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MEDICAL PRACTICE MANAGEMENT
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GET A HANDLE ON FINANCIAL STATEMENTS
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Financial statements are to accounting what CAT scans and X-rays are to medicine. The financial health of a business or professional practice can be assessed by analyzing its financial statements.
While most physicians prefer to focus on medicine rather than the business of medicine, it can be beneficial for physicians to familiarize themselves with the basics of financial statements. Learning how to read financial statements allows you to see where the practice's money came from, where it went, and where it is now.
Three basic financial statements include:
Balance Sheet
The balance sheet provides detailed information about assets, liabilities, and shareholder's equity. It is a snapshot of the financial status as of a certain date. Assets may include physical property, such as office buildings and equipment, cash and investments, receivables, and intangibles, such as goodwill.
Liabilities are amounts owed to others and can include items such as taxes owed to the government, bank loans, and money owed to vendors.
Shareholders' equity is basically the amount the practice would have left over if it sold all its assets for the amount appearing on the balance sheet and paid off its outstanding liabilities. This equity belongs to the practice owners.
Income Statement
An income statement shows how much revenue is generated over a specific period, usually a year. It also shows the costs and expenses that went into earning that revenue. The bottom line shows profit or loss for the reporting period. A practice that experiences a net loss may look to reduce its operating expenses in an attempt to return to the black.
Cash Flow Statement
The cash flow statement reports inflows and outflows of cash during the reporting period. A cash flow statement shows the net increase or decrease in cash. Cash flow statements are generally divided into three parts: cash flow from operating activities, cash flow from investing activities, and cash flow from financing activities.
As experienced accountants, we can dig deeper into your numbers and show you where you can make changes that will improve your practice's bottom line. Call Micah Prellwitz, CPA at 800.880.7800 ext. 1395 or Michele Graham, CPA at 800.880.7800 ext. 1360 for more information.
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SMART STRATEGIES FOR SETTING SALARIES
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Setting compensation levels for staffers is one of the more difficult issues that physicians face. After all, salaries typically account for a large part of a practice's expenses. If your pay scale is low, it may drive up the rate of employee turnover. On the other hand, paying above-market rates can inflate your overhead unnecessarily.
Attracting and retaining employees isn't the only goal when setting compensation levels. They should be structured in such a way that your staff members recognize that productivity and additional effort will be rewarded.
So what can you do to ensure that your compensation plans achieve these goals? You can start by considering these issues.
Study Benchmark Data
Pay and benefits may vary considerably from one location to another and even from one practice to another. A good strategy is to find out what other local physicians are paying or to get wage and benefit data online to use as benchmarks when you are making compensation decisions.
Adjust for Circumstances
You'll need to adjust the benchmarks you find for a variety of circumstances. For example, consider your location. Are you in a high-cost urban/ suburban area or a low-cost rural one? In addition, you should adjust for any factors specific to your practice, such as payer mix. Tailoring benchmarks to your practice's specific circumstances will give you custom tools you can use to evaluate staff costs.
Create Incentive Plans
It may make more sense from a budget perspective to offer merit or productivity bonuses to employees rather than offering an across-the-board pay raise for the whole practice. Offering incentive bonuses allows you to set specific goals. For example, if you want to reduce the number of claims that insurers reject, you could offer employees a monthly bonus if they can reduce rejected claims by a certain percentage, say 30%.
Your practice could also use merit bonuses to encourage staff members to acquire additional qualifications and training which generally creates a win-win situation: Your staff member acquires additional qualifications, and your practice benefits from his or her enhanced skills.
We can help your practice review your current compensation practices to determine where changes might be necessary and beneficial. Call Michele Graham, CPA at 800.880.7800 ext. 1360 to discuss in more detail.
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OPTIMIZING YOUR PRACTICE'S INCOME
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 Enhancing revenue and controlling expenses should be the primary financial focus of every medical practice. Improving operational efficiencies can help bring a practice closer to achieving these financial goals. Here are some ways you can maximize your practice's revenue stream and reduce costs without sacrificing patient care.
