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Finance

MEDICAL DIVISION
The Vital Signs of Profitability

for Your Healthcare Practice WhatWha t is Financial Plaanning is Financial Planning

to Coastal W ealth?
Helping you achieve
Every physician practice your accounts receivable Using the data to take action
has two distinct components: should be under 30 days, Harnessing the power of data is critical your goals
clinical and business. Most but may be as high as 60 to maximizing opportunities. For exam- with accoun tability!
providers spend the majority days. (You may wish to ple, with the right data, you can make
of their time focusing on the break this down by A/R more informed decisions when negotiat-
clinical side. However, the owed by patients and A/R ing alternative payment arrangements and
business side is just as impor- owed by insurance com- vendor contracts; you will have the infor-
tant if you want your practice panies.) mation you need to properly manage
to grow and thrive. • Unpaid claims staffing and cash flow; and you will be able
By following these three • Low-paid claims to identify the most profitable ways to
steps, you can improve your • Denied claims – How grow your practice.
practice management: many claims are being To get the most value from your data,
1. Identify the vital signs or rejected establish a disciplined process to collect,
key performance indicators BY KEVIN N. FINE • Clean claim rate – report, review, and act on the information,
(KPIs) for your healthcare This measures the per- and create a culture of accountability that
practice. This is equivalent of centage of claims that are holds physicians and staff accountable for
knowing which primary indicators to being sent out that have been scrubbed behaviors that affect the KPIs that drive
check when you see your patients (e.g., and cleaned; ideally this should be 95% or profitability.
body temperature, heart rate, blood pres- greater To learn more about measuring the vital
sure, etc.). There may be just a few top- • Overhead expenses expressed as per- signs of profitability for your practice, con- (954) 625-1515
level “vitals” for your business, but several centages of revenues tact an accounting and consulting firm WWW . CASEYSJOHNSON C . OM
more KPIs that you’ll want to include in • Timely submission of charges with healthcare industry expertise.
your tracking. • Patient volume per provider
2. Select or build the right reporting • Ratio of claims collected to fees Kevin N. Fine, MHA, is a healthcare i si
tools to make it easy to monitor those crit- incurred – Shows percentage of physician advisory services director at Kaufman d
ci al p gr d
ical signs. Just as you would encourage time that is actually billed and collected Rossin, one of the Top 100 CPA and advisory r a
your patients to schedule periodic check- • Operating and total margins firms in the U.S. You can reach Kevin n o M
ups to keep an eye on their health, you at kfine@kaufmanrossin.com. r r r f esenntaaattaatn a t t t ecu a dc
ecuc
should schedule regular reporting to mon- Reporting rvivvi vici ice d t M u . S e o
itor the health of your business. Keeping watch on the vital signs of your
3. Establish a disciplined process to business and taking action when issues or
review that data, share it with your physi- opportunities arise can improve the prof-
cian partners as appropriate, and imple- itability of your practice. Reviewing KPIs
ment any changes necessary. At the end of regularly allows you to see fluctuations
a checkup, you would make recommenda- from month to month and over time.
tions to help your patients reach their When you start to identify trends and
health goals, and you would hold them exceptions in the data, you can understand
accountable for taking action on your rec- what is changing and why.
ommendations (i.e., start exercising, take Reporting and reviewing data requires
medication). You should do the same for time and commitment, but it doesn’t
your business goals. have to be a painful process. Using tech-
nology to gather and report information
Key performance indicators on a regular basis can make the process
While there are endless metrics you can easier.
measure in your business, you should start There are several different types of
by deciding on a reasonable number of reports that you may want to consider,
specific measures that can have the most including financial statements, manage-
impact on profitability. If your practice has ment reports, FLASH reports, real-time
multiple locations or physicians, collect dashboards, exception reports and email
and measure this data at the lowest possi- alerts.
ble levels: per provider, office location or At a minimum, you should review KPI
specialty. data monthly. In addition, you may want
The following are some of the key per- to set up daily or weekly flash reports
formance indicators you should consider that show you a one-page snapshot of
tracking at your practice. top-line metrics in three categories: liq-
• Number of patient encounters uidity, productivity and profitability.
• Number of procedures Most electronic medical record (EMR)
• Gross charges systems and practice management soft-
• Receipts ware – if configured properly – will allow
• Outstanding A/R – This is an impor- you to generate reports and view these
tant indicator of cash flow. The majority of KPIs from your dashboard.

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