PS Performance Evaluation

Southwest Durham
Family Medicine, pllc
Performance Evaluation
November 2009

Practice Sync believes that physicians, regardless of specialty, should be able to own and run a successful medical
practice. We further believe that physicians should be able to do so without completely sacrificing their personal
life, and without becoming consumed by the daily stress of managing a medical practice. The most important
measures of success boil down to:
• How many patients must I see a day?
• How many hours am I working?
• How well am I compensated for the work I do?
The answer to these questions depends entirely on profitability.
The greater a practice’s profitability, the more satisfied the physician
owner and its employees.
Practice Sync works with clients to capture revenue more
efficiently, more effectively, more simply, and at lower cost to the
business. While many billing companies make similar claims,
Practice Sync delivers. And, unlike other billing companies,
Practice Sync backs its performance up with continuous Revenue
Cycle Management (RCM) transparency. We show our clients
where their money is, where it is expected, and most importantly,
where it is missing.
The first step in creating transparency is to help our practice owners
understand what information really matters and how to interpret
the results. The usual approach in many small offices is to simply look at charges and collections over a specific
timeframe. Factoring in number of encounters quickly provides average charges per encounter as well as average
collections per encounter. While such information is useful and important, particularly when evaluated over an
extended period, it does not explain why changes occur or where opportunities to improve the RCM process lie.
This approach essentially treats the entire billing and collections process as a black box whose input includes total
encounters and charges and whose output is revenue.
© 2009 Practice Sync, Inc. All rights reserved.
Assessing Your Practice
2
Encounters#
Charges$
RCM
“Black Box”
Collections$
The Traditional View
“Working with Practice Sync has
helped me to run a profitable business
without sacrificing my own quality
of life, or the quality of care to my
patients. Each provider at SW
Durham Family Medicine averages
only 16 patients over a 7-8 hour day.
My practice employees and providers
are paid well, have excellent benefits,
and a great lifestyle thanks to the
financial success that Practice Sync
has enabled.”
— Tiffany Marum, M.D.

We believe that to proactively manage the revenue cycle, we must first understand it by isolating, examining and
then reporting on the specific components that comprise the revenue cycle. Furthermore, we believe that our
customers also need to understand how their revenue cycle is being managed — hence, complete transparency.
The revenue cycle is not a black box. It is a series of discreet processes beginning with the patient encounter and
culminating with the collection of all remaining “owed” balances. In an ideal world, we would isolate, measure
and characterize performance within each step. Unfortunately, because of the multivariate nature of each step,
and the lack of availability of certain data, we often require multiple reports to understand performance within a
single step.
When we begin working with a prospective customer, we start by providing an assessment of the practice’s
current revenue cycle management processes. This assessment requires that we have access to the system
currently being used to manage billing and collections. This initial assessment includes a series of reports that
illustrate overall RCM performance. Additionally, we begin to break open the black box and shed light on
individual processes.
Our assessment evaluates the following processes using the specified reports:
Assessing Your Practice
3
RCM Overview
• Trended Production
• Monthly Charges and Collections
• Collections per Encounter
Collections
• Collections Yield
• Collection Sources
• Payer Mix
Cash Flow
• Bank Credits
versus Practice
Management
Collections
Billing
• Active Claims
Encounter
• Utilization
• E/M Distribution

Tiffany Marum, MD, founded Southwest Durham Family Medicine, PLLC (SWDFM), in 2005 with the goal of creating a
comfortable and accessible community-based practice. Departing from convention at the start, Dr. Marum designed her
office to be ergonomic and workflow-friendly. Exam rooms are comfortable, yet modest. A large centralized workstation
provides physicians and assistants easy access to equipment and supplies. All the physicians share a large common office.
Also sharing the large back-office is a server rack with multiple PCs operating the practice’s business-line software and
EMR. The investment in technology has paid large dividends for the practice — SWDFM operates at a meager 1.73:1
Staff to Provider ratio compared to the national average of 4.2 for Family Medicine. Dr. Marum is quick to point out that
SWDFM does not just “operate” with such a lean staff, it excels, particularly in the area of revenue cycle management
(RCM). The secret: great people, great technology, and great business partners — SWDFM credits Practice Sync for
helping the practice go from really good to exceptional.
Southwest Durham Family Medicine, PLLC
Founded: 2005
Location: Durham, North Carolina
Specialty: Family Medicine
Owner: Tiffany Marum, M.D.
Office Management: Practice Sync, Inc.

