ABC ASSOCIATES, P.C.
PRACTICE ASSESSMENT
2
ASSESSMENT
As-sess-ment-noun
Dictionary.com
1. the act of assessing; appraisal; evaluation.
2. the act of judging or ass...
3
METHODOLOGY USED
• Interview Providers And General Staff
• Observe Practice Operations
• Analyze Pertinent Financial And...
4
FINANCIAL
• Increase Revenues
• Accounts Receivable
• Coding
• Fee Schedule
• Billing Function
• Ancillary Services
• Ex...
FINANCIAL
6
ABC ASSOCIATES, P.C. FINANCIAL
FINDINGS
• Revenues Have Declined In Recent Years;
However, They Can Be Increased.
• Acco...
7
ABC ASSOCIATES, P.C. FINANCIAL
FINDINGS (cont.)
• A Billing Service Should Be Engaged.
• Ancillary Services Are Profitab...
8
PROVIDERS
• Physicians Can Be More Productive.
• More Office Hours Should Be Made Available To
Patients (Early Morning, ...
9
ABC ASSOCIATES, P.C.
NET REVENUE ANALYSIS
$0
$500,000
$1,000,000
$1,500,000
$2,000,000
$2,500,000
$3,000,000
$3,500,000
...
10
REVENUE GROWTH
• Revenues Can Be Increased By:
• Increasing Physician Office Encounters
• Decreasing Physician Days Out...
11
Source: MGMA Physician Compensation & Production Survey-2011 Report Based Upon 2010 Data
ABC Associates, P.C. Internal ...
12
Doctors A & B Increased To MGMA Median
Assumes Each MD Office Visit Generates $70.00 Revenue (Primarily E&M Codes)
Sour...
13Source: MGMA Physician Compensation & Production Survey-2011 Report Based Upon 2010 Data
ABC Associates, P.C. Internal D...
14
PHYSICIAN TIME OUT OF OFFICE
ANALYSIS
Increase Weeks Worked To 75%Tile/90%Tile:
One Week Two Weeks
Dr. A $10,000 $20,00...
15
ACCOUNTS RECEIVABLE
• There Are Excessive Monies Uncollected In The
121+ Days Aging Category For Both Patients And
Insu...
16
ACCOUNTS RECEIVABLE AGING
Source: ABC Associates, P.C.
Categories 0-30 Days 31-60 Days 61-90 Days 91-120 Days 120+ Days...
17Sources: ABC Associates, P.C. Internal Data
MGMA Cost Survey-2011 Based Upon 2010 Data
Billing Service: XYZ Billing Serv...
18
ACCOUNTS RECEIVABLE
COLLECTIONS
OVER 90 DAYS OLD
Source: ABC Associates, P.C. Internal Data-Assumes Normal 50% Net Coll...
19
MARKETING
Investopedia
The activities of a company associated with
buying and selling a product or service. It
includes...
20
MARKETING AND PUBLIC RELATIONS
PROGRAM
Sample Program
Minimal Outlay
• Community Programs (Speaking Engagements,
Practi...
21
EVALUATION & MANAGEMENT-
HOSPITAL IN-PATIENT CODING
• There Appears To Be Over Coding Of Certain
Evaluation And Managem...
22
E & M
CODING ANALYSIS
Source: ABC Associates, P.C. Internal Data For CY 2012; MGMA 2004 Coding Profile Sourcebook
(Gene...
23
HOSPITAL INPATIENT,
INITIAL CARE
PATIENTS AGED 65 & OVER
Source: ABC Associates, P.C. Internal Data For CY 2012; MGMA 2...
24
HOSPITAL INPATIENT,
SUBSEQUENT CARE
PATIENTS AGED 65 & OVER
Source: ABC Associates, P.C. Internal Data For CY 2012; MGM...
25
FEE SCHEDULE
• A Preliminary Fee Schedule Analysis Indicates
That Fees Paid By Certain Insurance Companies
(Representin...
26
CPT Codes Volume Charge
CY 2012 Annual
Charges
CPT
Codes Volume Charge
CY 2012 Annual
Charges
99213 7,597 $80 $607,760 ...
27
CPT
Codes Charge Anthem
United
Health Oxford Aetna Healthnet Connecticare CIGNA
99213 $80 $64.01 $51.86 $49.79 $56.53 $...
28
ABC ASSOCIATES, P.C.
FEE SCHEDULE ANALYSIS
PAGE 2
Source: ABC Associates, P.C. Internal Data
CPT
Codes Charge Anthem
Un...
29
ABC ASSOCIATES, P.C.
FEE SCHEDULE ANALYSIS
PAGE 3
CPT Codes Maximum Increase 10% Increase CPT Codes Maximum Increase 10...
BILLING
31
OUTSOURCE BILLING
ADVANTAGES
• Reduce Operating Expenses
– Staff Salaries
– Taxes
– Employee Benefits
– Seminars/Contin...
32
BILLING DEPARTMENT
VERSUS
BILLING SERVICE
See EXHIBIT IV For Assumptions
Year 1 Year 2 Year 3 Year 4 Year 5 Cumulative
...
