Similar to an annual physical or a well visit, a benchmarking analysis is an invaluable tool to establish a baseline measure of the health of your medical practice. Much like a comprehensive healthcare appointment, it is an essential step to review your practice performance, promote good financial health and aid in the early detection of reimbursement problems. A baseline, in a way, is a new beginning to strengthen what is working and how to heal what is failing.
Benchmarking sets the stage for providing valuable financial advice. There is a positive correlation between benchmarking reviews and improved cash flow. On average, doctors lose $.24 to $.32 on every dollar primarily due to inadequate collections processes and inaccurate billing procedures. When managed professionally, these two categories could represent up to a 25% cash flow increase.
A thorough analysis should include reviews of transaction history, outstanding claims profile, patient aging and insurance profile. The transaction report is a history of actions taken on each charge and captures all payments for primary, secondary, tertiary and patient activity. An insurance aging profile report captures all outstanding claims that are due from respective insurance payers based on monthly aging from 30 to over 90 days. The patient aging report breaks down the patient balance amounts due by aging 30 to over 90 days. The insurance profile report provides a historic count of the primary insurances billed and the total charges, payments and write-offs by payer.
Collectively, these reports provide the performance statistics needed to calculate collection ratio, analyze the patient collection process and evaluate the days in accounts receivable (approximate number of days to collect outstanding accounts receivables). They can also be used to determine recoverable reimbursements which are defined as optimal receipts from all insurance payers and patients collected in a timely manner. With this data, it is possible to review claim rejection and denial management, as well as benchmark accounts receivable to industry norms based on a given discipline and geographic area.
When was the last time you really took a look or pushed to answer the difficult questions about your practice performance? It is painless and the financial rewards are real. We know because we do it every day. The true value of benchmarking is not because it keeps the RCM professionals busy, but because it can identify potential cost savings and revenue opportunities that would otherwise go undetected.
How would you value a baseline review of your financial performance?
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