The document outlines 11 best practices that medical practices can implement to improve their financial performance, such as collecting patient balances on the same day as service to speed cash flow, establishing performance standards and providing feedback to employees to boost productivity, and claims scrubbing to reduce denial rates and unnecessary work. Implementing these best practices could potentially result in annual financial gains ranging from thousands to over $100,000 per physician, depending on the specific practices adopted and metrics of the individual clinic.

1. How to Reduce Costs & Improve Financial
Performance with NextGen Practice Management
The 11 Best Practices to Improve Financial Performance
James Muir VP Sales Southwest
NextGen Healthcare Information Systems, Inc.

2. Now Presenting - James Muir
• Presenter
– James Muir
– Vice President Sales
Southwest

3. Disclosure
• There are a lot of stats in this presentation
• I have done my best to use the best
sources
– Typically the MGMA or Physician’s Practice
• To keep the slides simple I have:
– Summarized the return for each best practice
– Normalized the returns to per doc per year
• Using primary care volumes & metrics

4. Top 30 Challenges for Medical Practices
Top 15 Challenges Rank
Dealing with operating costs that are rising more rapidly than revenues 1
Maintaining physician compensation levels in an environment of declining reimbursement 2
Collecting from self-pay, high-deductible health plan, and/or Health Savings Account patients 3
Managing finances with the uncertainty of Medicare reimbursement rates 4
Recruiting physicians 5
Negotiating contracts with payers 6
Selecting and implementing a new electronic health record system 7
Modifying your physician compensation methodology 8
Participating in the Medicare Physician Quality Reporting Initiative 9
Hiring and retaining quality staff 10
Participating in commercial pay-for-performance programs 11
Understanding physician performance-rating criteria 12
Preparing for participation in the Medicare e-prescribing incentive program 13
Improving patient flow through the practice 14
Dealing with the Medicare physician credentialing process 15
Source: MGMA 2009 Survey

5. Sum up challenges
Top 30 Challanges by Category
1. Cut Costs /
Improve
17%
Revenue 24%
2. Improve 31%
Operations 28%
3. Strategic
Initiatives Cut Costs / Improve Revenue Improve Operations Strategic Initiative Reporting
4. Reporting Source: MGMA 2009 Suruey

6. Cost Structure for Medical Practices
5% 1%
5% 2%
5%
55%
Payroll & Benefits
5%
Office Space
Medical Supplies & Drugs
8%
Laboratory
Professional Liability
Business Supplies
Equiptment & Furnishings
Outside Professional Services
14% Promotion/Marketing

7. What have some groups tried?
• Hiring freezes
• Freezing pay increases
• Cutting perks
– Getting rid of the break room for chart space
– Eliminating Bottled Water, Coffee, etc.
• What most these have in common:
– Negative Impact – Low Morale & increased turnover –
downward spiral
– STORY: We’re freezing hiring (but paying $86,000 in
overtime)
• Invest in automating first

8. Where can run to find
efficiency & cut costs?

9. Where the Physician Money “Leaks”
Actually Come From
• Enhanced authorization and certification
• Eligibility and authorization
Denial Management 2% – 4% • Complete and timely billing
• Improved registration data quality
• Better front office processes and technology
Reduction of aged • Improved follow-up processes all financial classes
A/R and 2% - 3% • Access to state-of-the-art, collection tools
Bad Debt Write-offs
Write-
5% – 10% loss of • Enhanced accounts receivable management
cash Process and • Process Tasking
Workflow 3% - 5% • Processes re-engineered to standards
Improvement • Benchmarks and standards implemented
training and certification
• Automated contract management
• Enhanced management and performance evaluation
Underpayments • Technology-enabled tools to monitor payer compliance
3% – 5% with contract terms and conditions
• Timely follow-up of underpayments
MGMA and HFMA study of Physician
Practices 2009