33
LOST REVENUE
AGING FACTOR
See EXHIBIT IV For Assumptions---See Slide 18 For Lost Revenue Source
Year 1 Year 2 Year 3 Ye...
34
ANCILLARY SERVICES
35
ULTRASOUND
FINANCIAL ANALYSIS
Amount %
Revenue $372,000 100.00
Expenses
Salary/Benefits $ 95,099 25.56
Equipment Lease ...
36
BONE DENSITY
FINANCIAL ANALYSIS
Amount %
Revenue $85,680 100.00
Expenses
Salary/Benefits $13,210 15.42
Equipment Lease ...
37
EXTENDER ACTIVITY
Current APRN Weekly
Patient Volume 61.00*
Weekly Compensated Hours 72.00**
Weekly Hours Required 26.0...
OPERATIONAL
39
ABC ASSOCIATES, P.C. OPERATIONAL
FINDINGS
• There Is An Absence Of An Effective
Organizational Structure.
• There Is No...
40
• Overall Staffing Level Is Higher Than The
MGMA Median For This Specialty.
• If The Billing Function Is To Remain In-
...
41
ABC ASSOCIATES, P.C.
ORGANIZATIONAL STRUCTURE
• Absence Of An Effective Organizational Structure
– Need To Create
• Gov...
42
ORGANIZATIONAL STRUCTURE
PHYSICIAN
OWNERS
PRACTICE
MANAGER
RECEPTION
SUPERVISOR
BILLING
SUPERVISOR
BILLING
STAFF
CLINIC...
43
COMMUNICATION
No Effective Means Of Communication Is
Currently In Place
• Employee Handbook
• Job Descriptions
• Perfor...
44
PARETO’S LAW
Vilfredo Pareto-19th
Century Economist
80% Of Land In Italy Owned By 20% Of Population
• 80% Of Objectives...
45
ABC ASSOCIATES, P.C.
POSITION ACTUAL* MGMA** VARIANCE
General Administrative 5.00 1.40 3.60
Business Office 4.60 4.00 ....
46
STAFF ROSTER
General Administrative:
Business Office:
Medical Reception:
Medical Sec./Transcription:
Medical Records:
O...
47
SUMMARY OF FINANCIAL
OPPORTUNITIES
OPPORTUNITIES IMPLEMENTATION RANGE
Revenue Increases
Increase Office Encounters $ -0...
48
RECOMMENDATIONS
REVENUE ENHANCEMENT
• Increase Office Encounters
• Reduce Physician Time Out Of Office
• Begin Collecti...
49
RECOMMENDATIONS (CONT.)
COST SAVINGS
• Engage Billing Service
• Reduce Extender Hours
• Reduce Staff
50
RECOMMENDATIONS (CONT.)
OPERATIONAL IMPROVEMENT
• Create An Effective Organizational Structure
• Institute Monthly Meet...
51
ABC ASSOCIATES, P.C.
TIMELINE
Month 1 Month 2 Month 3
Increase Office Encounters X
Reduce Extender Hours X
Review Outst...
52
EXHIBITS
EXHIBIT I: OFFICE VISIT ANALYSIS
BY PROVIDER
EXHIBIT II: OFFICE VISIT ANALYSIS
BY LOCATION
EXHIBIT III: GROSS ...
EXHIBIT I
OFFICE VISIT ANALYSIS
BY PROVIDER
NOTE: Counts Do Not Reflect Patient “No Shows”
54Source: Internal Data
Months: December, 2011; January, 2012; February; 2012
55Source: Internal Data
Months: December, 2011; January, 2012; February; 2012
56Source: Internal Data
Months: December, 2011; January, 2012; February; 2012
EXHIBIT II
OFFICE VISIT ANALYSIS
BY LOCATION
NOTE: Counts Do Not Reflect Patient “No Shows”
58
Source: Internal Data
Months: December, 2011; January, 2012; February; 2012
EXHIBIT III
GROSS CHARGES ANALYSIS
60Source: MGMA Physician Compensation & Production Survey-2011 Report Based Upon 2010 Data
Internal Data
EXHIBIT IV
ASSUMPTIONS FOR BILLING
ANALYSIS
62
ASSUMPTIONS
Billing Service
– Actual Service Fee Based
Upon The Following Factors:
• Specialty
• Financial Class
• Volu...
63
JOHN P. CROCE
Tele 203-257-9784
e-mail:
jcroce@fairfieldconsultants.com
www.fairfieldconsultants.com
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Medical Practice Consulting

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  • Morphed together various assessments and slides to cover most typical situations we face While we can certainly use your business, any qualified consultant can present an objective viewpoint(s) and professional advice for your business
  • Assessment process-indoctrinate oneself into the inner workings of a practice in the shortest time period
  • Representative practice issues
  • Note action words and phrases
  • Go to EXHIBIT I and II “ The Case Of The Disappearing Patient”
  • Charges handout
  • Assumes increased patient volume is there-marketing important Can parking handle increased load??
