This is the first in a series of exclusive articles for ‘e-News from MAG’ that will highlight ways for private practice physicians to improve their practice’s financial performance.
Solo primary care practices in small markets face a number of daunting challenges when it comes to keeping their doors open in today’s environment. Managing three critical factors – including medical coding, medical billing and the practice’s “patient panel” (i.e., payer mix) – can dramatically improve cash flow, profitability, and odds of survival.
Coding: Most physicians under-code because they assume that they will reduce their chance of a RAC (Recovery Audit Contractor) audit. However, under-coding leaves cash on the table – more than $30,000 in one case. The goal should be coding that reflects reality, a practice that will also offer the best offense during an audit.
Medical Billing: Even if it’s outsourced, the billing function is critical and should be closely monitored. The billing process begins when a patient calls for an appointment and ends once the payment is received in full (i.e., the funds have been deposited into the practice’s bank account). And a lot of missteps can take place between those steps that can congest the process and reduce cash flow, including…
- Incorrect patient demographics or outdated insurance data
- Incomplete charts and delayed charge posting and/or claims submissions
- Uncollected co-pays and other patient obligations – an especially key consideration given the proliferation of high deductible plans
- Ignored insurance denials and languishing accounts receivable balances
It is also imperative for practices to employ systems that can track key practice revenue cycle performance metrics.
These measures should be reviewed frequently, discussed at regular business meetings, and tied to employee performance evaluations and compensation.
Patient panel: A practice’s patient panel or payer mix (i.e., the distribution of Medicare, Medicaid, commercially insured and uninsured patients) directly impacts a practice’s profitability. A practice should understand 1) what services it can deliver profitably (services the practice perhaps should focus on growing) for each payer type and 2) the ratio of profitable vs. unprofitable services it needs to maintain in order to “keep the lights on.”
Scheduling is a key function that can be used to manage a practice’s payer mix. With scheduling guidelines, physicians can deliver good care to their patients while they also ensure that their practice stays in business.
It is also worth noting that targeted marketing can attract patients with more desirable payers. Given the ongoing implementation of the Patient Protection and Affordable Care Act, it’s a great time to take advantage of the uncertainty in the marketplace to attract patients who might be looking for new providers.
No one ever said that running a solo practice is easy, but the physicians who are pragmatic, methodical and deliberate when it comes to managing these three key business considerations will have a competitive advantage.
About the Authors:
John Maynard is a past Assistant State Director with The University of Georgia Small Business Development Center. He provided practice management consulting to small medical practices in Georgia. He also taught a practice management rotation at the Mercer University School of Medicine.
David LaBorde, M.D., is the CEO and co-founder of SwiftPayMD (swiftpaymd.com), a charge capture and revenue cycle management business intelligence platform. He graduated from Yale Medical School and Harvard Business School, and he frequently speaks on revenue cycle management, technology innovation in health care, and medical economics.