A guide to improving your medical practice's financial health

As a Medical Billing, Practice Management, RCM, and Finance professional whose mission is to help Medical Practices become and remain financially healthy, I am sharing some insights on how an owner provider can better manage their medical practice's financial health. I can also help you review or implement any of these aspects.

Here are several impactful actions a Practice Owner can take to assess the financial health of their medical practice:

1. Favorable Payer Contracts: Showcase your practice's quality of care, patient outcomes and value proposition to the Insurer. Renegotiate better reimbursement rates and explore new payer relationships that offer more favorable terms. Explore opportunities to participate in value-based care models like Accountable Care Models or Patient-centered medical homes. Propose service bundling with risk-sharing arrangements to diversify the practice's payer mix. Network with other providers in your area and research their contract terms, reimbursement rates, and negotiation practices.
2. Optimize Billing and Coding Practices: Ensure that your practice stays up to date with the latest coding guidelines and properly codes and bills for services provided by using correct modifiers and submitting claims accurately. Implement regular coding audits.
3. Maintain a Strong Revenue Cycle: Adopt robust RCM processes to streamline the revenue cycle: timely claim submission, proactive follow-up on denied or unpaid claims, efficient account receivable management, and effective patient registration and eligibility verification.
4. Monitor KPIs: ~20% of claims typically get denied. ~60% of these are never fixed and resubmitted. That is a lot of $$ being left on the table! Track and analyze these 6 financial KPIs at a minimum: AR Aging (ideally under 30 days), Collection rate (ideally above 95%), Denials rate (ideally below 5%), Net Patient Revenue (after accounting for contractual adjustments and write-offs), Operating Margin (ideally >15%), Payer Mix (Commercial vs Non-Commercial), AP Turnover. Use this data to identify areas for improvement and make informed decisions. A high claim denial rate could indicate inefficiencies in your billing process. High AR could indicate cash flow issues. Is your biller and billing platform delivering 95%+ payout on your filed claims??What is your Clean Claims Ratio? What is your Net Collections Ratio? These are all crucial questions! By prioritizing key metrics, embracing consistent reporting practices, and adequately benchmarking against industry standards, small medical practices can achieve greater financial stability and position themselves better for growth or a future sale.
5. Diversify Revenue Streams: Explore opportunities to diversify your practice's revenue streams, such as offering ancillary services (like in-house lab testing or medical equipment or therapy etc.) or implementing telehealth solutions or participating in alternative payment models like value-based care or offer elective or aesthetic or cosmetic procedures or concierge services.
6. Collections Strategies: A comprehensive patient collections strategy helps you minimize write-offs and bad debt. This will also include upfront patient eligibility verification, clear communication of financial responsibilities, and a streamlined payment process.
7. Optimize Staffing & Workflows & Leverage Technology Solutions: Ensure that your practice has the right staff with the necessary skills and expertise to manage the patient visit and revenue cycle effectively. Optimize your practice's workflows to improve efficiency and productivity. Utilize efficient and cost-effective practice and patient management technology solutions to optimize patient visit and flow management, claims submission, patient statements, and reporting.
8. Implement Cost-Saving Measures: Regularly review your practice's expenses and explore opportunities to reduce overhead expenses and costs, such as facility costs, utilities, equipment maintenance, or implementing efficient technology and workflow solutions.
9. Enhance Patient Satisfaction and Retention: Invest in patient experience solutions that streamline appointment scheduling, form filling, and payment processes, enhance patient communication, and provide exceptional customer service. Implement patient engagement initiatives to foster loyalty and encourage patient retention.
10. Seek Professional Guidance: Consider partnering with a healthcare practice and revenue cycle consulting firm like mine (ClinicRCM.com) to help identify and implement strategies to improve your practice's financial health.

I help medical practices transform their operations and realize better financial health and regulatory compliance through the adoption of efficient and cost-effective technology platforms and operational processes. Discover more at our website, www.clinicrcm.com. For a complimentary diagnostic consultation, email me at [email protected] or directly schedule a meeting at https://calendly.com/clinicrcm/meetwithclinicrcm