10. Top 11 Best Practices to Improve
Financial Performance
Ranking Best Practice
1 Collect patient balances same day of service
2 Establish performance standards, report & provide feedback
3 Claims Scrubbing
4 Tracking & Preventing Denials
5 Improve statement quality & frequency
6 Create & Enforce Write-off policy
7 Manage Insurance Under-payments
8 Remind Patients of Appointments
9 Verify Eligibility
10 Outsource Electronic Statements
11 Maximize Electronic Remittance Advice

11. Top 11 Best Practices to Improve
Financial Performance by Category
Category Best Practice
Process Collect patient balances same day of service
Process / Report Establish performance standards, report & provide feedback
Process / Report Claims Scrubbing
Process / Report Tracking & Preventing Denials
Process Improve statement quality & frequency
Process Create & Enforce Write-off policy
Process / Report Manage Insurance Under-payments
EDI Remind Patients of Appointments
EDI Verify Eligibility
EDI Outsource Electronic Statements
EDI Maximize Electronic Remittance Advice

12. Application Run-through
1. Briefly run though some aspects of EPM
– Focus on today’s top 11
2. Return and calculate the financial upside
if each best practice
3. Conclude

13. Worklog Manager
The Worklog Manager tells clinic staff:
• What to do
• When to do it
• How to do it
• Measures Productivity

14. The Worklog Manager
Auto Create Auto Complete
Event
Event

15. Jump to Application

16. 1. Collect Patient Balances Same
Day of Service
“Keying in at checkout is the most efficient
way to enter charges. Real-time
processing of work is the most efficient.”
– Elizabeth Woodcock, MBA, FACMPE From
Mastering Patient Flow, MGMA

17. 1. Collect Patient Balances Same
Day of Service
• Three Stars that Must be Aligned
1. 90% of charges must be coded by the time
the patient hits checkout
• EHR makes this easy
2. Your payer contract must be in your system
• So patient responsibility can be determined
3. Your building must physically allow for
collection to happen at checkout
• Or congestion will result
• Dentists have been doing this for years

18. 1. Collect Patient Balances Same
Day of Service
• Collecting Patient Balances Same Day
Improves Financial Performance Because:
1. Eliminates Statement Costs
2. Patient Balances are Collected sooner
• Speeds Cash Flow & Reduces A/R Days
3. Labor associated with collecting final
balances is eliminated

19. 1. Collect Patient Balances Same
Day of Service - Metrics
Metrics Low High
Range of Average Practice A/R days 40 47
Source: Physicians Practice
Range of A/R days reduced (32 & 35 days in A/R respectively) 20% 26%
One-time cash infusion as patient days are collected (per doc) $89,400 $152,360
Statement costs are reduced (per doc) $24,000 $86,000
Labor costs to collect private balances over 60 days (per doc) $10,185 $13,352
Source: Dartnell Institute
Total upside of collection patient balances to same day of $34,185 $99,352
service *not counting* the one-time cash infusion (per doc)
*Normalized for Primary Care Per Provider Per Year

20. 2. Establish Performance Standards,
Report & Provide Feedback
• Setting performance standards & automating
feedback improves financial performance
because:
– Defining Expectations Improves Performance
• Study: Engage Employees & Boost Performance, Hay Group. 2002
Robinson, Dilys and Sue Hayday
– Hawthorne Effect
– Feedback Changes Behavior Which Prevents
Errors

21. The Hawthorne Effect
• The Hawthorne Effect is a form of reactivity
whereby subjects improve an aspect of
their behavior simply in response to the fact
that they are being studied.
• Q. How Much?
• A. It varies. On average 30%
– Study: Richard E. Clark and Timothy F. Sugrue (1991, p.333) in a review
of educational research say that uncontrolled novelty effects cause on
average 30% of a standard deviation (SD) rise.
• “What get’s measured get’s managed.”

