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BLOG: Tightening revenue cycle management, part 3
In this last of a three-part series on monitoring your practice’s billing department, I present three simple graphs that can be readily generated in Excel.
The first graph shows the accounts receivable ratio, calculated by dividing the month-ending total A/R by the gross charges for the month. Depending on your charge profile, service and payer mix, and billing staff effectiveness, the ratio may be well under 1.0 or a bit over 2.0. In the graph below, which came from a client that changed billing systems in late 2013, you can see how the billing function got out of control and how that control was restored later in 2014.
The next graph shows the gross collection ratio, which is calculated each month by dividing practice collections by the gross charges billed out for the same month. The actual percentage is less important than the relative volatility of the curve. When the curve swings rather wildly, as it does from early 2014 onward, it’s a sign that the billing staff may be catching up and then serially falling behind with their work. This is a pattern often seen when management is weak or the billing department is understaffed.
As you can see from the last graph, the percent of receivables over 90 days is coming down, but for many quarters it still significantly exceeded the normal limits of 12% or less (in most settings). Agreed thresholds, along with longer-term graphs like this, shared with the patient accounts staff each month, can help motivate and track progress.
Keep in mind that all of these numeric examinations can be performed not only on the practice-at-large, but also on individual segments. You can examine and graph the relevant figures for an individual distant satellite office to see if the decentralized billing staff there are meeting standards set by the home office. If you’re an associate who is paid based on your collections, you can drill down into the data to see if your individual accounts are being worked hard or hardly worked.
Most patient accounts teams actually do an outstanding job for their practices but are underappreciated. So one of the side benefits of a little extra graphing work each month, even if all the numbers are all boringly favorable, is to give the team all the respect and recognition they deserve.
John B. Pinto is president of J. Pinto & Associates Inc., an ophthalmic practice management consulting firm established in 1979. John is the country’s most-published author on ophthalmology management topics. He is the author of John Pinto’s Little Green Book of Ophthalmology, Turnaround: 21 Weeks to Ophthalmic Practice Survival and Permanent Improvement, Cashflow: The Practical Art of Earning More From Your Ophthalmology Practice, The Efficient Ophthalmologist, The Women of Ophthalmology, Legal Issues in Ophthalmology, Ophthalmic Leadership: A Practical Guide for Physicians, Administrators and Teams and a new book, Simple: The Inner Game of Ophthalmic Practice Success. He can be reached at pintoinc@aol.com; website: www.pintoinc.com.