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Having trouble trying to make more money at your healthcare practice? Beyond patient care, here are four tips to increase your profitability.
Successfully managing your healthcare practice means having a handle on your overhead costs, vendor contracts, revenue flow, and staff productivity. This article will help you diagnose potential problem areas and highlight four signs you might be in trouble and what you can fix to make more money at your practice.
The first sign your practice is losing money is if your overhead costs are too high. Overhead can be an often-overlooked item for many medical practices. When was the last time you looked at your employee health plan costs? Or evaluated different cleaning services? Or checked out competition for your medical supply vendor?
For many practices, this is a set-it-and-forget-it effort.
If it has been a few years since you have evaluated your vendor contracts, take the time to review each one. Put together a simple spreadsheet of all the vendors and their monthly/annual costs. Reach out to two or three other vendors for bids on the same services.
Market dynamics have shifted, and competition is forcing many vendors to be more competitive on pricing or to add more perks as part of their contracts. Taking advantage of these opportunities will boost your profitability and help your healthcare practice make more money.
The second sign your practice is losing money is your staff productivity is too low. Ask yourself if there is room for improvement. Can you streamline workflows to bill faster or get more patient visits per day?
For the average family practice, missing one visit per day amounts to roughly $15,000 in annual losses (assuming 210 days of patient visits at $72 a pop.)
Some tips on improving productivity include mapping the patient journey through an office visit to identify improvements in processes to speed up visits.
A good example is having patients complete paperwork pre-visit through your patient portal. This eliminates the need to complete the paperwork in the office and can save up to 10 minutes per patient.
Automate as many of your processes as you can. Technology can move faster than your office staff, speeding up mundane tasks, saving time and resources, and helping you make more money at your healthcare practice.
One last consideration regarding staff productivity is to ask yourself if you’ve appropriately staffed. Staff exhaustion can negatively impact practice performance.
When your staff is run down, your healthcare practice just isn’t going to perform at maximum efficiency. Is your team working too much? Does everyone have equal workloads? Do you have a high turnover rate? These can all be signs of staff exhaustion.
It’s a balancing act, but you need to find the magic number that allows your practice to run efficiently and affordably without running into the red or creating backlogs. In some cases, outsourcing portions of the work, such as aged-AR balances, might make sense to create the ideal staffing balance.
A third sign your practice is losing money is a shift in your AR balances. Your accounts receivable (AR) represents how quickly your practice receives payment for your patient visits. The older your AR, the harder it is to collect. Studies show the likelihood of collecting AR over 90 days drops as low as 15% if the process is poorly managed. That means lost revenue for your business.
If you are seeing a rising trend in your healthcare practice’s older AR, it’s time to take a closer look at what is happening with your AR balances. Use your practice management system to analyze your AR buckets.
Examine your overall AR. Where is it spiking? Then break it down by payer type. Is it a patient payment issue or an insurance issue?
Patients are now responsible for 30-35 percent of their healthcare expenses. It puts new pressure on your practice to collect patient-owed balances in a quick, efficient, and consistent manner. You want to know if your patient balances over 90 are high or growing.
A high or rising percentage of insurance AR is a strong indication your practice has a denial problem. If that’s the case, you can use your practice management system to dig into your payer reports to understand the denial reason codes. You can use this analysis to take a deeper dive into the issues and help identify ways to remedy them in the future.
The final sign your healthcare practice could make more money is a dip in patient visits. Patient no-shows are a long-standing issue for medical practices—sometimes patients don’t show up. According to MGMA, the average practice has a 5%-7% no-show rate.
Time is money for physicians, and a missed healthcare appointment is a lost revenue opportunity. Using the same assumptions as we did above, you are a family practice that sees 20 patients per day and has a 5% no-show rate with an average cost of $72 per visit (assuming 210 working days). That is another potential loss of $15,000 annually. If your rate starts to climb, you can imagine the impact.
Additionally, no-shows create more administrative work for staff and prevent other patients from receiving the care they need.
If you have an increasing no-show rate, there are strategies you can leverage to mitigate the impact.
Central to the effort is a strong patient engagement strategy that keeps you connected with your patients.
All these strategies can help you reduce the impact of no-shows on your revenue stream.
While managing a successful medical practice can be challenging, you can keep your business on the right track by monitoring some of the common areas where practices lose money.
Struggling and need help making more money at your healthcare practice? Contact us at CompuGroup Medical to ask about better software and billing services. We can help.