Physicians should reevaluate their revenue cycles, which are too often overlooked, according to David Wold, CEO of Healthcare Information Services in Park Ridge, Ill. "There's a huge correlation between profitability and how the revenue cycle is managed," he says. "The revenue cycle of the practice is the bloodline."
Here are Mr. Wold's top eight revenue cycle concerns for orthopedic practices and ways physician owners can fix them.
1. Too many days are tied up in accounts receivable. One of the critical performance indicators Mr. Wold looks at with his surgeon's practices is the accounts receivable cycle. For the practice to make a profit, billing must be sent out promptly to get a return. Any unnecessary delay will cost a center its profit.
When working with orthopedic practices, he looks at what the turnaround is for billing. "Track that on a monthly basis," he says. "By tracking the percentages in your accounts receivable, you're looking at it every month for trends."
Monitoring the cycle each month will allow you to see if you need to devote more or less resources to an account and keep better track of all dollars.
2. Payments and cases are not reconciled daily. Even some of the best practices will lose revenue from neglecting to bill a visit. "It's amazing how many encounters get lost from the clinic to the billing office," Mr. Wold says.
At the end of every day, a clinic's administrative staff should sit down and reconcile each patient seen with the number of total charge tickets for the day. It's a simple thing to do, he says, but it can have a large impact on making sure each patient is appropriately charged for the practice's services.
3. Patients don't get charged for durable medical equipment. Another prominent area where physicians are "leaving money on the table," Mr. Wold says, is neglecting to charge for each piece of durable medical equipment distributed.
Most practices do not have good systems for distribution of slings, braces and more, he says. A physician will recommend DME for a patient and one assistant will give the product to another assistant, and somehow the patient is never charged for the product.
Mr. Wold recommends a daily capture of inventory versus billing to see what exactly your practice spends in terms of inventory and amount profit made. He also suggests figuring out a way to centralize DME and develop a process for distributing inventory and properly billing for it.
4. Unforeseen insurance denials. Before reimbursement rates began to drop, procedures were getting paid in high volumes and physicians could afford to pay less attention to the insurance denials. Now, Mr. Wold says, zeroing in on why denials are happening will save a practice significant money.
"The number one reason for denials is poor insurance information," he says. "If you have the wrong insurance information and perform surgery, your cost to collect quadruples."
Rather than losing money on insurance denials, do extra work on the front end to avoid sending improper information to your payors. Technology now affords orthopedic practices the ability to monitor whether the insurance company will cover a patient's procedure. "Software can work with practice management systems and can do eligibility verification before a patient comes in," he says.
5. Payor contracts are going unfulfilled. A big challenge, particularly for physicians in smaller offices, can be the inability to monitor the amount reimbursed by payors versus the negotiated pay rate.
"We have found even in large practices several examples where payors have underpaid to the tune of $100,000," Mr. Wold says.
If possible, a practice should use an enterprise system to run payments through for comparison with the negotiated rate. "Even if you don't have the technology, randomly go through and do an audit," he says. "If you see a pattern of under payment, allocated additional resources [to fix the problem]."
6. Small balances are slipping through the cracks. When administrative staffs are shorthanded or overwhelmed by tedious revenue issues, small charges often slip through the cracks. These amounts may be insignificant on their own, but they add up after a year.
"It's common that practices with limited resources go after big surgical cases with big dollars," Mr. Wold says. "That makes sense, but all of a sudden, 18 months later, you are looking at $65,000 to $75,000 of outstanding bills that haven't been collected with $100 or less. That's lost profit."
He suggests assigning one person to pursuing balances totaling $100 or less. Designating time for small claims will add up in the long run.
7. Surgical charges are late. It's a common problem for physicians to get behind on surgical charges, both due to large case volume and a lack of discipline, Mr. Wold says. These late charges have a huge impact on the profitability of the practice.
He suggests working with the physicians and staff members to tighten up payment schedules and catch up on charges.
"Set up a mechanism to go from 30 days to four or five days and you will have this one-time huge windfall because you got caught up," he says.
8. No physicians are involved in the revenue cycle. When none of the physicians in a practice are involved with the company's billing side, it can create problems. It's unrealistic to think all of the practice's surgeons will be privy to the revenue cycle, Mr. Wold says, but designating one physician to stay involved will greatly benefit the entire company.
Having an interested physician who is educated about billing matters makes the entire practice more efficient.
"In order to maximize the revenue cycle, the physician has to recognize it starts with him or her providing that service and making sure their leadership team or administrative team has the resources they need to get the job done," he says.
More Articles on Revenue Cycles:
5 Steps to a Better-Run Surgery Center Revenue Cycle
16 Tips for Optimizing a Surgery Center's Revenue Cycle
8 Quick Tips for Orthopedic Practice Revenue Cycle Management
8 Revenue Cycle Concerns for Orthopedic Practices & How to Fix Them FeaturedWritten by Heather Linder | August 16, 2012
Orthopedic practices are in a time of constant change with reimbursements, patient volumes and elective surgeries all declining. These changes are forcing physician practice owners to reevaluate processes and tackle inefficiencies.
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