Getting Your Practice "In the Zone": 7 Tips for Achieving & Sustaining Financial Health
Getting Your Practice "In the Zone":
7 Tips for Achieving & Sustaining Financial Health
Health care providers are working harder than ever before to see even a small increase in their income. They have to cope with complex medical billing and coding rules, and industry regulations just to run their practices. At the same time, costs are increasing and reimbursement rates are declining. The only way for a practice to achieve financial health in this demanding environment is to learn how to operate at peak performance level.
Read this Whitepaper to discover our top seven tips for optimizing your practice performance and revenue to achieve financial health.
Published: November 2010
Health care providers are working harder than ever before – and spending less time with each patient – to see even a small increase in their income. They have to cope with an avalanche of complex rules, regulations, and administrative processes just to run their practices. At the same time, costs are increasing and reimbursement rates are declining. The only way for a practice to achieve financial health in this demanding environment is to learn how to operate at peak performance level.
Taking into account all the tasks your practice needs to perform systematically in order to achieve financial health is a first step. This leads many practices to decide they can't do it all on their own. They discern which tasks really need to be done by the practice and which can be shared with a practice management partner, freeing them to look at the big picture. Finally, they gather the kind of actionable performance and benchmarking data that enable them to achieve the level of success they desire. This whitepaper provides seven tips for optimizing your practice's performance and revenue to achieve financial health, including:
- Figure out what you can do, can't do, and could do better.
- Convert "lost" patient time into billable time.
- Pre-process patients to ensure efficient, profitable appointments.
- Don't let money walk out the door.
- Bill appointments immediately and make sure claims are received.
- Swiftly review and appeal denials and underpays.
- Track, benchmark, and improve practice performance.
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What does financial health mean to you?
In a 2010 survey6, physicians gave the following definitions of what "financial health" would be for their practices:
Financial health = stability, growth, adequate compensation, less time I waste to get reimbursed. It really all comes down to money and time.
Financial health means not just the adequacy of today, but ensuring a revenue stream for the future. It encompasses a plan and the road map to get there.
Stable, reliable billing that is transparent and appears able to withstand the challenges of the future. Also, helping to reduce waste.
I think financial health is much more about stability! It is assurance of a known return and then a level of growth that matches the economy of the day.
2Reaching Peak Performance
In the world of sports, playing at the peak performance level leads to success and prosperity. When teams achieve peak performance, they're often said to be playing "in the zone" - that point where all players are synced and operating at an optimal level. To achieve this level of performance, teams continually examine the way they perform, benchmark their performance against themselves and others, and make adjustments that enable them to perform better. Your medical practice can achieve similar levels of success – driving more revenue with less work, controlling operations and strategic direction, and achieving financial health – by operating in the zone.
Despite all this potential, most practices operate well below their performance and revenue potential, simply because they're too overwhelmed to do everything needed to succeed. They don't have enough time in the day to focus on improvement, because their time is consumed by day-to-day tasks, such as submitting claims, reviewing claim acknowledgement reports, posting EOBs, looking online for claim statuses, and so on. They don't have the guidance, tools, or visibility into the practice to track their – and their payers' – performance. Without that visibility, they can't know what financial health looks like and how to achieve it. As a result, they face declining reimbursements, leave unclaimed cash behind, and struggle with poor cash flow.
Taken as a whole, the facts about the current state of medical practices is alarming:
- In a 2008 Physicians' Foundation survey, 94% of doctors said that the time they devoted to non-clinical paperwork has increased over the past three years, and 63% said that the same paperwork has caused them to spend less time per patient.1
- From 2004 to 2005 median gross charges for primary care doctors rose 6.8%, but their median compensation only increased 3.9%.2 That means that less and less of revenue is going into providers' pockets.
- And despite seeing more patients and thereby increasing their billing, physicians' real income after inflation actually decreased an average of 7.1% between 1995 and 2003, with primary care physicians and surgeons seeing the biggest decline.3
- To make matters worse, a recent study has found that bad debt due to uncollected deductibles runs practices about 18%, with a self-pay default rate at 30% or more,4 and 81% of self-pay net revenues unrecovered.5
3Why is financial health so hard to achieve?