Keep Coding Current
Coding errors are all too common. Simple errors end up costing medical practices money as well as time to rectify mistakes. Delays or denied claims translate into reduced reimbursements, which, in turn, affect cash flow.
In order to minimize coding errors, the cause of the problem must be identified. Typically, miscodes are due to undercoding to avoid penalty risk, using outdated data, or leaving coding decisions to inexperienced support staff. Periodic assessments of your practice's coding accuracy can help uncover problem areas. These assessments could include a review of your practice's forms and a comparison of billing codes with the actual services that were provided.
Maintaining updated coding manuals and software, keeping a code reference summary handy in exam rooms, and using online coding resources can help your practice attain a more accurate coding rate. So too will making notes during each patient visit. Be sure to have your staff attend refresher courses to help them stay current with coding practices.
Improve Employee Productivity
Eliminating inefficiencies and boosting employee productivity directly benefits your practice's bottom line. Below are a few ways to improve productivity.
- Define productivity goals and offer incentives to your staff for reaching those goals.
- Delegate administrative functions so that physicians spend the greater part of their day seeing patients.
- Maximize physician and medical assistant billable time by planning patient flow carefully.
Better Scheduling of Staff Time
Are your overtime expenses increasing from quarter to quarter? While some overtime is unavoidable, a consistent rise in overtime hours deserves some scrutiny. Consider reviewing the payroll records of your non-exempt employees to determine who worked overtime and why. Was your practice fully staffed and simply busy or was it short one or more employees on the days when the overtime occurred? If overtime was necessary because you were short-staffed, see if this was due to vacations or some other controllable situation. It may be time to revise your practice's policy on vacation time if scheduled time off was the cause of the overtime.
Update Fee Schedules
If your practice hasn't raised fees in some time, you may want to consider appropriate increases. However, be aware that some patients may be resistant to fee increases and could switch to another provider. In addition, it may be time to take a look at the reimbursement rates of all the plans you participate in. By running the numbers, you can determine whether it makes financial sense to continue accepting patients from some of the plans that reimburse poorly.
Buy Smarter
Medical and office supplies make up a portion of a practice's expenses. Yet, some practices rarely shop around for more competitive prices. Find out what some of your practice's "high-volume" items are and find out how much other vendors are charging. You can then use that information to negotiate lower prices with your current suppliers, consolidate orders with fewer vendors, or switch to new suppliers to save money.
We can work with you to identify areas in your practice where streamlining operations may help optimize your practice's bottom line. Eliminating inefficiencies and boosting employee productivity directly benefit your practice's bottom line. Contact Michele Graham, CPA today at 800.880.7800 ext. 1360 to see how we can help you. |
Bedside Manner Is an Important Attribute
When it comes to evaluating physicians, patients tend to focus on personality traits and doctor-patient interactions. Fifty-nine percent of respondents in a recent survey by the Associated Press-NORC Center for Public Affairs Research said that attributes such as "attentive," "caring," and "good bedside manner" mattered to them. Only 29% cited qualities such as "accurate diagnosis/ competence."
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ABOUT HSC MEDICAL BILLING & CONSULTING, LLC
Our personable billing team will partner with you as an extension of your office. Our experience and expertise with coding and insurance guidelines will produce optimal results while allowing you to focus on your practice. |
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Disclaimer
The information contained in this email is for general guidance on matters of interest only. The publication does not, and is not intended to provide legal, tax, or accounting advice.
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SEE WHAT OUR CLIENTS ARE SAYING...
"It is my pleasure to recommend the financial services of Harding, Shymanski & Company...Harding, Shymanski & Company has always provided us with a quality product on a timely basis. Their experience is apparent in the healthcare industry and I would highly recommend their services."
-Andrea Jarvis, Controller, Surgicare
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