22. Feedback Changes Behavior Which
Prevents Errors
• Most employees want to do a good job.
• Managers don’t provide frequent enough feedback
• Feedback prevents errors
• Unbiased feedback is most effective
– Study: Feedback & Management: A review of research into behavioural consequenses, Ian
R. Eggleton University of New South Wales, USA 1991
• Q. Does posting results in the lunchroom work?
• A. Yes.
– High performers perform better, and low performers
are unaffected.
• Study: “The improved outcomes from rank-order grading largely arise among the high
performers, but not at the expense of low performers.” International Review of
Economics Vol. 4, issue 1 (2005), pp. 9-19

23. 2. Establish Performance Standards,
Report & Provide Feedback Metrics
Metrics Low High
NextGen clients using Worklog Manager utilized an average of 19 Hours 69 Hours
44 hours (or 1.1 FTE) less per provider than the national (.475 FTE) (1.725 FTE)
MGMA average
Study: NextGen Healthcare 2008, MGMA Cost Survey 2008 using 2007 data
MGMA Staffing Average FTEs per Physician 4.19 FTE 5.13 FTE
Study: MGMA Cost Survey 2008 using 2007 data
Total Annualized Upside Range $27,456 $102,960
*Normalized for Primary Care Per Provider Per Year

24. 3. Claims Scrubbing
• Claims Edits validate claims for:
– Demographic Errors
– Coding Edits (i.e. CCI, LMRP)
– Historical Edits
• High-end solutions create automated
feedback to prevent errors from happening
again.

25. Worklog & Claims Edits
Registration Providers
Claims Edits Engine
Coding
• Creates Automated Feedback Loop
• Create Accountability which Prevents Problems

26. 3. Claims Scrubbing Metrics
Metrics Low High
Average industry-wide denial rate: 5% 15%
Source: Physicians Practice
Annualized value in reduced claims denial of Improving first- $16,537 $74,692
pass-clean-claim-rate to 98% or 99%
Annualized value per doc of labor costs cut by claims $5,269 $31,121
scrubbing & unnecessary work elimination
Total Annualized upside per doc for claim scrubbing and $21,806 $105,813
unnecessary work elimination
*Normalized for Primary Care Per Provider Per Year

27. 4. Tracking & Preventing Denials Process
Top 8 Reasons for Denials
1. Patient Registration Errors
2. Lack of Insurance Verification (ineligible)
3. Invalid ICD9 Code at Time of Entry
4. Incomplete information regarding referrals &
preauthorizations
5. Duplicate Claims for the Same Services
6. Medical Necessity (correctly linking CPT & ICD9 codes)
7. Complete Documentation for Medical Services Provided
8. Bundled or Non-Covered Services (correctly using modifiers)
Source: MGMA, Sarah Larch, MS, FACMPE & Deborah Walker, MBA, FACMPE

28. 4. Tracking & Preventing Denials Process
• Step 1 – Document reason codes (either manually or
automatically via ERA) for each denial
• Step 2 – Run denial reports by reason code & by payer
to identify patterns
• Step 3 – Evaluate reason codes starting with the most
frequent
– Is it us? Or is it them?
• Step 4 – For denials that originate with us make process
changes that prevent all clinic originated denials
• Step 5 – Repeat steps 2 through 4 monthly

29. 4. Tracking & Preventing Denials Metrics
Metrics Low High
Average industry-wide denial rate: 5% 15%
Source: Physicians Practice
Annualized value in reduced claims denial of Improving first- $16,537 $74,692
pass-clean-claim-rate to 98% or 99%
Annualized value per doc of labor costs cut by claims $5,269 $31,121
scrubbing & unnecessary work elimination
Total Annualized upside per doc for claim scrubbing and $21,806 $105,813
unnecessary work elimination
• Note: This return calculation is essentially the same as that for
Claims Scrubbing. Clean claims obviates the need to work denials
so it is important to note that you cannot collect this return twice.
*Normalized for Primary Care Per Provider Per Year

30. 5. Improve Statement Quality &
Frequency
• Improving statement quality and frequency
improves financial performance because:
– It reduces call volume
– It improves patient payment compliance

31. Typical Call Volumes in a Medical
Practice
1400
1200 Not enough capacity (over-utilization)
1000
Call Volume
800
600
400
200
0
Monday Tuesday Wednesday Thrusday Friday
Call Volume Staff Bandwidth

