Financial Tune-up for Your Small HealthCare Practice Ben Frasier 08/23/2011

Many times it can be difficult to really understand the important dynamics that your practice relies on. Really there are four essential components in driving revenue which management should focus. These strategies should be major focal points in which all other efficiencies are acquiesced. Component One: Revenue Sources The first and most essential part of your business dynamic is revenue. Thus your primary source of income should be derived from who is paying you. Who are the payers of your business? When reviewing your payer mix you also begin to really understand who your patients really are. In other words the payer and patient mix will tell management volumes about the gross revenue received on behalf of the patients. To analyze the revenue percentages, (1) begin collecting information in relation to total charges over a specified period of time. (2) As you compile the list of revenue sourced determine, measure and quantify the gross charges made to each payer over the same period of time. (3) Calculate the percentage of total gross charges for each payer. A list may look something similar to this itemization:
Company Name Medicare Medicaid United Health Group Blue Cross Wellpoint, Inc Kaiser Foundation Blue Shield Aetna Group Humana Group HCSC Group Total Percentage Volume 23% 13% 10% 10% 9% 8% 8% 7% 6% 6% 100%

Component Two: Payments Received by Payer Create a list of the top CPT Codes used within your practice. These codes can be different from one practice to another based on a physicians practice.

Focus on the items that are most used. Build these into a spreadsheet and connect them with the payer list like the one above. Be sure to focus on the reimbursement amount in relation to the explanation of benefits. For example purposed, the CPT Codes are fictitious but based on a dental practice.
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 TOP CPT Code Medicare Medicaid United Health Blue Cross WellPoint Kaiser Blue Shield Aetna D0999 D45667 D8787 D2435 D38746 D97234 D908423 D8373 D0823 D346635 D54857 D1232 D079897 D4355 D8968 D4556 D8886 D234556 D0009877 D2342 D43354 D9866 D75674 D3654 D5754 Humana HCSC

Once you have filled in the table, we move on to section three. Keep in mind accuracy and detail are essential as the above two components will tell management some critical data to help reformulate the workload to maximize patient volume and revenue. Component Three: Physician Volume The next step will require some exhaustive research, time and most importantly detail. (1) Define the exact number of patients the attending physician may see in a predetermined amount of time. For example purposes we are going to use one day. (2) Once this number has been determined you will need to divide the number of patients seen by the number of hours the physician worked. Component Four: Analyzing the Patient Mix

In order not to skew the results, take other similar volume days and try to find patterns within the payer and patient mix. Look for trends. There is a strong possibility you are spending more time with a certain age demographic. For example, you may be spending most of your time working with aged patients and the payer is Medicaid. Once the trends are realized, the results may be surprising when you identify where the most time is being spent. Begin matching patient procedures with CPT Codes. 1. Begin examining reimbursement rates. You now have a strong foundation to begin renegotiating contract rates as all physicians are not reimbursed equally. 2. Begin grouping appointment dates of certain patient/payers. By keeping a healthy balance of reimbursements your revenue will be more balanced. 3. You can begin focus on seeing patients with the higher reimbursement rates to boost income and increase reimbursement recovery. Now you have a center point to begin pointing your business in a more profitable direction.

Ben Frasier 08/23/2011