More than ever before, medical providers must cope with a plethora of complex rules, regulations, and administrative processes to run their businesses. To give just two examples, ANSI 5010 compliance is looming (see sidebar box below Tip #6: Staying Ahead of Industry Trends: ANSI 5010) and Local Coverage Determination (LCD) reimbursement policies are updated daily, making it nearly impossible to keep up without an automated system to track the changes. At the same time, costs are increasing and reimbursement rates are declining. To make matters worse, practices often lack access to financial and clinical performance data (internal and benchmark) that is vital for staying competitive and profitable.
But overcoming all of this and getting your practice to the peak performance level is not impossible. You just need the right approach, the right information, and the right assistance.
Gaining control of your processes begins with examining the nature of all the tasks your practice performs. Which of those tasks need to be done by your staff directly, one at a time? Which can be centralized? Which can be offloaded to a vendor? (For example, offloading a task such as checking patient eligibility could achieve an economy of scale.)
Next, you need to create comprehensive, structured, and systematic processes for the tasks your own staff must perform, making certain that tasks essential to your financial health are performed accurately and consistently. (For example, patient eligibility checking is essential to a financially successful practice, but in order for it to impact your success, it must be done in advance every time for every patient.)
Many practices choose to work with a practice management software and services vendor that can not only help make the practice's own processes rigorous, but also employs rigorous processes of its own. Such a vendor also offers economies of scale that are difficult for even a large practice to achieve. Areas where the right practice management vendor can create a comparative advantage for your practice include:
- IT infrastructure – Owns and maintains most of it so your IT investment and ongoing expenses are minimal.
- EDI transactions – Uses sophisticated electronic tools to submit claims, track them, and monitor their acceptance by the receiver.
- Fulfillment of paper claims – Handles huge volumes routinely with highly automated processes.
- Clinical document management – Sophisticated processing system is more efficient and effective.
- Claim tracking and payment posting – Uses sophisticated electronic tools for faster turnaround and fewer errors.
- Routine denial management – Faster, even real-time, adjudication because of deep knowledge of, and relationship with, payers.
- Data aggregation and denials mining – Knowledge gained from thousands of providers' experiences continually feed into its rules database.
- Provider enrollment – Enrolling providers for electronic transactions – EDI, ERA, and EFT.
- Lockbox services – Ability to receive a practice's remittances and facilitate their deposit into the practice bank account.
For many practices, it's about more than having the right software and processes internally; it's also about having the partner in place that can share best practices, take on much of the administrative burden, free practice managers to focus on the big picture, and provide the data needed to understand the big picture and plan ahead (e.g., patient mix, physician productivity, and reimbursement data to negotiate payer contracts). The following tips can help move your practice into the zone, where it can be more effective, you can enjoy your work more, and you have clear performance goals and understand how your practice can achieve those goals.
4What does a practice look like when it's in the zone?
Sometimes it's hard to imagine what your practice would look like if it were operating at peak performance. Your practice is in the zone when:
- Your work processes are structured, systematic, and comprehensive.
- Your office workflow is optimal, so you can see more patients and still provide high-quality care.
- Your providers are focused on high-quality patient care and successful outcomes rather than on worries about practice operations.
- You've reduced your no-shows and have a patient panel sufficient to re-fill most cancelled appointments.
- Your claims spend far less time in accounts receivable.
- You get paid a higher percentage of your total charges.
- You're driving more revenue with less work (practices with 20+ billing providers should have 1.3 to 1.5 administrative FTE per provider).
- You're collecting patient co-pays and deductibles at time of service, and if not, have a self-pay policy your practice follows consistently to capture this revenue.
- You're receiving additional income from Pay for Performance (P4P), PQRI, Medical Home, and HITECH Act incentives.
- Because of all these efforts, your collections show a significant increase.
- You have better insight into, and more control over, your practice's day-to-day operations and future growth.
