Running a successful medical practice in today’s economic climate is a tough job. There are increasing regulatory issues, decreasing reimbursement, growing competition, declining economy and other issues impacting the way we do business. The top challenges for practices are maintaining physician compensation, balancing rising operating costs with declining reimbursements, and collecting larger balances from patients. All of this is leading to income erosion for physicians.
In many industries, poorly managed businesses can survive on volume.
Due to the economic principles as applied to healthcare financing, more volume (working harder) does not directly correlate to more revenue. Because of the predominance of discounted fee for service payer reimbursement and Medicare payment cuts, volume does not always produce more profits.
As a physician you can increase profitability by working smarter, not harder. Income erosion can be stemmed through the improvement of poor performing processes and by increased management focus and monitoring.
There are five core processes in every practice that have a direct affect on profitability. We refer to these core processes as Profitability Levers:
Lever |
Impact on Profitability |
Reimbursement Systems |
Activities Performed to Generate and Capture Revenue |
|
- Fee Schedule
- Payer Contracting
- Coding and Charge Capture
|
Billing and Collections |
The Process of Getting Paid for Services Rendered |
|
- Patient Registration
- Charge Entry
- Claims Submission
- Payment Positing
|
AR Management |
Revenue Recovery and Feedback Loop for Process Breakdowns |
|
- Follow-up
- EOB Analysis
- Denial Tracking
- Write Offs
|
Expense Management |
Overhead Management and Cost Controls |
|
|
Volume |
Provider Productivity |
|
|
An assessment of each of these levers will allow providers to take stock of where their practice can capture more revenue on current patient volumes and to reduce operating costs by learning where their biggest drags on performance exist.
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