  • 5 weeks + 1 cont ed week-partners
  • Collection agencies and 90 days
  • marketing Place for a medical practice: Where located Physicial plant: condition of office-paint, carpeting, etc. “ wall”-front desk-how do your people greet patients? Delays-how do you handle them???? Communication-how do your people talk to patients, payers and vendors on phone POINT: Lots of things can be done to market your practice without spending a lot of money
  • Expanded hours and taking new patients- Subspecialty stressed in advertising Movie theatre intermissions Hospital-sponsored sessions THINK OUTSIDE THE BOX
  • Do all partners know that this type of coding is going on? Who decided?
  • Do all partners know that this type of coding is going on? Who decided? Note loss of income
  • Medical manager reports suck!!!!!!!
  • With no addition to staff, expect A/R to climb again for 90+ days Hidden factor for comparison Impact on collection ratio
  • Space-used 178 sq ft (17X10) Salary/bfts: (71,742+16,640)*1.076 Protocol-make sure all docs are doing ultrasounds the same-not referring out-rescheduling
  • Protocol-make sure all docs are doing bone density the same-not referring out-rescheduling Space-used 100 sq ft
  • Written agenda Someone to keep meeting on track
  • Transcript of "Medical Practice Consulting"

    1. 1. ABC ASSOCIATES, P.C. PRACTICE ASSESSMENT
    2. 2. 2 ASSESSMENT As-sess-ment-noun Dictionary.com 1. the act of assessing; appraisal; evaluation. 2. the act of judging or assessing a person or situation or event. Fairfield Consultants 1. analyzes where a practice has been, where it wants to be and creates a blueprint on how to get there. Random House Unabridged Dictionary 2006
    3. 3. 3 METHODOLOGY USED • Interview Providers And General Staff • Observe Practice Operations • Analyze Pertinent Financial And Productivity Information • Compare Actual Practice Results To Industry And Other Standards
    4. 4. 4 FINANCIAL • Increase Revenues • Accounts Receivable • Coding • Fee Schedule • Billing Function • Ancillary Services • Extender Productivity OPERATIONAL • Organizational Structure And Decision-Making • Communication • Staffing REPRESENTATIVE PRACTICE ISSUES
    5. 5. FINANCIAL
    6. 6. 6 ABC ASSOCIATES, P.C. FINANCIAL FINDINGS • Revenues Have Declined In Recent Years; However, They Can Be Increased. • Accounts Receivable Aging Must Be Improved And Outstanding Monies Should Be Collected. • While There May Be No Loss Of Revenue Due To General Under Coding, Additional Coding Training Is Essential. • The Practice Fee Schedule Should Be Updated And Fee Increases Sought Where Possible.
    7. 7. 7 ABC ASSOCIATES, P.C. FINANCIAL FINDINGS (cont.) • A Billing Service Should Be Engaged. • Ancillary Services Are Profitable. • Extenders Should Be More Productive.
    8. 8. 8 PROVIDERS • Physicians Can Be More Productive. • More Office Hours Should Be Made Available To Patients (Early Morning, Evenings And Saturday). • The Office Hours Provided By Extenders Exceed Those Needed.
    9. 9. 9 ABC ASSOCIATES, P.C. NET REVENUE ANALYSIS $0 $500,000 $1,000,000 $1,500,000 $2,000,000 $2,500,000 $3,000,000 $3,500,000 $4,000,000 $4,500,000 $5,000,000 NET REVENUES PERIOD 2009 2010 2011 2012 Annualized 2009 $4,715,928 2010 $4,444,864 2011 $3,452,808 2012 Annualized $4,143,370 Net Fee Revenue Source: ABC Associates, P.C. Internal Data 2012 Data Represent The Period January 1-October 31Annualized
    10. 10. 10 REVENUE GROWTH • Revenues Can Be Increased By: • Increasing Physician Office Encounters • Decreasing Physician Days Out Of Office • Improving Collections Of Accounts Receivable • Implementing A Practice Marketing Program
    11. 11. 11 Source: MGMA Physician Compensation & Production Survey-2011 Report Based Upon 2010 Data ABC Associates, P.C. Internal Data-Drs. A, B & C Ambulatory Encounters For Any Three Representative Months Of The Year Multiplied By Four
    12. 12. 12 Doctors A & B Increased To MGMA Median Assumes Each MD Office Visit Generates $70.00 Revenue (Primarily E&M Codes) Source: ABC Associates, P.C. Internal Data-CY 2012 Assumes Each Lab Visit Generates $200.00 Source: ABC Associates, P.C. Internal Data-CY 2012 Assumes A 3:1 Ratio (Office Visits To Lab Visit)
    13. 13. 13Source: MGMA Physician Compensation & Production Survey-2011 Report Based Upon 2010 Data ABC Associates, P.C. Internal Data
    14. 14. 14 PHYSICIAN TIME OUT OF OFFICE ANALYSIS Increase Weeks Worked To 75%Tile/90%Tile: One Week Two Weeks Dr. A $10,000 $20,000 Dr. B $11,000 $22,000 Dr. C $12,000 $24,000 Revenue Increase: $33,000 $66,000 Source: ABC Associates, P.C. Internal Data Revenue Calculated By Using CY 2012 Data For Each Physician Divided By 46.
