Practices with declining profitability often experience similar roadblocks that lead to a drop in revenue or an increase in practice expenses. In such instances, the following includes a couple of key areas worthy of review:
• Practices that do not have a comprehensive grasp of revenue cycle processes and workflows may be understaffed by not allocating sufficient resources to recoup all collectible A/R. Consequently, their days of accounts receivable outstanding may be higher than should be. Conversely, practices may be overstaffing their medical billing efforts, leading to a drain on expenses and inefficient processes that do not maximize profitability.
• Rent can be one of the largest expenses for a physician practice. It is therefore important to maximize the use of the space by maintaining a full patient schedule.Physician practices employ a number of techniques to achieve this goal, often focusing on marketing efforts (a robust website, search engine optimization, social media and building a strong referral base) to do so.
3. Payer Shortfalls
• Reviewing payer receipts on a regular basis can help you avoid acceptance of payer payments below your contracted rate. Physician practices participating with payers can still be subject to receipt of payments lower than contractually-agreed upon rates. If those low payments are not timely appealed, the much-deserved, additional revenue may be lost.
• Small purchasing contracts do not always lead to market rates for necessary products and supplies. By collectively purchasing with another practice, through a local hospital or seeking another form of volume-based purchasing, material expenses can be saved.
• Regularly review and negotiate insurance premiums, including malpractice and general liability insurance. Compare current rates with what is available in the marketplace, and then carefully read the exceptions to those policies to ensure the adequacy of coverage in place.
The areas highlighted above are not comprehensive but do provide a good roadmap of areas to consider when profitability is in decline. Precision stands ready to help you evaluate any of the aforementioned areas.