32. 5. Improve Statement Quality &
Frequency Metrics
Percent of calls related to billing: 26% 41%
Percent of increased call volume on Monday: 30% 42%
Average Calls Per day 100 200
Calls related to Billing 26 82
Average Time to field each billing call 7 26
Total Time fielding calls 182 2132
Call volume reduction do to clean statement w more frequency 10% 50%
Hourly rate of billers/collectors $ 13.00 $ 26.00
Cost of fielding statement calls $ 39.43 $ 923.87
Cost for clean statement w more frequency $ 35.49 $ 461.93
Saving for clean statement w more frequency $ 3.94 $ 461.93
Business days per year 260 260
Annualized Savings $ 1,025 $ 120,103
*Normalized for Primary Care Per Provider Per Year

33. 6. Create & Enforce Write-off Policy
• Analyze your bad debt & determine the culprit
– Is it self-pay?
– Or Payers?
• Important to use different adjustment codes for
different types of adjustments. Example:
– Bad Debt Adjustment
– Insurance Adjustment
• Have a policy that defines the rules for write-offs
• Limit who can do write-offs & how much they
can write off without approval
• Use Practice Management system to enforce
policy

34. 6. Create & Enforce Write-off Policy
Metrics
Metrics Low High
Unnecessary Write-offs annually per physician $30,000 $60,000
Source: Physicians Practice
Percentage of Unnecessary Write-off eliminated 95% 100%
Total Annualized Upside per doc for elimination of $28,500 $60,000
unnecessary write-offs
*Normalized for Primary Care Per Provider Per Year

35. 7. Manage Insurance Under-Payments
Insurance Companies Underpay in 2 Ways:
1. They underpay the expected reimbursement amount
Charge Amount $150
Allowable Amount $100
Reimbursement @ 80% $80
Actual Reimbursement $79
Underpayment $-1
2. They misstate the allowable amount
Charge Amount $150
Allowable Amount $100
Reported Allowable $95
Reimbursement @ 80% $76
Underpayment $-4

36. 7. Manage Insurance Under-Payments
• Contract Management Systems are Vital to
Prevent Losses due to Insurance Underpayments
– Automatic Alerting Systems are Ideal
• Losses due to underpayments range from
$17,800 to $35,160 annually per physician
• Occasionally Dramatically Higher
– Jack Reed & Piedmont
Metrics Low High
Total Annualized Upside per doc for stopping leaks $17,880 $35,160
from contractual underpayments
Source: MGMA
*Normalized for Primary Care Per Provider Per Year

37. 8. Remind Patients of Appointments
• Call Stats:
– 2% - 4% National No-show rate
– 75.7% of practices have staff make telephone reminder calls
– 19.3% send postcards/mailers
– 18.8% have an automated attendant system make calls
– 5.9% have a vendor handle reminders & confirmations
• Physicians lose money on no-shows because time is consumed but services
cannot be billed (under-utilization)
• Clinics lose on average between $9,700 - $35,000 per doc annually due to no-
shows depending on the no-show rate.
Metrics Low High
National no-show rate average 2% 4%
Source: MGMA
Annual labor costs per doc for those who have staff $3,279 $8,873
make reminder calls
Either but
not both Total Annualized Upside per doc by eliminating no- $9,700 $35,000
shows (opportunity cost)
Source: MGMA
*Normalized for Primary Care Per Provider Per Year

38. 9. Verify Eligibility
• Eligibility Verification is the second largest
reason for claims denial
• It is one of the easiest things automate in a clinic
Metrics Low High
Percentage of all claims denied (as reported by the 4% 8%
insurance industry. Physician’s Practice reports higher)
Source: American Medical Association’s National Health Insurer Report Card for 2008 &
Medical Banking Institute
Percentage to improve denial rate by: 10% 25%
NOTE: The Verden Group estimates reductions in denials due to eligibility in the range of
7 to 35 percent. We are being more conservative here.
Annual Labor Expense per physician for manual eligibility $334 $2,496
checking. Low number represents very few checks per year.
Total Annualized Upside per doc to automate eligibility $1,800 $14,400
verification
*Normalized for Primary Care Per Provider Per Year