    15. 15. 15 ACCOUNTS RECEIVABLE • There Are Excessive Monies Uncollected In The 121+ Days Aging Category For Both Patients And Insurance Companies. • Typically, Once Accounts Receivable Reach The 91 Day Aging Category, The Net Collection Ratio Can Decline To : • 50% Of The Practice’s Overall Net Collection Ratio For The Insurance Company Segment • 25% Of The Practice’s Net Collection Ratio For The Patient Segment
    16. 16. 16 ACCOUNTS RECEIVABLE AGING Source: ABC Associates, P.C. Categories 0-30 Days 31-60 Days 61-90 Days 91-120 Days 120+ Days Totals patient $25,000 $20,000 $15,000 $10,000 $430,000 $500,000 patient % 5.00% 4.00% 3.00% 2.00% 86.00% 100.00% insurance $975,000 $180,000 $45,000 $30,000 $270,000 $1,500,000 insurance % 65.00% 12.00% 3.00% 2.00% 18.00% 100.00% total $1,000,000 $200,000 $60,000 $40,000 $700,000 $2,000,000 total % 50.00% 10.00% 3.00% 2.00% 35.00% 100.00%
    17. 17. 17Sources: ABC Associates, P.C. Internal Data MGMA Cost Survey-2011 Based Upon 2010 Data Billing Service: XYZ Billing Service, LLC
    18. 18. 18 ACCOUNTS RECEIVABLE COLLECTIONS OVER 90 DAYS OLD Source: ABC Associates, P.C. Internal Data-Assumes Normal 50% Net Collection Ratio 91-120 Days 120+ Days Totals Patients Accounts Receivable $10,000 $430,000 $440,000 Projected Collection Ratio 12.50% 12.50% 12.50% Projected Revenue Collected $1,250 $53,750 $55,000 Insurance Accounts Receivable $30,000 $270,000 $300,000 Projected Collection Ratio 25.00% 25.00% 25.00% Projected Revenue Collected $7,500 $67,500 $75,000 Total Projected Collected Revenue $8,750 $121,250 $130,000 Total "Lost" Revenue $11,250 $228,750 $240,000
    19. 19. 19 MARKETING Investopedia The activities of a company associated with buying and selling a product or service. It includes advertising, selling and delivering products to people…….. The four “Ps” of marketing are product, place, price and promotion. Investopedia Inc. June 6, 2007
    20. 20. 20 MARKETING AND PUBLIC RELATIONS PROGRAM Sample Program Minimal Outlay • Community Programs (Speaking Engagements, Practice-Sponsored “Topic For An Evening”) • Newspaper “Women’s Health” Special Inserts • Supermarkets • Insurance Companies Higher Outlay • Advertising (Radio Commercials, Movie Theatres, Etc.) • Periodic Breakfast/Lunch Meetings With Referring Physicians
    21. 21. 21 EVALUATION & MANAGEMENT- HOSPITAL IN-PATIENT CODING • There Appears To Be Over Coding Of Certain Evaluation And Management And Hospital In- Patient Codes When Compared To The MGMA Model. • There Appears To Be Under Coding Of Hospital In-Patient, Subsequent Care Codes When Compared To The MGMA Model. • Financially, There Is A Nominal Financial Gain For ABC Associates, P.C. When Compared To The MGMA Models.
    22. 22. 22 E & M CODING ANALYSIS Source: ABC Associates, P.C. Internal Data For CY 2012; MGMA 2004 Coding Profile Sourcebook (General Surgery Patients Aged 65 & Over)-Based Upon 2002-2003 Data 99201 99202 99203 99204 99205 Totals ABC Associates, P.C. 0 103 852 46 0 1,000 MGMA 217 271 321 150 41 1,000 Charges $90.00 $130.00 $200.00 $205.00 $230.00 n/a Payments $45.00 $65.00 $100.00 $103.00 $115.00 n/a MGMA Revenue $9,756 $13,455 $32,130 $15,399 $4,715 $75,455 ABC Associates, P.C. Variance ($9,404) ($8,385) $53,020 ($10,661) ($4,715) $19,856 99211 99212 99213 99214 99215 Totals ABC Associates, P.C. 24 1,308 2,640 22 6 4,000 MGMA 193 1,650 1,728 362 69 4,000 Charges $45.00 $60.00 $87.00 $140.00 $200.00 n/a Payments $23.00 $30.00 $44.00 $70.00 $100.00 n/a MGMA Revenue $4,434 $49,488 $76,014 $25,312 $6,880 $162,129 ABC Associates, P.C. Variance ($3,882) ($10,248) $40,146 ($23,772) ($6,280) ($4,037) Combined ABC Associates, P.C. Variance $15,819