A practice that has achieved financial health, that is operating in the zone, has a different feel to it. A well-thought-out mix of patients ensures a good income level. Your patients are processed efficiently – often completing paperwork online before arriving. There are fewer no-shows due to timely automated patient reminders. Your staff are not burdened with the nitty-gritty details of claims processing, because your practice management vendor has taken that off their plate, allowing them to spend more time on revenue-enhancing tasks. There is a good relationship between the front desk and the billing office, so, like a successful sports team, they work collaboratively toward common goals. Cash flow is good, because claim errors are caught by the system before they go out. Claims get paid more quickly and you have fewer denials. Confident of practice income and less burdened by time-consuming details, practice managers have more time to focus on developing the practice and ensuring its long-term success.
Does this sound desirable? The following section addresses each of these critical areas of practice performance with key tips for getting your practice in the zone.
When vendor goals align with practice goals
The San Antonio Orthopaedic Group, in practice for more than 60 years, had seven offices, 23 physicians, 280 employees, and over 100,000 patient visits annually. It sought an effective practice management service to help achieve peak performance, a service that would enable it to gain insight into, and control over, the practice's operations and finances. "We like to slice and dice the data many different ways in order to run our practice more effectively," says Carrie Miller, Director of Professional Reimbursement. "athenahealth has made that possible."
As soon as the service was implemented, it had a significant positive impact. The group's DAR went from 120 to 35 days. "The percentage of claims we submitted that had errors dropped from 90% to the low single digits and we increased collections from $50,000 per day to $90,000 per day in just three months," says Chief Executive Officer Usman B. Mirza. "I don't think athenahealth gets enough credit for that," says Mirza. "With all the capabilities that are integrated into the products, we save money in many areas: on reminder calls, on hiring experts to deal with managed care contracts, on loading in data, on employee training; and, because of clean claims, we are able to collect our money faster."
San Antonio Orthopaedics found a true partner in athenahealth. There were few upfront costs and fees were based on profitability. "If the government doesn't fix this Medicare situation, and we have a 21% reduction in our payments, athenahealth is going to get hit with that, too," says Chief Operating Officer Chris Kean. "If I were paying a fixed price, the cost for my practice management would go up relative to my revenue going down."
5How do you move your practice into the zone?
Each of the following seven tips delineates what you should be doing across the practice workflow in order to move your practice toward peak performance. And because many practices employ practice management software and services vendors, the tips also delineate what a vendor should be doing to assist you. Just as a great athletic team employs coaching by experienced professionals to help it perform at its highest level, many practices benefit from having a partner with deep industry and process knowledge as well as the capacity to take the most onerous tasks (such as paperwork and claims follow-up) off their hands. Also like an athletic team's coaches, a vendor should share the risk with you – winning only if you win. Finally, your vendor shouldn't bog you down with excessive up-front costs that put you in the hole before your revenue even begins to improve.
Figure 3.Roles & Responsibilities Across the Workflow
The best practice management tool could be a checklist
The following excerpt is from the book The Checklist Manifesto, by Atul Gawande
(Metropolitan Books, 2009).
Here, then, is our situation at the start of the twenty-first century: We have accumulated stupendous know-how. We have put it in the hands of some of the most highly trained, highly skilled, and hardworking people in our society. And, with it, they have indeed accomplished extraordinary things. Nonetheless, that know-how is often unmanageable. Avoidable failures are common and persistent, not to mention demoralizing and frustrating, across many fields – from medicine to finance, business to government. And the reason is increasingly evident: the volume and complexity of what we know has exceeded our individual ability to deliver its benefits correctly, safely, or reliably. Knowledge has both saved us and burdened us.
That means we need a different strategy for overcoming failures, one that builds on experience and takes advantage of the knowledge people have but somehow also makes up for our inevitable human inadequacies. And there is such a strategy – though it will seem almost ridiculous in its simplicity, maybe even crazy to those of us who have spent years carefully developing ever more advanced skills and technologies.
It is a checklist.
Tip #1: Figure out what you can do, can't do, and could do better.
A careful economic assessment reveals the enormous potential of putting consistent systematic processes in place and working with a practice management partner to ease your burden. With the help of the right partner, you can increase revenue through better patient throughput, improve staff efficiency, submit claims that are reviewed for errors in real time, and enjoy easy-to-manage reporting, while capturing the pay-for-performance measures for the programs in which you participate. A practice management partner that offers services along with software can also help you reduce the time spent managing paperwork such as remittances and payer correspondence.
