Practice Management Alert
Key Financials
Question: Which basic financial records should we track regularly? Missouri Subscriber Answer: To indicate how well your practice's financial operations are being managed, you should constantly track four basic items: 1. Net collection ratio. If your collection ratio for the past three months is below 90 percent after contractual adjustments, something may be amiss with your billing and collection system. Because specialty services normally take longer to collect, this figure will vary between specialist and primary care practices. 2. Total accounts receivable, or total months in accounts receivable. Ideally, this should be no more than one to one and a half months for a primary care practice and less than one and a half to three months for a specialist. Note: One reason practices sometimes see a sudden increase in outstanding charges or accounts receivable is that they send in a batch of incorrectly filled-out claims that payers refuse to honor. Or a major payer might be having financial problems and is holding payments until pressed for the check. 3. Procedure production and revenue. Routinely examining several month's worth of charges by procedure code will show you where most of your charges are being initiated. This process alsohelps determine which third-party payers account for what percentage of your reimbursement. Another important exercise is to analyze charges and services generated by individual physicians in the group to identify if the services performed by specific providers are consistent with practice standards, or if there are any inequities in services or charges among different doctors in the practice. 4. Income and expense reports. You should examine these reports monthly to detect any unplanned changes in practice patterns. This will allow you to know where changes may be required to stay on budget or to take advantage of an unexpected increase in demand for certain services. You Be the Expert and Reader Questions were answered by consulting editor Catherine Brink, CMM, CPC, president of Healthcare Resource Management Inc., Spring Lake, N.J.; and Adrienne Rabinowitz, CPC, director of billing, Western Monmouth Orthopedic Associates, P.A., Freehold, N.J. $ $ $
Practice Management Alert
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Key Financials
Question: Which basic financial records should we track regularly? Missouri Subscriber Answer: To indicate how [...]
