But a quick fix isn’t always the answer. Oftentimes, a more carefully considered response is in order. You can’t manage what you don’t measure, and following these five steps will help you get a handle on the problem so you can implement an action plan that leads to sustained results.
1. Invest the time and effort to accurately identify the problem.
Avoid acting on your gut feelings about the issue. Instead, begin by carefully reviewing your statements and accounting data over the past few years. In today’s unpredictable business environment, it’s more critical than ever to establish a baseline measure of your financial performance. A practice profitability portfolio is an effective way to target areas that need improving and develop strategies to boost financial performance.
2. Carefully consider the impact of extraordinary items, lags and run rates.
Review both year-over-year and month-by-month financial data. One-time items like unforeseen expenses or unexpected income should be weeded out to determine your underlying financial performance. That way, you can avoid confusion over what actually constitutes a harmful trend.
Also consider the effects of credentialing errors, inadequate billing processes and payment lags on physician revenue. To get an accurate picture, take a hard look at both billed amounts and collections.
3. If needed, rework your accounting methods.
Managers and accountants often have different ways of tracking expense lines. If your financial reports have just a few general expense and revenue lines — each with multiple items rolling up into the totals — you should consider a transition to more granular accounting. This will allow you to more efficiently and effectively evaluate your numbers and identify profitability issues.
4. Be wise about trimming expenses.
Cutting expenses may seem like an obvious answer when profitability takes a dive, but it can often have a limited effect—or even make things worse. A shrinking staff, for example, can adversely impact clinician productivity. It can also lead to morale problems and employee turnover.
If cuts are needed, focus on things that don’t undermine your productivity or unnecessarily penalize employees. Be clear on what will be gained to make sure the cuts are worthwhile.
5. Never underestimate your revenue potential.
Don’t ignore what’s happening outside your doors. Has there been a dip in the local economy or layoffs at a major employer? Also don’t be afraid to look at a seemingly adverse situation like new competition as a revenue opportunity. When large competitors enter a local market, independent practices can respond by offering more convenient or personalized services. Your practice could also stand out by working flexibly with new employers or health plans and targeting them for customized marketing efforts.
At any practice, even seemingly small improvements can boost revenue significantly. Focus on things like accounts receivable management, scheduling and reminder systems that reduce no-shows, and timely billing and collections. Full service Revenue Cycle Management (RCM) companies offer a dedicated team of trained and certified billing representatives, state-of-the art technology and compliance software to proactively manage your billing so you get paid faster.
AssuranceMD has the expert staff and the resources to alleviate your administrative challenges and potentially boost profitability at your practice. Click HERE to request a free consultation.