Providers:

3 (2 FTE)
Medical Assistant/Nurse: 2 (1.25 FTE)
Front Office: 2
Office Manager: 1 (0.2 FTE)
Staff-to-Provider Ratio: 1.73:1
Active Patients: 6,200
Practice Size: 2,000 square feet
Exam Rooms: 6
4
Practice Profile

“Trended Production” shows both individual provider and total office
production over several months. It is particularly useful for showing individual
provider contribution to top line charges. Information can further be broken
down to include provider specific collections — which is often a key driver of
physician compensation.
The decrease in charges that occurred during August and September
is specifically attributable to a decline in man-days by Provider 2 and
Provider 3, respectively.
Jan ‘09 Feb ‘09 Mar ‘09 Apr ‘09 May ‘09 June ‘09 July ‘09 Aug ‘09 Sept ‘09
Days 39 41 44 45 42 42 44 35 34
Provider 1 15.0 13.5 13.5 14.5 12.5 13.5 13.5 11.0 11.5
Provider 2 12.5 12.0 12.0 13.0 12.5 12.5 14.5 8.0 13.0
Provider 3 11 15 18 17 17 16 16 16 9
Total Encounters 550 585 614 626 574 640 631 518 514
Provider 1 208 190 196 202 177 224 205 176 195
Provider 2 206 193 182 189 182 198 224 132 208
Provider 3 136 202 236 235 215 218 202 210 111
Total Average/Day 14.3 14.4 14.1 14.1 13.8 15.4 14.5 15.0 15.3
Provider 1 13.9 14.1 14.5 13.9 14.2 16.6 15.2 16.0 17.0
Provider 2 16.5 16.1 15.2 14.5 14.6 15.8 15.4 16.5 16.0
Provider 3 12.4 13.5 13.1 13.8 13.0 14.1 13.0 13.5 12.3
Total Charges $95,309 $106,012 $106,327 $122,082 $113,920 $123,989 $122,943 $109,597 $99,685
Provider 1 $35,055 $31,695 $31,629 $43,629 $38,544 $46,544 $45,055 $40,369 $39,664
Provider 2 $37,910 $37,970 $31,524 $35,157 $35,452 $37,890 $43,320 $27,994 $40,736
Provider 3 $22,344 $36,347 $43,174 $43,296 $39,924 $39,555 $34,568 $41,234 $19,285
Charges/Encounter $173 $181 $173 $195 $198 $194 $195 $212 $194
Provider 1 $169 $167 $161 $216 $218 $208 $220 $229 $203
Provider 2 $184 $197 $173 $186 $195 $191 $193 $212 $196
Provider 3 $164 $180 $183 $184 $186 $181 $171 $196 $174
Trended Production
5
Encounter Billing Collections Cash Flow
RCM Overview
Report run date: October 30, 2009© 2009 Practice Sync, Inc. All rights reserved.

“Average Daily Encounters” is solely intended to illustrate the average daily
workload of providers in this office.
While there is some variance in the average daily encounters, the range
has held between 14-17 patients per day during a period that included the
turn-over of 2 providers. Most notably, the practice is operating profitably
while maintaining a light volume of patients compared to same-size,
same-specialty practices.
Average Encounters per Day (per Provider)
6
RCM Overview
18
16
12
10
20
14
Jan '07 Apr‘07 Jul‘07 Oct‘07 Jan‘08 Apr‘08 Jul‘08 Oct‘08 Jan‘09 Apr‘09 Jul‘09
Average Encounter per Day (per Provider)
Providers: 3 (2 FTE)
Staff-to-Provider Ratio: 1.73 : 1

