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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 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
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
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
FINANCIAL
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
ABC ASSOCIATES, P.C.
FINANCIAL FINDINGS (cont.)
• A Billing Service Should Be Engaged.
• Ancillary Services Are Profitable.
• Extenders Should Be More Productive.
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
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
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
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
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
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
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
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
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
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
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
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
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
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
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
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
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
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
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
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
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
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
BILLING
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
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
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
ANCILLARY SERVICES
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
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
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)
OPERATIONAL
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
• 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
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
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
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
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
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
STAFF ROSTER
General Administrative:
Business Office:
Medical Reception:
Medical Sec./Transcription:
Medical Records:
Other Admin. Support:
Medical Assistant:
RN:
LPN:
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
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
RECOMMENDATIONS
(CONT.)
COST SAVINGS
• Engage Billing Service
• Reduce Extender Hours
• Reduce Staff
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
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
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
EXHIBIT I
OFFICE VISIT ANALYSIS
BY PROVIDER
NOTE: Counts Do Not Reflect Patient “No Shows”
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
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
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
EXHIBIT II
OFFICE VISIT ANALYSIS
BY LOCATION
NOTE: Counts Do Not Reflect Patient “No Shows”
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
EXHIBIT III
GROSS CHARGES ANALYSIS
60
$0
$500,000
$1,000,000
$1,500,000
$2,000,000
$2,500,000
$3,000,000
Values
Categories
ABC ASSOCIATES, P.C.
CY 2012
Gross Charges
Gross Charges $2,400,000 $2,300,000 $3,000,000 $1,211,000 $1,806,000 $2,190,000
Doctor A Doctor B Doctor C Median 75%tile 90%tile
Source: 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
• 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
JOHN P. CROCE
Tele 203-257-9784
e-mail:
jcroce@fairfieldconsultants.com
www.fairfieldconsultants.com

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Medical Practice Business Consulting Presentation

  • 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.
  • 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 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 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 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 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 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 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 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
  • 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
  • 46. 46 STAFF ROSTER General Administrative: Business Office: Medical Reception: Medical Sec./Transcription: Medical Records: Other Admin. Support: Medical Assistant: RN: LPN:
  • 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
  • 49. 49 RECOMMENDATIONS (CONT.) COST SAVINGS • Engage Billing Service • Reduce Extender Hours • Reduce Staff
  • 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
  • 57. EXHIBIT II OFFICE VISIT ANALYSIS BY LOCATION NOTE: Counts Do Not Reflect Patient “No Shows”
  • 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
  • 60. 60 $0 $500,000 $1,000,000 $1,500,000 $2,000,000 $2,500,000 $3,000,000 Values Categories ABC ASSOCIATES, P.C. CY 2012 Gross Charges Gross Charges $2,400,000 $2,300,000 $3,000,000 $1,211,000 $1,806,000 $2,190,000 Doctor A Doctor B Doctor C Median 75%tile 90%tile Source: MGMA Physician Compensation & Production Survey-2011 Report Based Upon 2010 Data Internal Data
  • 61. EXHIBIT IV ASSUMPTIONS FOR BILLING ANALYSIS
  • 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

  1. 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
  2. Assessment process-indoctrinate oneself into the inner workings of a practice in the shortest time period
  3. Representative practice issues
  4. Note action words and phrases
  5. Go to EXHIBIT I and II “ The Case Of The Disappearing Patient”
  6. Charges handout
  7. Assumes increased patient volume is there-marketing important Can parking handle increased load??
  8. 5 weeks + 1 cont ed week-partners
  9. Collection agencies and 90 days
  10. 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
  11. Expanded hours and taking new patients- Subspecialty stressed in advertising Movie theatre intermissions Hospital-sponsored sessions THINK OUTSIDE THE BOX
  12. Do all partners know that this type of coding is going on? Who decided?
  13. Do all partners know that this type of coding is going on? Who decided? Note loss of income
  14. Medical manager reports suck!!!!!!!
  15. With no addition to staff, expect A/R to climb again for 90+ days Hidden factor for comparison Impact on collection ratio
  16. 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
  17. Protocol-make sure all docs are doing bone density the same-not referring out-rescheduling Space-used 100 sq ft
  18. Written agenda Someone to keep meeting on track