Judy Capko
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These are challenging financial times for medical practices, with many provisions of health care reform looming and the economic
future unpredictable. Urologists are expected to spend more money on building a solid infrastructure and expanding technology
at a time when many are concerned about practice economics. Fortunately, there are some actions you can take to improve practice
finances.
This article outlines the performance indicators you need to keep an eye on and explains how to sharpen them.
First, get a clearer picture of your position. Compare last year's financial performance to the prior year's, examine shifting
trends, and identify why these shifts are occurring. For example, are you doing less of a particular procedure and, if so,
is there a reasonable explanation? If one physician's production took a dip, was it due to more scheduled time out of the
office, or is it an abnormality that needs to be addressed? Perhaps one urologist's aged accounts receivable has spiked because
of a payer contracting issue. Identifying these types of issues is a good start to managing finances better.
Use benchmarks to evaluate performance In a group practice, it is important to look at the group as a whole but also evaluate specific numbers and benchmarks for
each physician. Examine group performance based on the per-physician averages to evaluate and manage income, expense trends,
and staff levels. For example, how does the practice compare to the average urologist in the country who utilizes 4.8 full-time
equivalent (FTE) employees, representing 20.5% of operating expenses (according to the Medical Group Management Association),
and reports gross income of $790,000 against total operating expenses of $397,460 per FTE physician?
Beyond this, it is important to monitor and compare these additional performance indicators between each physician in the
practice from year to year:
- Top 10 CPT codes by utilization. This determines the high-demand services and variables between physicians. This report can also be used to track payer reimbursement
trends for these top revenue sources.
- Number of new patient and established patient visits. This allows you to monitor practice growth or decline.
- Referral trends. It's important to know who is referring patients to your practice, who is not, and how this is changing over time. This is
also a good way to evaluate referral management and marketing efforts.
- Charges, receipts, and adjustment. These are standard internal benchmarks for physician productivity and will also alert you to shifts in reimbursement, which
may mean bigger third-party write-offs.
- Outstanding claims. If there are variants between physicians, there could be contracting issues or differences in physician coding (CPT and ICD)
and reporting patterns.
- Aged accounts receivable 90 days or more. This is an important indicator for monitoring internal billing and collection performance.
The old saying, "You cannot manage what you fail to measure" is true. When armed with these data, the practice will be able
to better understand its position and know what corrective actions and changes need to be made.
Next, use this information to establish performance goals, raising the bar each year. Of course, the goals must be realistic,
and management must establish methods to meet them. For example, if the goal is to reduce staffing costs, are you willing
to invest in technology to help staff be more efficient, reduce errors, and increase productivity? If one of the goals is
to grow the practice by 10%, are you sure you have that much excess capacity, or will you need to add another urologist or
midlevel provider and additional support staff? Will demand support the ability to achieve a 10% growth goal, or will you
need to hire a professional to develop a marketing plan and allocate resources to implement the marketing strategies?
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