    23. 23. 23 HOSPITAL INPATIENT, INITIAL CARE PATIENTS AGED 65 & OVER Source: ABC Associates, P.C. Internal Data For CY 2012; MGMA 2004 Coding Profile Sourcebook (General Surgery Patients Aged 65 & Over)-Based Upon 2002-2003 Data 99221 99222 99223 Totals ABC Associates, P.C. 0 0 50 50 MGMA 7 26 17 66 Charges $200 $250 $300 n/a Payments $100 $125 $150 n/a MGMA Revenue $700 $3,250 $2,550 $6,500 ABC Associates, P.C. Variance ($700) ($3,250) $4,950 $1,000
    24. 24. 24 HOSPITAL INPATIENT, SUBSEQUENT CARE PATIENTS AGED 65 & OVER Source: ABC Associates, P.C. Internal Data For CY 2012; MGMA 2004 Coding Profile Sourcebook (General Surgery Patients Aged 65 & Over)-Based Upon 2002-2003 Data 99231 99232 99233 Totals ABC Associates, P.C. 2,000 0 0 2,000 MGMA 1,203 584 213 2,000 Charges $65 $80 $95 n/a Payments $35 $45 $50 n/a MGMA Revenue $42,105 $26,271 $10,660 $79,036 ABC Associates, P.C. Variance $27,895 ($26,271) ($10,660) ($9,036)
    25. 25. 25 FEE SCHEDULE • A Preliminary Fee Schedule Analysis Indicates That Fees Paid By Certain Insurance Companies (Representing Over 80% Of Practice Charges) Should Be Negotiated Upwards
    26. 26. 26 CPT Codes Volume Charge CY 2012 Annual Charges CPT Codes Volume Charge CY 2012 Annual Charges 99213 7,597 $80 $607,760 85025 845 $30 $25,350 90471 2,957 $25 $73,925 36416 820 $20 $16,400 92551 2,118 $25 $52,950 99391 811 $130 $105,430 99173 2,064 $20 $41,280 99000 709 $15 $10,635 81003 2,031 $20 $40,620 99394 682 $174 $118,668 87880 1,582 $25 $39,550 90633 631 $86 $54,266 99051 1,389 $80 $111,120 90669 580 $106 $61,480 90472 1,267 $20 $25,340 82465 532 $15 $7,980 87081 1,271 $15 $19,065 90658 500 $25 $12,500 99214 1,221 $150 $183,150 90723 435 $126 $54,810 99393 1,085 $160 $173,600 90715 432 $70 $30,240 99392 991 $150 $148,650 90647 419 $30 $12,570 Total $2,027,339 CY 2006 $2,402,870 ABC ASSOCIATES, P.C. Source: ABC Associates, P.C. Internal Data
    27. 27. 27 CPT Codes Charge Anthem United Health Oxford Aetna Healthnet Connecticare CIGNA 99213 $80 $64.01 $51.86 $49.79 $56.53 $53.40 $66.14 $60.23 90471 $25 $21.96 $9.59 $11.77 $11.55 $15.16 $14.80 $11.92 92551 $25 $13.61 $13.93 $6.85 $12.88 $18.77 $10.07 $12.74 99173 $20 $15.26 $0.47 $3.23 $0.61 $8.81 $0.00 $12.54 81003 $20 $3.18 $3.20 $2.91 $0.39 $1.61 $3.17 $2.56 87880 $25 $17.65 $16.52 $6.02 $10.58 $8.25 $16.38 $14.66 99051 $80 $7.48 $2.94 $16.47 $18.83 $4.20 $0.00 $42.77 90472 $20 $13.62 $8.20 $8.19 $12.10 $9.15 $15.56 $12.05 87081 $15 $9.80 $4.24 $6.85 $5.90 $4.56 $9.25 $8.02 99214 $150 $106.28 $80.24 $75.77 $93.56 $85.80 $108.95 $59.09 99393 $160 $139.02 $82.68 $91.30 $104.16 $129.10 $129.10 $108.56 Source: ABC Associates, P.C. Internal Data Bold Italics Indicates Fees That Should Be Negotiated Upward ABC ASSOCIATES, P.C. FEE SCHEDULE ANALYSIS PAGE 1
    28. 28. 28 ABC ASSOCIATES, P.C. FEE SCHEDULE ANALYSIS PAGE 2 Source: ABC Associates, P.C. Internal Data CPT Codes Charge Anthem United Health Oxford Aetna Healthnet Connecticare CIGNA 99392 $150 $138.27 $86.99 $88.79 $104.81 $130.62 $121.87 $106.99 85025 $30 $11.75 $3.47 $11.90 $6.47 $5.47 $10.63 $9.52 36416 $20 $0.29 $2.93 $11.35 $1.13 $0.13 $5.36 $7.18 99391 $130 $123.60 $76.36 $78.75 $97.99 $112.22 $106.07 $98.46 99000 $15 $0.00 $0.39 $1.85 $0.00 $0.00 $0.00 $1.61 99394 $174 $150.50 $94.65 $101.78 $123.21 $146.13 $127.66 $118.55 90633 $86 $24.80 $33.19 $32.16 $32.09 $33.90 $34.54 $36.08 90669 $106 $73.90 $75.81 $77.74 $75.11 $75.81 $64.65 $86.36 82465 $15 $4.95 $2.20 $0.19 $3.39 $0.00 $0.00 $0.00 90658 $25 $12.60 $12.70 $13.78 $10.78 $12.52 $13.19 $17.31 90723 $126 $75.52 $77.28 $78.72 $66.34 $78.72 $82.00 $70.73 90715 $70 $37.39 $39.77 $39.15 $39.58 $39.56 $43.89 $43.43 90647 $30 $21.62 $24.84 $25.45 $27.37 $25.63 $28.27 $30.53 Bold Italics Indicates Fees That Should Be Negotiated Upward Note: CPT Code 90647 Charge Should Be Increased
