So how is your practice doing? A simple question, but to answer you have to ask a question; compared to what? Well, let’s compare it with some recent information that MAGMA published about physician-owned vs hospital-owned medical practices. Some striking differences. For almost every benchmark the physician-owned practice performed better than the hospital owned practice.
From MGMAs Data Drive 2017 Cost and Revenue
- Median total gross charges $1,876,174 $1,208,258
- Median adjusted FFS charges $1,033,830 $588,007
- Median Total A/R per FTE physician $169,281 $111,514
- Median days adjusted FFS in A/R 62.19 66.45
- Median gross FFS collection percent 53.90% 46.90%
- Median adjusted FFS collection percent 99.02% 96.75%
- Median bad debt due to FFS activity $19,612 $21,875
Data such as this can be used to benchmark your own practice, and answer the question, how’s your practice doing?
Start with adjusted gross charges, which is what your charges are after adjusting for contractual allowances, you might even call this your actual billings. How is the performance of the physicians in your practice in comparison? This is a measure of your physician performance, the volume, and complexity of the patients seen.
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If your charges are less than the benchmark, you might want to take a look at the services you provide and determine if you are capturing all charges from your medical records. An integrated EHR-PMS system should sweep the services form the medical record to the billings to capture everything. Some studies say that upwards of 7% of all services performed and documented in the medical record are not transferred to billing.
This is also a measure of how busy your physicians are. How is their schedule? Gaps in the appointment book mean lost revenue. Are the gaps no-shows, or lost volume?
From here the benchmarks are measures of your office staff performance.
Accounts receivable is money that has been billed but remains outstanding. What is happening in your practice? Ideally, you should be billing daily so that cash flow is maximized. And your office should be aggressively pursuing claims with insurance companies older than 30 days since most states have regulations that call for physician claims to be acted on within 30 days of receipt by the insurance company.
Accounts receivable is money that has been billed but remains outstanding. What is happening in your practice? Ideally, you should be billing daily so that cash flow is maximized. And your office should be aggressively pursuing claims with insurance companies older than 30 days since most states have regulations that call for physician claims to be acted on within 30 days of receipt by the insurance company.
The next big issue in accounts receivable is patient collections. Balances due from patients. What is your policy on collecting at the time of service? Do you take credit cards as a contingent payment to be charged when the insurance company settles and advises the balance due? If not, consider. Otherwise, you will need to work on your collection practices at the front desk.
Private physician-owned practices are doing a better job in collecting funds due with 99% of FFS payments being collected. How are you doing in comparison?
And when it comes to the ultimate bad debt, those charges that you are unable to collect, less than $20,000 a year is the benchmark. Better still, if you are requiring a contingent credit card, you can often bring that balance even lower.
And when it comes to the ultimate bad debt, those charges that you are unable to collect, less than $20,000 a year is the benchmark. Better still, if you are requiring a contingent credit card, you can often bring that balance even lower.
No benchmark is perfect for your practice, but if you don’t have anything to compare with you really don’t have a handle on your own performance, and where there are opportunities for improvement.