This graph illustrates practice-level charges and collections on a month to
month basis. Additionally, collections as a percent of charges has been plotted
to highlight the consistent collection rate.
Despite variations in production, seasonality is playing a limited role.
Most of the variance — particularly the decline in production during
September 2008 through January 2009 — is attributable to provider turn-
over.
7
Jan ‘07 Apr‘07 Jul‘07 Oct‘07 Jan‘08 Apr‘08 Jul‘08 Oct‘08 Jan‘09 Apr‘09 Jul‘09
Active
Collections Total Charges
Total Collections
% Collections of Charges
Total Charges and Collections
Report run date: October 30, 2009
$112K
$84K
$28K
$0K
$140K
$56K
80%
60%
20%
0%
100%
40%
Sep‘09
RCM Overview

“Average Charges per Encounter” is a very good indicator of a practice’s billing
and coding processes. Assuming there are no changes to the underlying Master Fee
Schedule, then increases to “Average Charges per Encounter” must reflect one or more
of: shift in utilization to higher value procedures, better documentation and “Charge
capture,”or more aggressive coding. By carrying over the collections as a percent of
charges plot from the previous slide, we can show how changes to the average charges
per encounter is affecting the overall collection rate.
Beginning January 2009, there is a substantial increase to average charges per
encounter — during a period with NO fee schedule changes. Despite a 20%
increase during this period, the collection rate appears to be holding steady —
with perhaps a slight drop from 60% to 58%. This indicates a combination of:
higher value procedures, better “charge capture”, and better coding accuracy.
Average Charges per Encounter
8
RCM Overview
Active
Collections
$200
$180
$140
$120
$220
$160
80%
60%
20%
0%
100%
40%
Jan ‘07 Apr‘07 Jul‘07 Oct‘07 Jan‘08 Apr‘08 Jul‘08 Oct‘08 Jan‘09 Apr‘09 Jul‘09 Sep‘09
Charges per Encounter
% Collections of Charges

This is arguably the most important indicator of overall RCM. It is a pure
measure of production. If there are no changes to fee schedule or payer
mix, then any other fluctuation is attributable to controllable RCM related
activities. While collections per encounter is a key indicator, a number of
sensitivities (including fee schedule, payer mix, and utilization) make it
unreliable for cross-comparing to other practices, even same-specialty.
From January 2007 to June 2009, average collections per encounter has
increased by nearly $20 per encounter. Given an annual encounter rate
of approximately 7,500, this represents an annual increase in revenue of
$150,000.
Collections per Encounter
9
RCM Overview
Jan '07 Apr‘07 Jul‘07 Oct‘07 Jan‘08 Apr‘08 Jul‘08 Oct‘08 Jan‘09 Apr‘09 Jul‘09
Active
Collections
$110
$100
$80
$70
$120
$90
Collections per Encounter

Nearly all providers, regardless of specialty, operate within a very small subset
of procedure codes. Utilization highlights exactly which codes, and with what
frequency, providers are using. This information can be very useful in helping
both providers and office staff understand where to invest time in monitoring
rules changes. Further, comparing utilization to other same-specialty providers
can yield both utilization and coding opportunities.
Utilization Year-to-Date
10
RCM Overview
Total number of CPTs utilized
175
Number of CPTs
accounting for
80% of volume
11
Number of CPTs
accounting for
80% of charges
13
Number of CPTs
accounting for
95% of charges
49
Number of CPTs
accounting for
95% of volume
41