    29. 29. 29 ABC ASSOCIATES, P.C. FEE SCHEDULE ANALYSIS PAGE 3 CPT Codes Maximum Increase 10% Increase CPT Codes Maximum Increase 10% Increase 99213 $64,376 $6,438   85025 $2,463 $246 90471 $18,265 $1,827   36416 $6,208 $621 92551 $10,946 $1,095   99391 $16,258 $1,626 99173 $15,265 $1,527   99000 $725 $73 81003 $1,200 $120   99394 $15,317 $1,532 87880 $5,484 $548   90633 $2,829 $283 99051 $35,255 $3,526   90669 $5,321 $532 90472 $4,435 $444   82465 $1,000 $100 87081 $2,924 $292   90658 $2,079 $208 99214 $21,824 $2,182   90723 $2,979 $298 99393 $27,393 $2,739   90715 $1,534 $153 99392 $22,130 $2,213   90647 $1,888 $189 Total Annual Charge Increase: $230,000 $23,000 Total Annual Revenue Increase: $150,000 $15,000Source: ABC Associates, P.C. Internal Data Revenue Calculated At 65% Net Collection Ratio
    30. 30. BILLING
    31. 31. 31 OUTSOURCE BILLING ADVANTAGES • Reduce Operating Expenses – Staff Salaries – Taxes – Employee Benefits – Seminars/Continuing Education – Billing Software Technical Support – Supplies – Postage – Computer Hardware/Maintenance • Improve Billing Cycle • Improve Accounts Receivable Aging/Cash Flow • Improve Effectiveness Of Claim Appeals/Resubmissions • Collections Automatically Deposited Into Client’s Bank Account • Patient Statements/Collection Agency Process • Comprehensive Management Reports • No Employee “Turnover” Headaches DISADVANTAGES • Typically, Fees Paid A Billing Company Or Service Are Often A Flat % Of Collections Or Other Restrictive Arrangement, With No Or Limited Financial Incentive For You To “Grow” Your Practice • Loss Of Control Of Billing Policies And Procedures – How Collections Are Processed – How Patient Interactions Are Handled – How Appeals And Resubmissions Are Handled – How The Billing Cycle Works – How Billing Policies And Procedures Impact Your Accounts Receivable Aging
    32. 32. 32 BILLING DEPARTMENT VERSUS BILLING SERVICE See EXHIBIT IV For Assumptions Year 1 Year 2 Year 3 Year 4 Year 5 Cumulative Annual Revenue $2,500,000 $2,600,000 $2,700,000 $2,800,000 $2,900,000 $13,500,000 Billing Department Year 1 Year 2 Year 3 Year 4 Year 5 Cumulative Salaries $60,000 $63,000 $66,150 $69,458 $72,930 $331,538 Taxes, Benefits $15,000 $15,750 $16,538 $17,364 $18,233 $82,884 Computer Support $12,000 $15,000 $18,000 $21,000 $24,000 $90,000 Supplies $1,000 $1,000 $1,000 $2,000 $2,000 $7,000 Continuing Ed $2,000 $2,000 $2,000 $2,000 $2,000 $10,000 Overhead Allocation $15,000 $15,000 $15,000 $15,000 $15,000 $75,000 Total $105,000 $111,750 $118,688 $126,822 $134,163 $596,422 Billing Service Year 1 Year 2 Year 3 Year 4 Year 5 Cumulative Service Fee $125,000 $130,000 $135,000 $140,000 $145,000 $675,000 Monthly Access Fees $26,460 $26,460 $26,460 $26,460 $26,460 $132,300 Total $151,460 $156,460 $161,460 $166,460 $171,460 $807,300
