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
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
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
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
ABC ASSOCIATES, P.C.
FINANCIAL FINDINGS (cont.)
• A Billing Service Should Be Engaged.
• Ancillary Services Are Profitable.
• Extenders Should Be More Productive.
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
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
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
0
500
1,000
1,500
2,000
2,500
3,000
3,500
Values
Categories
ABC ASSOCIATES, P.C.
OFFICE ENCOUNTERS
Office Encounters
Office Encounters 620 2,200 1,484 1,933 2,527 3,405
Doctor A Doctor B Doctor C Median 75%tile 90%tile
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
0
50,000
100,000
150,000
200,000
250,000
Values
Categories
INCREASE OFFICE
ENCOUNTERS
Annual Encounters Increase
Annual Encounters Increase 1,313 449 1,762 $123,340 $117,349 $240,689
Doctor A Doctor C
Increased
Encounters
Increased
Annual MD
Revenue
Increased
Annual Lab
Revenue
Total
Increased
Annual Rev.
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
45
45.5
46
46.5
47
47.5
48
Values
Categories
ABC ASSOCIATES, P.C.
WEEKS WORKED PER YEAR
MD Weeks Worked Per Year
MD Weeks Worked Per Year 46 48 48 46
Median 75%tile 90%tile ABC
Source: MGMA Physician Compensation & Production Survey-2011 Report Based Upon 2010 Data
ABC Associates, P.C. Internal Data
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
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
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
0.00%
10.00%
20.00%
30.00%
40.00%
50.00%
60.00%
Values
Periods
ACCOUNTS RECEIVABLE
AGING COMPARISON
ABC
Specialty A
Specialty B
Billing Service
ABC 50.00% 10.00% 3.00% 2.00% 35.00%
Specialty A 53.00% 17.00% 9.00% 6.00% 15.00%
Specialty B 45.00% 18.00% 9.00% 7.00% 21.00%
Billing Service 58.16% 23.40% 10.78% 3.88% 3.77%
0-30 Days 31-60 Days 61-90 Days 91-120 Days 121+ Days
Sources: ABC Associates, P.C. Internal Data
MGMA Cost Survey-2011 Based Upon 2010 Data
Billing Service: XYZ Billing Service, LLC
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
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
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
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.
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
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
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
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)
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
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
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)
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
• 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
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
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
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
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
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
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
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
ABC ASSOCIATES, P.C.
TIMELINEMonth 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
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. EXHIBIT I
OFFICE VISIT ANALYSIS
BY PROVIDER
NOTE: Counts Do Not Reflect Patient “No Shows”
54. 54
0
50
100
150
200
250
300
350
400
VALUES
LOCATIONS
DOCTOR A
OFFICE VISIT ANALYSIS
Patients Seen
Hours Worked
Ratio
Days Worked
Patients Seen 256 115 371
Hours Worked 67.25 37.75 105.00
Ratio 3.81 3.05 3.53
Days Worked 21 18 39
Location A Location B Totals
Source: Internal Data
Months: December, 2011; January, 2012; February; 2012
55. 55
0
100
200
300
400
500
600
VALUES
LOCATIONS
DOCTOR B
OFFICE VISIT ANALYSIS
Patients Seen
Hours Worked
Ratio
Days Worked
Patients Seen 464 93 557
Hours Worked 126.75 23.75 150.50
Ratio 3.66 3.92 3.70
Days Worked 33 11 44
Location A Location B Totals
Source: Internal Data
Months: December, 2011; January, 2012; February; 2012
56. 56
0
20
40
60
80
100
120
140
160
VALUES
LOCATIONS
DOCTOR C
OFFICE VISIT ANALYSIS
Patients Seen
Hours Worked
Ratio
Days Worked
Patients Seen 155 0 155
Hours Worked 69.25 0.00 69.25
Ratio 2.24 0.00 2.24
Days Worked 22 0 22
Location A Location B Totals
Source: Internal Data
Months: December, 2011; January, 2012; February; 2012
58. 58
0
200
400
600
800
1000
1200
1400
VALUES
LOCATIONS
COMBINED MD
OFFICE VISIT ANALYSIS
Patients Seen
Hours Worked
Ratio
Days Worked
Patients Seen 909 406 1,315
Hours Worked 280.00 147.75 427.75
Ratio 3.25 2.75 3.07
Days Worked 84 52 136.00
Location A Location B Totals
Source: Internal Data
Months: December, 2011; January, 2012; February; 2012
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
JOHN P. CROCE
Tele 203-257-9784
e-mail:
jcroce@fairfieldconsultants.com
www.fairfieldconsultants.com
Hinweis der Redaktion
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