- Look at how much staff time is consumed by tasks that could be more economically offloaded to a practice management vendor (such as paper handling, patient eligibility determination, and claim submission, follow- up, and posting), freeing staff for revenue-enhancing tasks (such as payer contracting).
- Look at which practice tasks are revenue-enhancing and which are cost-producing, then cross-train staff to handle each as the workflow requires.
- Analyze and benchmark practice workflow to determine where greater efficiency can be achieved.
- Analyze and benchmark your practice's level of success at getting paid quickly and completely by payers and patients in order to improve the claims revenue cycle.
- Determine which practice services produce the most revenue and suggest ways to improve patient mix.
- Analyze provider efficiency in order to optimize the use of their time.
Tip #2: Convert "lost" patient time into billable time.
How many patients your providers see determines how much revenue your practice can generate. When patients cancel or fail to show up for appointments, it disrupts your revenue stream as well as your schedule. According to recent studies, more than a quarter of all cancelled appointments are never filled7 and up to 6% of scheduled patients don't show up.8 This can add up to to a sizeable chunk of appointment time that isn't producing revenue. You can optimize provider time by converting no-shows, cancellations, and other "lost" time into billable time.
Figure 4.No-Show & Patient Cancellation Rate by Scheduling Day
- Match your appointment capacity to patient demand to reduce backlog and schedule churn.
- Grow your patient panel through direct marketing and referrals.
- Include sufficient open time in your schedule to accommodate same-day appointments, making up revenue lost to cancellations and no-shows.
- Schedule appointment requests within one week, reducing the likelihood of no-shows, and create a waiting list to draw on for filling open time (31% of appointments scheduled more than 20 days out are rescheduled and 8% are no shows9).
- Provide reports that give insight into optimizing patient schedule and mix.
- Send automatic voice-mail and/or e-mail reminders two days before appointment to reduce the amount of revenue lost to no-shows and encourage cancellations early enough for you to fill open time.
- Provide live operator services.
Tip #3: Pre-process patients to ensure efficient, profitable appointments.
Without the right patient information on hand, much time is lost collecting and confirming that information. Eligibility is the key piece of information for preventing denials. Establishing eligibility in advance will ensure a smooth, profitable appointment and reduce work "downstream." Taking advantage of payers' online systems makes it easier both to establish patient eligibility and process claims, helping ensure your practice gets paid what it deserves.
- Confirm patient demographics, so system information is accurate.
- Contact ineligible patients prior to appointment so that they can contact their payers to try to establish eligibility.
- Foster a strong relationship between the front desk and billing office to reduce denials, increase time of service collections, and reduce registration errors.
- Automatically complete eligibility checks and highlight ineligible patients, so you have the data to contact ineligible patients prior to appointments.
- Enroll practice providers for electronic data exchange in order to speed the billing process.
Tip #4: Don't let money walk out the door.
High-deductible plans, the reduction of health insurance through employers, and the growing number of uninsured are shifting more financial responsibility onto patients (the number of plans with deductibles of $1,000 of more for single coverage rose 20% from 2006-2010)10; the percentage of employers offering insurance has not grown since 2000;11 and the number of non-elderly uninsured Americans rose to 45.7 million in 200812). This means a greater portion of your revenue is at risk. Unpaid co-pays and deductibles can add up to big losses. Self-paying clients accounts for 19% (and rising) of the average practice's accounts receivable.13 And yet, 81% of self-pay net revenues are never recovered.14 Refresh your payment policies and make sure that front desk staff ask for payments that are due at the time of service.
- When possible, let patients know before appointments what payment will be due and what your payment policies are.
- Collect co-pays/deductibles – new and past due – at appointment to avoid the cost, unreliability, and delays associated with billing via mail.
- Establish an automated payment plan for patients to pay bills in monthly installments using a credit card; this eliminates paper statements, multiple check processing, and time-consuming follow-up.
- Collect outstanding balances at appointments to avoid costly mail and collection service costs.