    33. 33. 33 LOST REVENUE AGING FACTOR See EXHIBIT IV For Assumptions---See Slide 18 For Lost Revenue Source Year 1 Year 2 Year 3 Year 4 Year 5 Cumulative Annual Revenue $2,500,000 $2,600,000 $2,700,000 $2,800,000 $2,900,000 $13,500,000 Billing Department Year 1 Year 2 Year 3 Year 4 Year 5 Cumulative Salaries $60,000 $63,000 $66,150 $69,458 $72,930 $331,538 Taxes, Benefits $15,000 $15,750 $16,538 $17,364 $18,233 $82,884 Computer Support $12,000 $15,000 $18,000 $21,000 $24,000 $90,000 Supplies $1,000 $1,000 $1,000 $2,000 $2,000 $7,000 Continuing Ed $2,000 $2,000 $2,000 $2,000 $2,000 $10,000 Overhead Allocation $15,000 $15,000 $15,000 $15,000 $15,000 $75,000 Total $105,000 $111,750 $118,688 $126,822 $134,163 $596,422 Lost Revenue $240,000 $240,000 $480,000 Grand Total $345,000 $111,750 $118,688 $366,822 $134,163 $1,076,422 Billing Service Year 1 Year 2 Year 3 Year 4 Year 5 Cumulative Service Fee $125,000 $130,000 $135,000 $140,000 $145,000 $675,000 Monthly Access Fees $26,460 $26,460 $26,460 $26,460 $26,460 $132,300 Total $151,460 $156,460 $161,460 $166,460 $171,460 $807,300 Outsource Savings           ($269,122)
    34. 34. 34 ANCILLARY SERVICES
    35. 35. 35 ULTRASOUND FINANCIAL ANALYSIS Amount % Revenue $372,000 100.00 Expenses Salary/Benefits $ 95,099 25.56 Equipment Lease $ 9,012 2.42 Supplies $ 2,947 .79 Overhead Allocation $ 84,600 22.74 Expense Total $191,658 51.52 Net Income $180,342 48.42 Source: ABC Associates, P.C. Internal Data Assumptions: 250 Ultrasounds Per Month @$124 Payment Per Ultrasound; Overhead Allocation: Rent: $6,600 Rent Per Year, $3,000 For Telephone, Utilities And Office Supplies; $75,000 For Support Staff (2)
    36. 36. 36 BONE DENSITY FINANCIAL ANALYSIS Amount % Revenue $85,680 100.00 Expenses Salary/Benefits $13,210 15.42 Equipment Lease $15,811 18.45 Supplies $ 300 .35 Rad. Install. Ann Fee $ 65 .08 Overhead Allocation $16,000 18.67 Expense Total $45,386 52.97 Net Income $40,294 47.03 Source: ABC Associates, P.C. Internal Data Assumptions: 42 Tests Per Month @$170 Payment Per Test; Overhead Allocation: Rent: $5,200 Per Year,$2,400 For Telephone, Utilities And Office Supplies; $8,400 For Support Staff
    37. 37. 37 EXTENDER ACTIVITY Current APRN Weekly Patient Volume 61.00* Weekly Compensated Hours 72.00** Weekly Hours Required 26.00*** Excess Weekly Office Hours 46.00 Annual Compensation “Cost” To Practice $86,000**** * ABC Associates, P.C. Data For the Period _________________ ** From Internal Practice Information *** Assumes Weekly Productivity Level of 9 New OB Patients (.75 Hours Each), 5 New GYN Patients (.50 Hours Each) And 47 Established Patient Visits (3 Visits Per Hour) ****Calculated as: ($49,998+$63,000*.35)*1.20 (Benefits, Taxes)
    38. 38. OPERATIONAL
    39. 39. 39 ABC ASSOCIATES, P.C. OPERATIONAL FINDINGS • There Is An Absence Of An Effective Organizational Structure. • There Is No Effective Means Of Communication Within The Practice.
    40. 40. 40 • Overall Staffing Level Is Higher Than The MGMA Median For This Specialty. • If The Billing Function Is To Remain In- House, There Needs To Be Effective Billing Policies And Procedures To Ensure That The Aging Of Accounts Receivable Remains At An Acceptable Level. OPERATIONAL FINDINGS (cont.)
    41. 41. 41 ABC ASSOCIATES, P.C. ORGANIZATIONAL STRUCTURE • Absence Of An Effective Organizational Structure – Need To Create • Governance To Establish Clear Policies And Procedures • Effective & Efficient Organizational Structure With Clear Reporting Lines • Help Practice Manager Develop Leadership Skills
    42. 42. 42 ORGANIZATIONAL STRUCTURE PHYSICIAN OWNERS PRACTICE MANAGER RECEPTION SUPERVISOR BILLING SUPERVISOR BILLING STAFF CLINICAL SUPERVISOR EXTENDERS EMPLOYEE PHYSICIANS RECEPTION STAFF NURSES MEDICAL ASSISTANTS Source: ABC Associates, P.C.