Utilization Year-to-Date
11
RCM Overview
Top 20 CPTs by Volume Top 20 CPTs by Charges
80101 Urine drug screen assay 99214 Complex F/U, established patient
99213 Routine F/U, established patient 99213 Routine F/U, established patient
99000 Specimen handling 80101 Urine drug screen assay
99214 Complex F/U, established patient 99203 New patient standard visit
36415 Routine venipuncture 99000 Specimen handling
81002 Urinalysis 99395 Preventative care, established patient 18-39
90471 Immunization administration 36415 Routine venipuncture
99203 New patient standard visit 99396 Preventative care, established patient 40-64
99395 Preventative care, established patient 18-39 99385 Preventative care, new patient 18-39
99211 Nurse visit 99204 New patient complex visit
90658 Influenza vaccine 90471 Immunization administration
80100 Drug screen 99386 Preventative care, new patient 40-64
99396 Preventative care, established patient 40-64 99211 Nurse visit
87430 Strep test 99202 New patient simple visit
94760 Pulse ox reading 99212 Simple F/U, established patient
99385 Preventative care, new patient 18-39 90649 Gardasil vaccine
99204 New patient complex visit J0696 1g ceftriaxone
99212 Simple F/U, established patient 90715 TDaP vaccine
96372 Intramuscular injection 99215 Extended F/U, established patient
S8110 Peak flow readings 90658 Influenza vaccine
90715 TDaP vaccine 90636 Hepatitis A/B vaccine
Nearly all providers, regardless of specialty, operate within a very small subset
of procedure codes. Utilization highlights exactly which codes, and with what
frequency, providers are using. This information can be very useful in helping
both providers and office staff understand where to invest time in monitoring
rules changes. Further, comparing utilization to other same-specialty providers
can yield both utilization and coding opportunities.

This is a key measure that CMS and larger private payers actively monitor.
Plotting provider-level distribution curves of the core E&M codes and
comparing to Medicare specialty-specific data illustrates both audit risk and
potential undercoding (lost revenue).
All 3 providers appear to be conservatively coding.
E&M Utilization YTD • New Patients
12
By Percent
Provider 1
Provider 2
Provider 3
Medicare
Provider 1
Provider 2
Provider 3
RCM Overview
99201 9920599202 99203 99204
0
50
100
150
200
99201 9920599202 99203 99204
0%
23%
45%
68%
90%
Staff-to-Provider
Ratio: 1.73 : 1

E&M Utilization YTD • Established Patients
13
RCM Overview
Provider 1
Provider 2
Provider 3
By Percent
Provider 1
Provider 2
Provider 3
Medicare
This is a key measure that CMS and larger private payers actively monitor.
Plotting provider-level distribution curves of the core E&M codes and
comparing to Medicare specialty-specific data illustrates both audit risk and
potential undercoding (lost revenue).
Provider 3 appears to be skewed towards level 4 visits which might
increase audit exposure. Recommend periodic note reviews.
99211 9921599212 99213 99214
0
375
750
1125
1500
99211 9921599212 99213 99214
0%
23%
45%
68%
90%
Staff-to-Provider
Ratio: 1.73 : 1

“Active Claims” represent outstanding patient and insurance balances as a
percent of total expected payment. In the typical billing cycle, responsibility
migrates from insurance to patient. Therefore, as claims age, we expect the
relative percent of outstanding balance to shift from insurance to patient
responsibility. Furthermore, all insurance balances should resolve (either settle
or migrate to patient responsibility) within 30 days. Any insurance balance
older than 30 days indicates “problem” claims.
April appears to be an outlier, with a higher number and/or value of
claims than anticipated. Recommend reviewing outstanding April claims
to locate source of problem.
Active
Collections
40%
30%
10%
0%
50%
20%
Jan ‘09 Feb‘09 Mar‘09 Apr‘09 May‘09 Jun‘09 Jul‘09 Aug‘09
Active Claims Assessment
14
RCM Overview
Patient Outstanding
Insurance Outstanding

“Collections Yield” represents the percent of Expected Payment actually collected.
It is a pure measure of the collections process. In most industries, there is a 2-3%
natural “bad” debt rate -- meaning uncollectable owed balances. In healthcare,
the “bad” debt rate is probably closer to 3-4% because (1) large share of patient
responsibility, and (2) tighter regulations on collecting medical debt. As a result,
we generally would not expect to see Collections Yield exceed 96%.
April, as expected from previous chart, has a lower Yield than anticipated.
One potential source is a “lost” batch. If a batch is submitted to a
clearinghouse, but the underlying claims never reach the intended payer,
then the claims are never adjusted. The impact is twofold — (1) “Expected”
payment amount is overinflated, and (2) collections are lower than should be.
Collections Yield
15
RCM Overview
Active
Collections
90%
80%
60%
50%
100%
70%
Jan ‘09 Feb‘09 Mar‘09 Apr‘09 May‘09 Jun‘09 Jul‘09 Aug‘09 Sep‘09
Yield Providers: 3 (2 FTE)