- Scan insurance cards so that claims can be accurately processed and make sure patients complete necessary HIPAA forms.
- Confirm that insurer on claim corresponds with patient record.
- Process and post credit card and check payments.
- Embed advanced payer tools, such as RTA, directly in the workflow to identify patient balances immediately.
Tip #5: Bill appointments immediately and make sure claims are received.
Most practices have significant charge entry lag and are in the dark about how accurate their claims are and lax about clarifying what patients owes. The more promptly the process is started, the cleaner the data will be, and the fewer denials will occur. A more accurate claims and billing process, along with immediate scheduling of future appointments, can keep your providers busy and improve cash flow. And, once your appointments have been billed, the next step is ensuring that your claims have been received and accepted by payers.
- Enter or confirm charges on day of charge entry in order to get paid faster (cross-train staff to handle high- volume periods).
- Immediately schedule next appointment/procedure to maintain effective patient mix.
- Review daily charges to ensure completeness and accuracy.
- Submit claims and provide payer responsibility electronically in real time (when payer has capability) so patients can be billed immediately for balances.
- Provide easy-to-use tracking of incomplete billing slips.
- Reorder charge line items.
- Provide payer data that enables practice staff to produce clean claims.
- Provide embedded coding validation to ensure accurate coding and claim processing.
- Embed real-time, continuously updated rules database in the workflow to rapidly incorporate payer-specific rules (such as for daily LCD updates) based on watching which claims get denied and learning to prevent such denials.
- Stay ahead of industry trends (e.g., ANSI 5010, ICD-10) and test payer rules and processing changes to ensure practice has no increase in denials or decrease in revenue.
- Enroll practice providers for electronic payment in order to speed the payment process.
- Review payer and clearinghouse acknowledgement reports daily to ensure claims were accepted.
Tip #6: Swiftly review and appeal denials and underpays.
This is where it all breaks down for many practices, because the vigilance required is time-intensive and expensive. You need systematic processes in place for each claims eventuality: when you don't hear back from a payer, when you receive a denial, when it's time to bill patients for their portion of the charges, and when patients don't pay. This is where the economies of scale, sophisticated electronic tools, and deep knowledge of how payers work offered by a practice management vendor can make a huge difference. The vendor's continuously updated rules database ensures you more accurate billing, its ability to keep on top of each transaction ensures you faster payment turnaround time, and its scale of business with payers ensures you more bargaining power when negotiating with payers. When it comes to getting paid more and faster, this is a game-changer for your team.
- Follow up on uncollected self-pay balances to ensure that patients are clear about their obligation.
- Review overall practice performance monthly (e.g., payer performance, schedule utilization, denial trends, etc.)
- Receive all remittances from all payers in all formats.
- Scan all documents and link them directly to claims in PMIS.
Staying Ahead of Industry Trends: ANSI 5010
HIPAA requires the U.S. Department of Health and Human Services to adopt required standards for covered entities to use when conducting certain health care transactions electronically. Compliance with the new standards, ANSI 5010, is looming, and it is complex and challenging. Initial deadlines occur over the next few months, and the level I compliance deadline is December 31, 2010. In order to help you achieve compliance, your practice management software and services vendor should:
- Put new and updated patient and billing workflows fields in place well ahead of time.
- Achieve level I ANSI 5010 compliance in advance of the December 31, 2010 deadline.
- Begin testing ANSI 5010 changes to billing and claims systems with payers and clearinghouses well in advance of the January 1, 2012 transition date.
- Update claims submission, eligibility, claim status inquiry, claim acknowledgement, and ERA for the transition to ANSI 5010.
- Update claim generation and submission processes for all payers to support ANSI 5010 requirements.
- Work with payers to help them understand readiness timelines, testing scenarios, and specific changes regarding ANSI 5010 implementation, so payer errors don't hold you up.
- Proactively contact industry stakeholders to determine readiness timelines.
- Test proactively with real claims to ensure that you don't suffer denials due to errors.
- Track and report on results of real claims through the transition; take responsibility for claims going through cleanly, not just for software readiness.
- Capture and post denials and route them to the right party.
- Perform zero paid claims appeal (over $200).