    43. 43. 43 COMMUNICATION No Effective Means Of Communication Is Currently In Place • Employee Handbook • Job Descriptions • Performance Appraisals • Need To Institute Monthly Meetings (Type Of Which Deemed When And If Necessary): – Physician Owners – Physician Owners And Providers, Technicians – Practice Manager And Physician Owners – Practice Manager And Support Staff
    44. 44. 44 PARETO’S LAW Vilfredo Pareto-19th Century Economist 80% Of Land In Italy Owned By 20% Of Population • 80% Of Objectives (Effects) Are Achieved With 20% Of Means (Causes) • Subsequently, It Takes 80% Of The Means To Achieve The Remaining 20% Of Objectives (Cost To Move From 80% To 100% 4X Greater Than Cost To Move From 0-80%)
    45. 45. 45 ABC ASSOCIATES, P.C. POSITION ACTUAL* MGMA** VARIANCE General Administrative 5.00 1.40 3.60 Business Office 4.60 4.00 .60 Medical Reception 4.90 4.60 .30 Medical Sec./Transcription 0.00 1.20 ( 1.20) Medical Records 3.00 2.30 .70 Other Admin. Support 0.20 0.50 ( .30) Total 17.70 14.00 3.70----------------------------------------------------------------------------------------------- Medical Assistant 0.00 4.60 (4.60) RN 2.90 2.50 .40 LPN 3.00 1.05 1.95 Total 5.90 8.15 ( 2.25) Overall Total 23.60 22.15 1.45 * 7 FTE Providers ** Based on MGMA 2011 National Cost Survey Report-Median Results For Specialty
    46. 46. 46 STAFF ROSTER General Administrative: Business Office: Medical Reception: Medical Sec./Transcription: Medical Records: Other Admin. Support: Medical Assistant: RN: LPN:
    47. 47. 47 SUMMARY OF FINANCIAL OPPORTUNITIES OPPORTUNITIES IMPLEMENTATION RANGE Revenue Increases Increase Office Encounters $ -0- $ 240,000 Reduce Time Out Of Office $ -0- $ 66,000 Collect A/R Over 90 Days Old $ -0- $ 130,000 Fee Schedule Increases $ -0- $ 15,000 Total Revenue Increases $ -0- $ 451,000 Cost Savings Outsource Billing Function $ -0- $ 54,000 Reduce Extender Hours $ -0- $ 86,000 Reduce Staff Where Needed $ -0- $ 30,000 Total Cost Savings $ -0- $ 170,000 Total Financial Opportunities $ -0- $ 621,000
    48. 48. 48 RECOMMENDATIONS REVENUE ENHANCEMENT • Increase Office Encounters • Reduce Physician Time Out Of Office • Begin Collecting Outstanding Accounts Receivable • Review Fee Schedule And Seek Payer Adjustments, Where Possible
    49. 49. 49 RECOMMENDATIONS (CONT.) COST SAVINGS • Engage Billing Service • Reduce Extender Hours • Reduce Staff
    50. 50. 50 RECOMMENDATIONS (CONT.) OPERATIONAL IMPROVEMENT • Create An Effective Organizational Structure • Institute Monthly Meetings To Improve Communication • Create Job Descriptions, Employee Handbook And Performance Appraisal System • Additional Physician Coding Training • Physician Succession Planning
    51. 51. 51 ABC ASSOCIATES, P.C. TIMELINE Month 1 Month 2 Month 3 Increase Office Encounters X Reduce Extender Hours X Review Outstanding A/R X Collect Outstanding A/R X Review Fee Schedule X Obtain Payer Fee Increases X Reduce MD Time Out Of Office X Begin Process To Engage Billing Service X X X Reduce Staff X Institute Governance X Create Organizational Structure X Institute Monthly Meetings X Create Job Descriptions X Create Employee Handbook X X X Create Performance Appraisal System X Coding Training X MD Succession Planning X
    52. 52. 52 EXHIBITS EXHIBIT I: OFFICE VISIT ANALYSIS BY PROVIDER EXHIBIT II: OFFICE VISIT ANALYSIS BY LOCATION EXHIBIT III: GROSS CHARGES ANALYSIS EXHIBIT IV: ASSUMPTIONS FOR BILLING ANALYSIS
    53. 53. EXHIBIT I OFFICE VISIT ANALYSIS BY PROVIDER NOTE: Counts Do Not Reflect Patient “No Shows”
    54. 54. 54Source: Internal Data Months: December, 2011; January, 2012; February; 2012
    55. 55. 55Source: Internal Data Months: December, 2011; January, 2012; February; 2012
    56. 56. 56Source: Internal Data Months: December, 2011; January, 2012; February; 2012
    57. 57. EXHIBIT II OFFICE VISIT ANALYSIS BY LOCATION NOTE: Counts Do Not Reflect Patient “No Shows”
    58. 58. 58 Source: Internal Data Months: December, 2011; January, 2012; February; 2012
    59. 59. EXHIBIT III GROSS CHARGES ANALYSIS
    60. 60. 60Source: MGMA Physician Compensation & Production Survey-2011 Report Based Upon 2010 Data Internal Data
    61. 61. EXHIBIT IV ASSUMPTIONS FOR BILLING ANALYSIS
    62. 62. 62 ASSUMPTIONS Billing Service – Actual Service Fee Based Upon The Following Factors: • Specialty • Financial Class • Volume • Terms • Aging • Delivery Method – Monthly Access Fee • $165 1st Station; $120 Each Additional Station For 18 Stations. Billing Department – Actual Current Expenses Adjusted For Annual Revenue Increase – Overhead Allocation: • Portion Of Most Practice Expenses Based Upon The Billing Office Space As A % Of Overall Office Space Billing Service: XYC Billing Services, Inc.(203)XXX-XXXX Billing Department: ABC ASSOCIATES, P.C. Internal Information
    63. 63. 63 JOHN P. CROCE Tele 203-257-9784 e-mail: jcroce@fairfieldconsultants.com www.fairfieldconsultants.com
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