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How often and which practice reports should you deliver to your group’s physicians? The wrong answer could cost you big.
There were no obvious signs of trouble at the infectious disease group practice in Houston. Patient volume was strong, the physicians were managing a rigorous schedule, and reimbursement claims were more than enough to offset expenses and produce a tidy profit. So it came as a shock to everyone when the group’s coffers suddenly ran dry.
“The physicians were working very hard, but the staff had not been posting charges consistently,” recalls Belinda Ratcliff, director of client services for Global Healthcare Alliance, a medical billing services company retained by the practice to get its financial house in order. “By the time the charges made it into their system, they had exceeded filing limits for some of the health insurance companies, which have very tight submission deadlines. They missed their window of opportunity.”
It was an expensive lesson, and one that could have been easily prevented by regularly monitoring the group’s performance measures. “Physicians should not find sticker shock at the end of the month when they get their bank statement and say, ‘What happened?’” Ratcliff says. “They should be able to tell with weekly monitoring what money is coming in and what charges are going out so cash flow stays consistent.”
Too much or too little?
But in the information age in which an endless flow of financial data can be automated with a single keystroke, it’s not always clear which reports you should generate, how often you should review them, and which ones you should present to physician shareholders to keep them in the loop.
“We very often see physicians getting too little or too much information,” says Charles Thomason, president of Medical Management Associates in Atlanta, a practice management consulting firm. “If they don’t get sufficient information they won’t know what’s going on in the practice. But at the other extreme, there’s a lot of automated information available out there, and when physicians receive voluminous reports every month where the bottom line is not readily apparent, that information gets ignored altogether.”
So moderation is crucial. Practice administrators should generate as many reports as necessary to manage their businesses, says Thomason, but they should also cull the number of reports they give physicians each month to a critical few. In general, those reports should include a balance sheet (listing assets and liabilities), a profit and loss statement (also known as an income statement), and the office’s performance statistics (that should generally include the practice’s net collections rate, gross collections rate, number of days claims are in accounts receivable, percentage of accounts over 90 days old, and the practice’s overhead rate).
Thomason adds that it’s also helpful to provide physicians a snapshot of their individual productivity each week. These reports should include how much they billed, how much they collected, and how many patients they saw on a month-to-date and year-to-date basis. “These snapshots allow them to keep track of their individual productivity, and they’re easy to push out electronically,” he says.
Communication and consistency
According to Ratcliff, many administrators (and physicians) fall into a rut in which they become accustomed to reviewing just one or two measures of their practice’s status rather than regularly evaluating the big picture. “Some people need the minutia, but from the 10,000-foot level there are good metrics every physician needs to be reading, including charges, payments, and contractual adjustments,” says Ratcliff. She advises administrators to provide that information as often as physicians like, but no less than once a month. “I know some doctors who want to look at this daily.”
The six physicians at Alpert and Sermas Neurological Associates in Houston are among them. “If you start looking at these reports when you’re trying to figure out why your overhead is more than what you’re generating, it may be too late,” says practice administrator Marci Escobedo. Although her physicians have ready access to their practice’s performance reports, they also convene every three weeks to discuss charges, payments, and percentages, along with reimbursement trends.
“We communicate any problems we’ve had with payers,” says Escobedo. “If our claims are being held too long or a payer is reimbursing at an unacceptable rate, I let the doctors know so we can renegotiate a proper rate.” Recently, after tracking the declining reimbursement rates from a leading insurer, the practice opted to drop the plan.
Thomason says consistency is the final piece of the puzzle. It’s not enough to simply give your physicians the information they need when they need it. You also need to ensure you deliver their reports in the same format each month, making it easy for them to regularly size up their practice’s performance at a glance.
“That allows them to look at the key indicators and compare them easily from one month to the next,” says Thomason. “We call them dashboard indicators because it’s like driving a car. You should be able to glance down and see how fast you’re going and how much gas you have left. When one of those indicators falls outside the norm, it makes it easier to flag that and go back and drill down to more detailed reports.”
Shelly K. Schwartz is a freelance writer in Maplewood, N.J., who has covered personal finance, technology, and healthcare for 12 years. She can be reached via email@example.com.
This article originally appeared in the May 2008 issue of Physicians Practice.