- Follow up on claims quickly to identify any lost claims or remittances.
- Generate and mail patient statements in a timely manner to ensure that patients are aware of their responsibility.
- Define posting turnaround times in order to trend payments.
- Provide the data that allows practices to quickly pursue underpayments.
- Verify deposits prior to posting remittance; track missing EOBs/ERAs or missing checks/ERAs.
Tip #7: Track, benchmark, and improve practice performance.
With a practice management vendor taking so much of the day-to-day work off your hands, you will finally be in a position to step back, analyze how your practice operates, and figure how to get it into the zone. To accomplish this, you need data, guidance, and committed, motivated providers and staff. It is critical to have tools to manage and monitor practice operations, benchmarking them against the performance of similar practices. Your practice management vendor should provide these tools as well as an account manager to coach you on how to take advantage of the tools to "step up your game" in each area of practice performance.
Turning a practice around
Over the years, Dr. Peter Masucci's pediatric practice had accrued more than $250,000 in unpaid claims. It was in desperate need of a practice management vendor that could provide transparency and give staff more control over the business. So, in 2004, the practice went live on athenahealth's cloud-based practice management and billing system. This system provides continually updated payer-specific coding rules. Physicians are alerted to relevant payer rules to ensure proper documentation and efficient billing processes. The system proactively guides office staff away from mistakes that impact the performance and profitability of the business.
The practice's profit increase has allowed the purchase of more medical equipment, bringing more testing in-house, which yields even more revenue and better care. The practice also benefits from the athenahealth's payment yield feature, which automatically checks insurance payment to verify they're being paid at the full, contracted amount, and notifies the practice when it's being underpaid. Since going live with athenahealth, the practice has seen its revenue realization rate increase from 62% of claims paid at their contracted rate to 99%. In addition, with athenahealth monitoring every claim, the practice's days in accounts receivable (DAR) went from more than 65 days to approximately 23 days – and it continues to decrease.*
"Medicine, which once used to be a business of service and only dealing with insurance companies 10% of the time, has now become an industry driven by the insurance companies," said Donna Masucci, an RN and the office manager for the practice. "Having to pay so much attention to the administrative side of the practice was taking the doctor away from seeing his patients." Working with athenahealth has enabled the practice to put its focus where it should be – on its patients.
* These results reflect the experience of this particular practice and are not necessarily what every athenahealth client should expect. athenahealth clients see an average 9.2% increase in collections and 37% decrease in days in accounts receivable. These metrics are based on a weighted average for athenahealth clients with valid pre-athenahealth benchmark data that had their 15-month anniversary with athenahealth during 2009.
Visibility into your practice enables proactive, data-driven staff and resource management as well as optimized performance. In consultation with your account manager, you can use reports to guide process improvements and uncover pockets of revenue, enabling your practice to operate at its peak performance level.
- Analyze areas where tasks performed by your vendor can free up staff for revenue-enhancing work.
- Analyze where staff can be cross-trained to perform critical tasks during busy periods.
- Review staff performance and provide incentives for improvement.
- Track all significant aspects of your practice's performance to show where improvements can be made:
- Claim days in accounts receivable
- Claim denial rate
- Claims requiring additional work by practice and/or vendor
- Charge entry turnaround time
- Charges not captured
- Revenue realization rate
- Reimbursement rate for top payers
- Services rendered most frequently
- Patient cancellation and no-show rates
- Provider productivity
- Benchmark practice performance against similar practices.
- Track how the vendor is performing in response to your practice's needs.
- Consult with practice management about performance and suggest methods for performance improvement by practice and the vendor.
As the health care system becomes more complex and expensive to deal with, providers' ability to concentrate on patients and make a profit is threatened. But there are ways to reduce complexity and make patient encounters and administrative processes more efficient within your practice without sacrificing quality of care. The right practice management partner can also make it easier to turn your practice around financially and enable you to focus on quality patient care, good outcomes, and building the practice. Systematic processes and expert assistance can help your practice manage today's demands - help it operate in the zone and achieve financial health – and enable you to keep an eye to the future, developing a game plan for ongoing success and growth.