39. 10. Outsource Electronic Statements
• Outsourcing Patient
Statements is one of the
easiest ways a medical
clinic can save money.
• It can allow you to increase
statement frequency which
lowers call volumes
• Make sure your system
keeps an image of the
statement for reference
Metrics Low High
Total Annualized Upside per doc to outsource statements $24,000 $49,200
electronically
*Normalized for Primary Care Per Provider Per Year

40. 11. Maximize Electronic Remittance
Advice
• “Take advantage of available technology.
Electronic remittance automation can reduce
your staff cost tremendously and diminish the
possibility of fraud.” – Elizabeth Woodcock, MBA, FACMPE
• Every practice should utilize electronic
remittance to the greatest extent possible
Metrics Low High
Total Annualized Upside per doc to maximize Electronic $24,000 $49,200
Remittance Advice (ERAs)
Source: MGMA
*Normalized for Primary Care Per Provider Per Year

41. Summary of Top 11 Best Practices to
Improve Financial Performance
Ranking Best Practice Range of Savings
1 Collect patient balances same day of service $34,185 $99,352
2 Establish performance standards, report & $27,456 $102,960
provide feedback
3 Claims Scrubbing $21,806 105,813
4 Tracking & Preventing Denials $21,806 105,813
5 Improve statement quality & frequency $1,025 $120,130
6 Create & Enforce Write-off policy $28,500 $60,000
7 Manage Insurance Under-payments $17,880 $35,160
8 Remind Patients of Appointments $9,700 $35,000
9 Verify Eligibility $1,800 $14,400
10 Outsource Electronic Statements $24,000 $49,200
11 Maximize Electronic Remittance Advice $2,674 $6,500
*Normalized for Primary Care Per Provider Per Year

42. How does NextGen address these Best Practices?
Ranking Best Practice Addressed By
1 Collect patient balances same day of service AutoFlow, Contract Management
2 Establish performance standards, report & provide Worklog Manager
feedback
3 Claims Scrubbing Claims Edits, Worklog Manager
4 Tracking & Preventing Denials Reporting, Worklog Manager
5 Improve statement quality & frequency Statements, EDI
6 Create & Enforce Write-off policy Security, Worklog
7 Manage Insurance Under-payments Contract Management, Worklog
Manager
8 Remind Patients of Appointments Scheduling, EDI
9 Verify Eligibility Background Business Processor,
EDI
10 Outsource Electronic Statements EDI
11 Maximize Electronic Remittance Advice EDI, Background Business
Processor

43. Case Study – Piedmont
• About Piedmont Physicians Group
– 72 Physicians
– 14 Locations
• Operational Improvements
– Reduced billing and collection costs by 35%
• Reduced staff from 42 to 23
Operational
– New employee training time reduced by 71% Overhead
– Time per patient call reduced 52%
• Financial Improvements
– Reduced A/R days from 73 to 28
– Reduced claim denials by 70% Revenue
– Recovered $288,000 in insurance underpays
– Improved cash flow by $1,250,000

44. Conclusion
1. Technology can create tremendous efficiency
– invest in automation before hiring, firing,
initiating pay freezes, cutting perks, etc.
2. Execute technology correctly – money spent on
technology executed poorly is wasted money
3. There are lots of great areas you can focus on
to improve your financial performance. Be
Passionate and get started!

