Revenue-cycle management (RCM) is more important than ever for physician practices and health care organizations of all stripes, and improvement in this area is especially critical to the sustainability and growth of physician private practices.
Their typically lower patient volumes and tighter margins mean that without disciplined oversight, even well-run physician private practices can miss signs of problems that slow reimbursement or even lose it altogether.
To support practices of all sizes, including those that are physician-owned, the AMA has developed a new resource (PDF) that offers pragmatic advice on navigating the complexities of revenue-cycle management (RCM) while delivering care and managing a business.
The report, which is an additional supportive resource of the AMA Business of Medicine education program, helps physicians identify information applicable to their needs. The report was created by the AMA in collaboration with experts at The Linus Group, a consulting firm that helps health care organizations with strategy, branding, communications and market positioning.
Pragmatic, relatively simple measures can strengthen RCM for the decreasing number of independent practitioners. Linus Group President Kristin Apple and the firm’s director of strategy, Lindsey Schott, shared insights on how small to medium-sized physician practices can maximize RCM for ongoing stability and profit.
“It needs to become a matter of working smarter, not harder,” Schott said. “That doesn’t mean adding another patient to the day but getting the maximum reimbursement for the care they’re already providing.”
Start at the very beginning
Denials and delays often originate at registration, so Schott advises that physician private practices acknowledge that good RCM starts there.
“Practices need to make sure that the first and most basic steps are done right,” she said. “That means getting demographics, insurance numbers, contact info, spelling and dates correct. These easy-to-make errors are responsible for a lot of roadblocks.” New jobs, marriages and moves mean new information, and missing it costs time and money. “Confirming and updating that information at every appointment is a good place to start.”
It takes astute clinical judgment as well as a commitment to collaboration and solving challenging problems to succeed in independent settings that are often fluid, and the AMA offers the resources and support physicians need to both start and sustain success in private practice.
Watch accounts receivable closely
Industry data and the Linus Group’s experience confirm that days in accounts receivable (AR) can present the most revealing overview of a physician private practice’s financial health.
“Almost everyone we work with is aware of AR as an important metric and actively looking at it,” Schott said. “Anything between 30 and 45 days in AR means that claims are moving and reimbursement is timely. More than 90 is a red flag that something in the revenue cycle needs attention.”
Leadership awareness of days in accounts receivable as a valuable metric is key. “When practice leaders understand what those numbers mean, they start asking better questions and connect daily operations with financial outcomes,” Apple said.
Don’t overlook staff
Patient care is often seen as central to sustainable RCM, but the day-to-day experience of employees is just as important. High turnover at the front desk and shortages of experienced billing specialists can degrade a physician private practice’s overall performance.
“Find the right people and pay them well,” Apple said. “Being able to look coders and billers in the eye lets them know they are part of the bigger picture, which helps increase revenue because they understand how important they are to the practice.”
Transparency and communication across teams also drives cooperation that prevents bottlenecks. “Facilitating relationships throughout the practice helps everyone understand why they’re being asked to do what they do,” Schott said. “That’s when lasting traction starts.”
Outsourcing doesn’t mean out of mind
Outsourcing is common and many small physician private practices rely on outside vendors for coding and billing support, but it still requires oversight.
“Some practices approach outsourcing as if coding and billing is no longer their responsibility, but it is,” Schott said. “Every practice is unique and should expect customizable reporting. Ask for more than the templated reports vendors usually give everyone.”
That applies internally too, Apple added. “Whether it’s staff or a vendor, leaders have to keep the lines of communication open. You can’t improve what you don’t see.”
Pick your KPIs
MGMA lists dozens of key performance indicators (KPIs), but Schott advises physician private practices not to chase them all.
“It’s a matter of trial and error. Pick one or two KPIs, track them for a quarter and see if paying attention makes a difference to the bottom line,” she said. “If it does, keep it. Once it’s part of the process, add something new. There’s no need to tackle everything all at once.”
Make it regular and rewarding
Successful practices schedule regular RCM check-ins. “Meet briefly and casually every week or at least every month to review the most important numbers,” Schott said. “It just needs to be intentional and prioritized.”
Recognition motivates staff as well. “People want to win and making RCM rewarding has long-term benefits,” Apple said. “When the leadership sees progress toward RCM goals, mark it and celebrate the success.”
More than numbers
Less-than-stellar RCM is not an option in today’s competitive health care environment.
“Physicians who own practices cannot afford to not pay attention,” Schott said. “Not keeping an eye on the revenue cycle not only puts practices at risk, it also jeopardizes patient access.” It also threatens the independence and autonomy that makes these physicians prefer private practice over employment.
Revenue-cycle management doesn’t have to overwhelm small physician private practices. Simply focusing on a few priorities can alleviate burnout, help retention, and stabilize cash flow. Clean registration and updates, tracking days in accounts receivable, rewarding staff and open communication can help private practices protect both their financial future and their ability to care for patients on their own terms.
Find out more about the AMA Private Practice Physicians Section, which seeks to preserve the freedom, independence and integrity of private practice.
