You don’t know how much money you have in the bank. What if I told you, you can calculate a projection of your inflow for this month?
I often ask the question, “What are your projections for inflow this month?” Often, I get a glazed over blank stare or a stammering of excuses why they don’t know. Can you imagine how an employee would feel if they did not know how much money they were going to make on their next pay period? How on earth would they be able to budget their expenses? They wouldn’t know if their mortgage was going to be paid, or if they were going to be able to provide for their family. So why is it that so many practice owners just don’t know how much inflow will be coming in for the month?
It's actually very common within industry that the people keeping track of the money coming in really just roll the dice and “hope” they get paid from insurance companies. Everyone feels like their hands are tied, give up and just become complacent and “trust” they will be paid. There is a much better way, and it will help practice owners sleep better at night.
Projecting your inflow is very easy. It is based upon your current daily inflow and the number of working days in the month. But before we get to that formula, here are some areas that will need to be addressed right away to make sure you are getting your money as quickly as possible.
• If you have staff that complete their notes over the weekend instead of the day the patient was in, get that habit changed immediately. Like we talked about with DSO, it is critical staff complete all of their notes that will be charged out the same day the patient was seen. This will decrease the number of days out that you will be paid, and make it much more accurate to predict your monthly inflow.
• Bill claims out every day. It may seem like a lot of work, but it's really only minutes per day and the constant flow of income into your bank account will make it easier for you to stay on-point with your budget. Not only do you want to send claims out on a daily basis, but tighten that belt a bit further and bill claims out the same day the patient was seen. Yes, it's possible and the rewards are too great to pass up.
• Post monies coming in the same day they are received. This will keep your A/R in check, and you’ll be able to better understand the paying habits of your payers. Why is this important? Well, Medicare has 14 days from the time they receive the claim to pay it. If you have any Medicare A/R over thirty days, that’s a problem for you, look into why that’s happening. Blue Cross, Aetna, and sometimes Blue Shield pay within a week. Healthnet and Cigna will pay within about ten days. All of this is important so that you can tailor your follow-up process based upon payer and know if they are paying on time.
Now that you have your items to follow up with and your process in place, it’s time to project out what your Inflow will be for the month. You will need to calculate your average inflow per day and multiple that by the number of working days in the month.
Average Inflow Per Day = $21,000
Month of February has 20 working days
Projected Inflow for February is $420,000 ($21,000 * 20)
Based upon how much money is posted on a daily basis, this number will fluctuate and this is why it's so important to send out claims daily and post daily. But once you have a better idea of what you’ll be bringing in for the month, you’ll be able to better budget your expenses.