45. Thank you! Questions?
• Contact Info:
– James Muir, VP Sales Southwest
– jmuir@nextgen.com
– Mobile: 801-633-4444

47. Integration in NextGen’s PM & EMR
Drives Down Costs & Improves
Financial Performance
• Creates Efficiency
– Drives Down Human Resource Costs
– Improves Financial Performance
• Increased Collections
• Faster Collections (reduced A/R days)
• To achieve these results integration must
be In the Right Places

48. Where in NextGen Does Integration
Create Cost-Saving Efficiency?
Top 3:
1. Claims Edits Automate Workflow
– Superior to Traditional Edits because in addition to
sophisticated Payer Edits they also Create Workflow Tasking
2. AutoFlow & Contract Management
– Allows Collection of Patient Responsibility at Checkout
3. Workflow Integration between EPM & EMR
– Which allows Tasking & Messaging between clinical &
administrative staff
• Reporting on Your Data

49. 2. AutoFlow & Contract Management
• Allows Collection of Patient Responsibility at Checkout
• Eliminates 90% of labor needed to collect patient amounts
after encounter
• Speeds Payment & Lowers A/R Days
– Case Study: Piedmont
• What makes this possible?
1. Real-time Charge Information from EMR
2. Real-time Contract Information from EPM
3. Simple AutoFlow Process to Prompt User for Correct Patient Amount

50. Practice Management Integration
Demographics
Scheduling Information
CPT & ICD9
NextGen EMR 3rd Party Practice
Management System
• What’s Missing?
Messaging & Tasking
“38-50% of all medical administrative errors are
caused during the manual exchange of information
between parties.” Gartner Group

51. 3. Workflow Integration Between EPM & EMR
• What Interfaces can • What We Lose:
Achieve with Interfaces:
– Demographics – Messaging
– Appointments – Tasking
– Charges NOTE: These are very important for improving efficiency
within the practice & manifest themselves in terms
Human Resource costs savings.
Examples:
• ABNs – Advanced Beneficiary Notices
• Follow-Up Appointments
• Physician ordering surgery (requires additional administrative tasks)
• Physician ordering a services that require authorization
• Generally, any time tasks cross from the clinical side to administration & vice verse

52. Reporting
• NextGen Dashboard
– Create Dashboards for Any Metrics Within NextGen
• Ad-Hoc Reporting
– Easy enough that each department can access and
create their own reports
• Background Business Processor
– Schedule Reports & eMail them as Excel Spreadsheet
Attachments

53. Integrated Dashboards

54. Ad-Hoc Reporting
• Based on Microsoft
SQL Server
• Active ‘Seed’ Report
Concept
• Easily:
– Customize
– Memorize
– Run
– Drilldown
• One click to:
– Graph
– Excel
– ASCII
– HTML
Make Better Decisions
Faster with Less Effort

55. Background Business Processor
• Define Processes
• Schedule
Frequency
• Run Unlimited
Jobs in Each
Process
• Example: Run
scheduled reports,
convert them to
excel spreadsheets
& email them out.
All unattended.

56. Case Study - NeuroSource
• About NeuroSource
– Specializing in the Business of Neuroscience
– Over 130 providers
– Over $100 Million Annually
• Operational Improvements Operational
– New employee training time reduced by 61% Overhead
• (from 13 days to 5)
– Time required for Month-end reduced by 87.5%
• (from 4 days to 4 hours)
– Overtime Reduced by 84.5%
– Staff turnover reduced from 12% to 1%
• Financial Improvements Revenue
– Charges increased 22% with no increase in staff
– Days in A/R reduced by 54%
– Collections improved by 40.9%

57. Case Study - Ogden Clinic
• About Ogden Clinic
– 54 Providers Multi-specialty group in Ogden Utah
– 8 Locations
• Operational Improvements
Operational
– Reduced average check-in time by 2 minutes
Overhead
• Saving 2.5 FTEs
– Reduced Average Employee Time
• From 2 weeks to 2 days
– Eliminated 12 FTEs and shifted 5 FTEs
• Financial Improvements
– Reduce A/R Days from 50 to 38 Revenue
– Reduced Annual Supply costs by nearly $100,000
– Health Maintenance Revenue Increase 7%
– Overall Increased Annual Revenue $980,000

58. Operational Reports
• Move
Beyond
Financial
Reporting
• Operational
Reporting
• Identify
Bottlenecks