By Jerry S. Sobelman, CPA
In the competitive health care environment, a practice assessment can identify trends, provide process improvements and provide recommendations to improve cash flow and reduce costs for your medical practice. Such an assessment should ask questions like: Why is there such a cash shortage? How can we increase collections? Why is employee morale so low? How can we increase patient satisfaction? How can we attract new patients? Can we decrease expenses?
Patient Process Review
The first step in performing a practice assessment is to review the office operations, including the patient registration process, the patient waiting time, the check out process and the follow-up system. At a practice that had added a new associate, the receptionist was turning patients away because she felt overwhelmed with the added workload. In another situation, the check-in process for an ambulatory surgery center was located next door at the business office location.
The problem was that patients would check in at the office but were walking out of the surgery center without paying their applicable copay or deductible. The check in and out processes determine whether the practice will be paid for its services and also has a large effect on patient satisfaction. In essence, an inadequate system can prevent a practice from growing and being profitable.
Comparing your practice to financial bench marks, such as days in accounts receivable, staffing levels, compensation for both the physicians and staff, overhead percentages and level of service charges (as compared to your peers locally and nationally), can identify areas of improvement.
In many cases, we have found that certain expenses were much higher in comparison to other practices in the same specialty. Reasons for this include not sending the service or product out for bid or, in the case of the practice with the lower operating costs, joining a purchasing cooperative and receiving discounts for bulk purchases.
When using bench marks, it is important to use both national and local indices because of the difference in cost of living and the level of managed care penetration.
Preventing an Audit
Medicare is taking action to combat fraud and abuse. Beneficiaries across the country have been receiving a toll-free fraud alert phone number on their explanation of benefits. This makes it even more important to review your billing practices.
A comparison of the coding levels of your peers can identify over or under coding. In many cases, we have found that practices under code for new patient visits and up code for established visits. These coding practices not only put the providers at risk for an audit, but usually reduce the revenue for the practice as new patient visits are reimbursed at a much higher rate than for established patient visits.
Other activities that raise red flags are: billing Medicare for telephone calls, conferences with the family or missed appointments; providing an incorrect diagnosis code on the claim; routinely waiving copayments; and billing Medicare for services that the patient does not remember receiving.
Many of these situations could occur in your office because of misunderstandings or innocent mistakes between the staff, patients or providers. Have your billing and collection systems reviewed to reduce the chance of your practice being audited.
Reviewing your practice’s efficiency can also tell you whether you are over or under staffed. It can reveal whether your billing personnel are doing a good job collecting from the health plans and patients.
Another important effect is the increase in employee morale. The employees participate in the review with each area being interviewed. They appreciate having their functions recognized and, in turn, recognize the importance and relevance of each function within the office.
As you tell your patients of the importance of a regular check up, remember that you can also improve the health of your practice by having a practice checkup.
Jerry S. Sobelman, CPA, is a principal of Margolis & Company P.C. Health Care Services Group.