Practice Management Alert

If you're not paying attention to how the billing and collections activity in your practice changes, you could be missing key indicators that make all the difference to your success.
 
That's why it's important that medical offices conduct so-called "benchmarking" activities, where they compare themselves against either national or local norms, or against themselves.

The latter is the most useful approach, insists Frank Cohen, senior analyst with Medical Information Technology Systems in Clearwater, Fla. "The problem with external benchmarking is that we're trying to compare ourselves against standards for an industry that by its very nature doesn't have standardization," he explains. It's much more beneficial for a practice to simply compare itself against itself, he says. Doing so can help you spot downward trends (such as sagging referral patterns), or will alert you to any red flags your practice might be sending up (such as a sudden unexplained increase in level-5 visits, for example).
 
In an ideal world, billing data would be used to "verify and quantify changes" that the practice's management noticed, points out Gregory Kusiak, MBA, president of California Medical Business Services in Arcadia, Cal. "However, in [the real] world, it may well be that the 'first alarm' is sounded by someone looking at the billing data."
 So what should you be looking at, exactly? Kusiak points to three key areas:   output (i.e., the volume of work your physicians are producing),
  cash receipts per unit of work, and
  how long it takes to turn work into cash. Practices can measure output in terms of the number of examinations they're billing for, Kusiak notes. But "while this can be useful for comparing [similar] procedures, it is weak or useless for comparing unlike procedures," he warns. To accommodate differences in procedures, look at how many procedures your docs perform, and also take relative value units into account. "A monthly report on RVUs by referring physician can signal changes in referral patterns," he points out.
 
Evaluate your cash receipts in terms of dollars per RVU, Kusiak instructs. This will give you a good snapshot of what's happening within the practice, he says. You can use cash receipts to monitor the payment performance of a particular payer or payer class.
 
Your best bet for monitoring how long it takes your practice to get cash in hand is a "zero balance" report, Kusiak notes. "This looks at all claims which have been fully paid or adjusted within a given time period, and it is used to determine the true, collectible value of the accounts receivable at any point in time." (Note: Turn-around time for a claim to paid could be anywhere from 15 to 60 days, depending on the carrier.)
 
Benchmarking also can help you identify physician-specific problem [...]