Improving Your Medical Practice’s Financial Health

Providers today should review their practice’s financial health routinely. Here’s what to check.

Providers today should review their practice’s financial health routinely. These numbers should be compared to the previous months as well as years and reviewed with the practice administrator on a regular basis.

Here is a summary of reports with a description of the importance of each:

Account Receivable (A/R) Reports

Monthly charges, adjustments, and payments: Charges, adjustments, and payments are all related. If you see a considerable change in your normal trend in these numbers early enough, it will allow you to be prepared for financial differences in the future. For example, if there is a decrease in charges one month, you can expect a decrease in payments in subsequent months. Other areas of concern would be if charges are steady but the payments are starting to decrease.

Days in A/R: How old are the unpaid dates of service in our system? Ideally, we want to see most of our A/R in the 0-30 day range. One way to determine our days in A/R is to calculate what percentage of our AR is in 0-30, 60, and/or 90+. To calculate your AR percentages you would take your total A/R that is between 0-30 days old/Total A/R in system=0-30 A/R percentage. You would perform the same formula for each date span to calculate the remaining buckets.

Charge lag time: How long does it take to enter charges after the service is performed?  We like to see office based services to be entered in within 24 hours and off-site charges not longer than 72 hours. Date the charge was entered minus date the service was provided = charge lag time. 

Bill lag time: How long does it take the practice to submit the claims to the clearinghouse? Claims should be uploaded nightly after charges are entered. Many systems will show this date or the information can be retrieved from the clearinghouse.

Denials: What are our top five or ten denials for the month? Are they the same denials every month? Are they controllable or noncontrollable? A controllable denial is a denial that the practice could have controlled (e.g., coverage terminated, missing information) whereas a non-controllable denial would be out of the practice’s control (e.g., bundling, requesting medical necessity documentation).

Office Visits

New: Tracking how many new patient visits can assist with forecasting the growth of the practice. If there is a consistent decline in new patient visits the practice should investigate why. Perhaps the practice is in need of a strategic plan or needs to investigate marketing opportunities.

No Shows: By tracking no-show visits the practice can determine missed revenue opportunities or possible patient care issues.

Tracking the above information in a dashboard format will make it easier to review and monitor. In order for these reports and numbers to be of value, the data being utilized has to be consistent and pertinent.