I just joined a new practice. If I know the receipts and expenses of the practice, what can I tell about it’s health?
First, I would suggest some internal review of the data. Have there been any changes in receipts or expenses in the last 2 years? If so, work with staff and/or owners to determine what has occurred within the practice to explain these changes. These explanations can include adding or loosing providers, billing outsourcing, new space, etc. Also ask the staff/owners if changes in receipts and expenses were anticipated.
Next, take the data and compare it to others in the industry, your specialty, or the area. Is there a trend in the region for everyone of your specialty to see a decrease in receipts? Perhaps a local insurance company has changed its fee schedule and it is causing issues with everyone in your area. Checking with your local associations (MGMA, ACHE, or specialty association) will assist you in finding these answers. Regional associations will give you the data to compare your new clinic to others.
When looking at receipts, it will take more information to determine what is going on. You’ll need to review your billing practices and policies. When was the last time the insurance contracts were reviewed? Is the staff assuring that insurances are paying according to the published fee scheduled? And are patients paying their copays and deductibles before they leave the clinic?
Other areas to review include receipt by CPT code, the number of visits/patients, receipts by provider, and the current age of the accounts receivable. These will assist you in determining if the financial income of the clinic is healthy.
Expenses are easier to review and understand. Here, you need to determine what is the clinic spending money on. From personnel to medical supplies, office supplies to facilities, the more detail you know the more you can control these expenditures.
You should also review your inventory of medical and office supplies. Who is in charge of assuring the needed items are on hand? Is there a control to assure nothing goes missing? In addition, the prices for these supplies should be compared and Group Purchasing Organizations utilized whenever possible (see Intalere or your specialty association).
By reviewing all of the data available to you, asking open-ended questions, and observing, you should be able to quickly determine the health of your practice. With study of receipts and expenses the financial health is easily obtainable.