide Web is reserved; when your domain name is registered and the registration is kept current, no one can steal it. 

I have used many different vendors for domain registration and hosting, and I can attest that the quality and expense vary tremendously. I’ve been burned by vendors going out of business and have, to my chagrin, discovered what a headache it can be to deal with some vendors based outside the United States (even in Canada). I’ll save you a lot of wasted money by recommending two domain registration services: Network Solutions (the most established but more expensive) at 

, and Go Daddy (in my book the most efficient and inexpensive) at 

. Go Daddy also provides domain hosting for under $10 per month; the vendor affiliated with Network Solutions charges $79 or more per month. Interland (

) is a quality vendor for somewhat higher end service, including Web design. 

Let’s look at secure e-mail communications. Recently, I interviewed attorney Stephen Rose, a senior partner at Preston Gates Ellis LLP, a prominent West coast law practice specializing in business and healthcare law. My lengthy conversation with him convinces me that you can safely use e-mail as a communication medium if you do two things: 

First, make sure your patients have given you written permission to communicate by e-mail; this satisfies not only HIPAA but also other federal regulations such as the Can-SPAM law. 

Second, use encrypted e-mail, either stand-alone on your own servers or with popular software such as Cypherus (

A classic solution, formerly a favorite of the wired community, is PGP (“pretty good privacy”). It’s now available in a variety of configurations (from desktop to enterprise-wide), and you can look it up at 

. PGP has partnered with Proofpoint, a company founded by the former chief technology officer of Netscape, to offer HIPAA-compliant e-mail and messaging solutions (

). You might also consider Kryptiq, a vendor whose product I’ve seen in action in medical practices and whose management team biographies read like a Who’s Who list of insurance and engineering gurus (

The encryption and secure e-mail industry is in a state of flux, with ferocious competition taking place today. I caution you to check out several vendors before picking one. That said, you ought to pick 

 for this service, and you should do this as soon as possible. Once you secure e-mail communications with your patients, you can answer follow-up questions in batches, using advice nurses if you like, to expedite the process. You can even use auto-responder software to create answers to frequently asked questions. No, most payers won’t reimburse you for time spent on e-mail, but then they don’t pay you for the time you spend on the phone either, and e-mail is much more efficient than phone tag. Obviously, if appropriately answering a patient question really requires an appointment and exam, you have the opportunity to instruct the patient to come in. 

Remember, too, that you are in a battle for the marketplace here. The more affiliation you can create via your Web site and e-mail, the better for you and your patients - even if the tasks aren’t reimbursed directly. 

Finally, consider taking your patient communication strategy to the next level with electronic letters, or e-zines. Surely you’ve seen, and may already use, paper newsletters to communicate with patients. Newsletters keep patients informed as to what is happening with your practice. You can use them to inform them of new providers or services, educate them for health maintenance, post articles about new babies you’ve delivered, and so on. 

Newsletters are also useful for framing expectations about your practice so they aren’t disappointed when they access care. Studies have shown, for example, that patient satisfaction is linked not to wait times, but rather to 

 wait times. So a newsletter that educates patients on scheduling, billing, and physician access can frame your practice in such a way that perceived performance exceeds expectations. 

You can immediately improve patient satisfaction and, with just a little effort, reduce liability risks and improve your payer mix by a judicious use of Internet and e-mail technologies. If you choose your vendors wisely, the cost is minimal compared to the payoff. 

Steve Rebagliati, MD, MBA, is a practicing physician. He offers these resources, ideas, and tips for using information technology increase revenues, decrease hassles, and free up time, so physicians like you can succeed in a changing world. He can be reached by e-mail at 

This article originally appeared in the February 2006 issue of Physicians Practice

Steve Rebagliati, MD, reveals how to rev up your Web site.

Author | Steve Rebagliati, MD, MBA

Articles

The Tech Doctor: My $40,000 Mistake

The Tech Doctor: EMR Data Entry

The Tech Doctor: Put Internet Marketing to Work

THE TECH DOCTOR: Rev Up Your Web Site