The software available to healthcare practices today provides more opportunities for financial reporting with less effort than ever before. What gets measured gets managed, and running routine, scheduled reports can lead to big improvements in revenue cycle management. This reporting provides insight to the financial stability of a practice, and can be used as a proactive tool to identify opportunities for correction and improvement. Specific reports that target key areas can lead to cost savings and increased profits by identifying sources of revenue loss as well as missed opportunities for revenue gain.
To find and quantify these opportunities, begin by running reports that address the following questions:
Who is receiving services?
The revenue cycle begins with the patient. Who is calling your office? Who is walking through the door? How often are these patients returning? Monthly financial reporting should include data on the number of patient visits, and whether these are new or established patients. Tracking these numbers is fundamental to managing patient retention and planning for growth.
Who is not receiving services?
On the other hand, who isn’t showing up? By running reporting data on the patients who aren’t receiving services, you can identify opportunities for improvement. Missed appointments are bad for patient care and are expensive: according some estimates, no-shows cost the U.S. healthcare system some $150 billion annually. A trend showing an increase in no-show appointments signals a need for re-evaluation of the customer relationship program, such as automating the appointment confirmation process.
Is the practice missing opportunities to see new patients? By monitoring where referrals are originating, you can identify a baseline to see where outreach would be appropriate, and monitor those efforts accordingly. A report that shows a once-consistent source of referrals suddenly drying up could signal a need for investigation (for example, perhaps a referring physician has left a local practice).
How are patients paying?
Who is paying for your services? An essential aspect of revenue cycle management is understanding where the money is coming from, and these details should be reflected in the practice’s routine financial reports.
Are all your eggs in one basket? Reporting data should include identification of the payer mix, which is an accounting of the types of groups and individuals making financial payments (e.g., Medicare). This provides the practice with an understanding of where the revenue is coming from and how secure that revenue stream is. This is also a starting point for evaluating collection percentages and the balance of payers, and identifying points of value and vulnerability. If a major policy change were to impact one type of payer, is your practice nimble enough to adjust?
How long does it take to be paid?
What could be more important to the revenue cycle than actually getting paid? The longer an account remains outstanding, the more difficult it is to collect. Lengthy outstanding balances also negatively impact your cash flow. Financial reporting should include measurement of the days in accounts receivable, which is information on the length of time it takes to collect payment. From this reporting it is possible to measure the percentage of accounts receivable by aging category: 30 days, 60 days, 90 days, and more than 120 days. You’ll want to see each of these “buckets” represent a diminishing percentage of your outstanding claims as the length of time since the claim submittal increases. By comparing these performance metrics to industry benchmarks, you can better target and measure collection efforts.
Financial reporting needs vary from practice to practice, but the underlying reason to produce reports on a consistent schedule is to maximize the effectiveness of revenue cycle management, no matter the size or scope of the medical practice. Routine financial reporting will help you recognize trends and compare your practice’s performance against industry benchmarks. Regular reporting of these metrics also allows for early correction of risks and vulnerabilities, nipping losses in the bud.
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Beyond revenue cycle management, the benefits of financial reporting don’t end at the bottom line. A low number of no-show appointments means patients are getting the care they need; a steady cash flow allows the practice to provide quality care with adequate staffing. Good business is good for the patient, and there is always room for improvement.