Starting a medical practice can be like playing the roulette table in Las Vegas. What little revenue stream you have still runs the risk of getting denied by insurance. I learned this struggle firsthand as the chief financial officer for a startup. The business needed to scale to earn revenue to make its payroll, and in wound care, margins are thin. In my previous three financial leadership positions, my teams and I have broken multiple revenue records, so here, I want to briefly share with you how to go from the red to the black with the secret being in the systems.
Medical practices require a large amount of expertise, oversight and diligence to meet compliance rules. They also require strong staff whose competitive salaries, combined with high IT costs and other support costs, shrink what margins you have. Set up a system to network with peers, and schedule time to read everything you can with open eyes. Set reminders in your calendar now to revisit your financial driven decisions in 12 to 14 months, and ensure they are providing the expected return.
My rule for all startups is to be conservative and slow. Anything worth doing is worth doing right, so research your software platforms, especially electronic medical records and enterprise practice management tools, because they are expensive and difficult to change down the road.
It’s important to remember that everyone loves to be paid more, but bringing in a “unicorn” with a high salary thinking the money will follow is a farce. No matter who they are, a practice is a team effort, and every great quarterback needs a great receiver and team to win. Ensure those in front of your clients fully understand your product and service as much as you do. Remember, this is the necessary foundation from which your business office will build the practice’s revenue stream.
Setting Up Your Financial Business Office
Once the front of the house is established, you must ensure the business office is working just as efficiently. Bad business office practices often bring down healthcare companies no matter how perfectly a clinical team performs.
Most medical practice business offices handle contracting, credentialing, registration, authorization, coding/billing, follow-up, posting and, if necessary, collections. First, do not underestimate or rush the contracting and credentialing process, as this is the first and largest impact to your revenue stream. Starting with a good foundation is key. Negotiating the right contract and establishing an efficient and accurate credentialing process eliminates so many revenue problems downstream.
Registration and authorization can be frustrating but are critical to the success of your bottom line. Getting patients’ insurance and personal information right the first time makes as much of a difference in their experience as a waiter getting a diner’s order correct the first time. Set up a system to automatically verify every new patient, and then once a month verify established patients, due to how often plans can change. Getting this done right allows for a smooth authorization process that, if not done correctly, can delay procedures or result in a loss if procedures have already been performed.
As noted in every step so far, there is no reason to even move forward until all information has been completed. If there is no authorization, then there is no payment, and without payments, you cannot help your patients. In healthcare, you need to always remember the patient. Being consistent and thorough ensures the likelihood of payment, and that enables you to see more patients in need.
Assuming the provider is credentialed, the patient’s chart will be created with all information verified, and the carrier will then authorize care. At this point, the provider may see the patient and dictate their visit before closing the chart. I have coders overread the dictation similarly to a radiologist with an X-ray. Strong coders are a great investment in audit protection and eliminating missed services. Be careful in choosing the coders’ leadership, as they will communicate with providers. And the follow-up team to learn what actions result in denials downstream.
Handling Financial And Collections
Cash posting should never be overlooked because this is the first point of communication from the payer. And they can be the first to identify trends. The most efficient practices I have worked for have had better than a 4% denial rate. If everything in this process is done to the carriers’ expectations, you may expect to receive a payment.
However, if a denial does occur, you will need to follow up with the carrier to find out the best next steps. Lump denials together by payer and by reason to see if there are any trends.
If there is any question, try to call the carrier off peak times to limit the time on hold. Then every week, set a reminder to follow up on the status. The squeaky wheel will always get the grease, and without due diligence, small leaks can sink great ships. Follow-up is key to a strong revenue stream.
Lastly, and least enjoyable, is if a patient neither pays nor calls. Then you will need to send them to collections. Do not grab just any agency; do your research, because bad collection practices will reflect poorly on you. Try to get payment upfront whenever possible, or work out an agreement ahead of time to avoid a negative experience.
This is just a high-level outline of setting up systems within your business office. As momentum builds from a small creek to raging rapids, so should your revenue stream. But it all depends on the efforts you put in at the crucial beginning stages of your practice.