“Collection Sources” shows how much of total collections is attributable to
patient and how much to insurance. This is important because there are
distinct collection processes for each. Furthermore, patients are every office's
worst payer, and patient share is expected to skyrocket over the next several
years. This graph illustrates how sensitive an office is to their patient collection
processes.
Despite an expectation of increased patient responsibility amounts,
patient payments have actually held steady, with a nominal decrease, over
the last five years.
Collection Sources
16
RCM Overview
$700K
$525K
$175K
$0
$350K
2005 2006 2007 2008 2009
Patient Collections
Insurance Collections

An office’s contracted fee schedule is the single most important revenue driver.
In reality, though, an office does not have a single fee schedule. Instead, it has
a “blended” fee schedule which is the weighted average fee schedule across its
multiple payers. As such, an office should prefer to have a higher percentage of
patients from its higher value payers. “Payer Mix” illustrates the source and
share of an office’s underlying fee schedules.
After several years of gaining share, BCBS appears to be stabilizing near
55%. Biggest Gainer: PrimaHealth. Biggest Losers: Medicare and
UnitedHealthcare.
Payer Mix
17
RCM Overview
40%
30%
10%
0%
60%
20%
2005 2006 2007 2008 2009
50%
BCBS
PrimaHealth
Cigna
United Healthcare
Aetna
Medicare
Patient

This chart illustrates actual cash flow (Bank Credits) compared to the collections
as reported within an office’s practice management (accounting) system. In theory,
these two plots should be very close. In reality, however, they frequently are not. The
type of variance can reveal important information about the wellness of the RCM
system. Vertical differences are generally attributable to timing differences between
when funds are posted and when they are actually realized in the form of a bank credit
(examples include: credit card transactions and counter deposits — cash and checks).
Horizontal differences, or phase-shifting, on the other hand, is attributable to a delay
in posting.
This practice has been using Practice Sync’s Revenue Cycle Manager for several
months. As a result, the differences between the two curves is both expected and
unremarkable.
Bank Credits vs. Practice Management Collections
18
RCM Overview
$30K
$10K
$0
$40K
$20K
06/07/09 07/05/09 08/02/09 08/23/09 09/20/0909/06/0908/16/0907/19/0906/21/09
Total Collections
Total Bank Credits

When we work with you and your practice, we scrutinize revenue cycle activities at an even lower
level than during our initial assessment. This ongoing analysis combines 835 and 837 claims files,
the use of Practice Sync proprietary Revenue Cycle Manager, and a full business process review.
Working with Practice Sync
19
Ultimately, our goal is to simplify and improve the revenue cycle to make your business more
successful. At Practice Sync, we continuously monitor these components of the RCM process so
you don't have to. But, unlike other billing companies, we also share all the details of the process
with our clients so that our clients know how they are performing and how they can improve.
This transparency is crucial to making your business successful and maximally profitable.
The Practice Sync View:
The Practice Sync
Revenue Cycle Manager
Encounter:
• Utilization
• Documentation
• Charge Capture
Patient
Collection
Eligibility
Verification
Encounter
Patient Billing
& Collection
Collection
Cash Receipts Timing
vs.
Operating Expenses
Cash Flow
ERA/EOB Posting
&
Balance Reassignment
Submission
Claim
Creation/Edit
Billing
Problem Claims Management

Get Started Today. It’s Simple.
1. Call Practice Sync at (919) 225-3825.
2. Complete a brief telephone assessment.
3. If you qualify, Practice Sync will schedule a visit to
your office to assemble evaluation data.
4. In approximately one week, Practice Sync will meet
with you to review our analysis and outline a path to
optimize your practice’s performance.
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