Ophthalmology and Optometry Coding Alert

If you aren’t evaluating your ophthalmology practice’s trends, you won’t know where you stand.

Your ophthalmology practice may have heard that benchmarking can help you determine whether you’re coding and billing appropriately, but it is possible that you have no idea where to start. Fortunately, help is on the way with a few quick tips on how to get started.

Background: In essence, benchmarking creates a standard against which you can compare your own data to historical internal results or industry standards. Once you know whether your practice’s finances are healthy, you can keep an eye on them to see whether they go up or down.

Ophthalmology Coding Alert sat down with Andrew Maller, MBA, COE, principal and consultant with BSM Consulting in Phoenix, to find out how to get started with a benchmarking program at your practice. Check out his advice and then institute a strategy that can help you discover trends.

1. Start With Data You Have

Although there are a lot of variables that you can use for comparison, if you’re just starting out with a benchmarking, you should use data that is easily accessible to you, Maller says.

“Profit and loss statements can track a number of key metrics. One would be the operating expense ratio or overhead ratio, which are the total expenses before provider compensation divided by revenue. It’s a great indication of overall practice efficiency—the management of your expenses.” The inverse of that is to evaluate your net operating income ratio, he advises. “After expenses are paid, how much is left to cover compensation for providers?” These two metrics are great to starting points when you’re reviewing your results for the first time.

“Other things you can evaluate from profit and loss statement are staffing costs, Maller says. “This is typically your highest expense category – track that in relation to revenue.” According to Maller, staff payroll expenses, including wages, payroll taxes, and benefits, often represent somewhere around 25 to 30 percent of practice revenue. Using this result as a starting point, it’s often easier to diagnose whether your practice is staffed properly.

2. Commit to Monthly Analysis

You should use benchmarks not just as a measure of past performance, but also to set goals for your practice, such as in terms of your revenue, budget, or claims success. “Benchmarking against yourself on a monthly basis as a good starting point,” Maller says. “One reason is that if you’re benchmarking against yourself to determine practice trends, doing your analysis only once or twice a year means there could have been an issue that you could have discovered six months ago or longer. So if you want to be proactive and use benchmarking as a management tool, starting off monthly is a great plan.”

3. Don’t Panic Over Upward Trends

When you’re benchmarking on a monthly basis, you will see aberrations or variances in the data, but don’t overreact if you see a change on a month-to-month basis, Maller says. “The key is to look for and identify trends over time.”

In addition, remember that your analysis data has both a numerator and a denominator, so a change in either of those will skew the benchmark one way or the other, he says. “If your overhead ratio is up, you may want to see whether the denominator – revenue – is down. I look at trends in both the numerator and denominator and that lets me see where my issue may lie.”

4. Know What to Do With the Results

After you complete your first few benchmarking comparisons, you’ll have some good data to use for your next steps. “Once you have your information, you can marry your subjective concerns in your data to objective benchmarks,” Maller says. “So the subjective concern might be that you have too many staff members or your doctors haven’t felt as busy the last few months. Then you layer on the objective data like benchmarking and marry those together, and you can evaluate what’s going on and then you can determine what to do about it.”

5. Get Everyone on Board

If your clinicians or staff members can’t see the benefit of benchmarking, it’s important to remind everyone that you’re trying to approach your practice’s financial health the same way the ophthalmologist would approach a patient with a diagnosis, Maller says.

“Doctors go through this very step-oriented process, marrying subjective concerns with objective data, and they look at possible causes/diagnoses, then they evaluate a series of things to do about it. It’s the same with benchmarking,” he advises. “Once you come up with your findings, you can figure out what to do about it, such as training staff better, helping your tech staff work up a patient more efficiently if that’s the issue, or submitting claims more efficiently if your billing staff is behind in processing.”