enhancing services to new and existing physician clients suzanne denzine, cpa, chcc...

Enhancing Services to New and Existing Physician Clients

Suzanne Denzine, CPA, CHCCsdenzine@KolbCo.com

www.KolbCo.com

Your Presenter• Suzanne Denzine, CPA, CHCC

– Shareholder and Health Care Consultant

– Expertise in operations and personnel management, physician compensation arrangements, business analytics, HIPAA regulations and assessments, OSHA compliance, fee analysis, compliance programs, physician/hospital relationships, third-party payer contracts and negotiations, and practice start-ups

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In Addition to Physicians…

• Expand your definition of Health Care owners/stakeholders– MDs, DOs, Behavioral Health Practitioners– Advanced Level Practitioners (NPs and PAs)– Dentists– Veterinarians

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Why I Don’t See Value in My CPA

• From the client perspective– Current on upcoming Health Care reform

issues– Proactive planning ideas included with

financial statements not just historical financial data

– What are the numbers telling me?– Value of service not demonstrated

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How to Enhance My Services to New or Existing Medical Clients?• Add value to existing services

• Understand their Revenue Cycle challenges; be proactive

• Additional “Specialty Services” to consider for building on your health care niche

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Current Services• Change Management

– 2012-2013 substantial changes occurring in health care

• SGR - Potential Medicare reduction in reimbursement rates again for 2013

– How will practices be able to absorb a 30% reduction in Medicare reimbursement?

– Commercial payers fee schedules at less than 100% of Medicare reimbursements

• Implementation of electronic medical records– How practices meet 1st stage meaningful use in

2012 or 2013

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Current Services

• Change Management– Health care consolidation choices– Requires in-depth knowledge

• Of the organization• Of the health care industry• Of the medical practice model

– Knowledge-base to work through changes in critical parts of a practice

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Current Services

• Look for other ways to add value– Do you review the financial reports with your

clients in person?– Are your statements presented in a format

specific to medical practices?– Is a production analysis report part of your

business analysis?• Example: provide gross and net collection rates

global and by provider

Polling Question

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Management with SMART Ideas

• S Systems

• M Management Outsourcing

• A Accounts Receivable

• R Revenue Cycle

• T Targeting the low hanging fruit

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Management with SMART Ideas

• S Systems– EMR systems– Recall systems – Collections fees– Desktop power station

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Management with SMART Ideas

• M Management Outsourcing– Be an adviser on what is right for a practice– Is there a right answer?– Examples:

• Coding expert• Business analytics consulting• Cost accounting• Transcription

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Management with SMART Ideas

• A Accounts Receivable – Basic Tenets of a Good Collection Strategy

• Developed written financial policies• Verify patient’s insurance coverage• Set clear expectations• Collect at time of service• Make easy and convenient to pay• Offer flexible payment options• Create team responsibility and incentive to collect

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Management with SMART Ideas

– What are the benchmarks that count?• Net collection rate

– 99% or better is a STAR

• Days in A/R– Under 35 days in total is a STAR

• Exhibit A

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Management with SMART IdeasXYZ Practice EXHIBIT A

2011

Dashboard to Track AR and AmountsTurned over to Collection Agencies

*need entire qtr *need entire qtr

MD Production Jan Feb Mar Q1* Average Apr May Jun Q2* AverageGross Charges Total 326,694.00$ 411,942.00$ 499,092.19$ 412,576.06$ 327,000.00$ 412,000.00$ 499,000.00$ 412,666.67$ Adjustments Total 204,381.00$ 137,347.00$ 283,973.42$ 208,567.14$ 204,000.00$ 137,000.00$ 284,000.00$ 208,333.33$ Adjusted Charges 122,313.00$ 274,595.00$ 215,118.77$ 204,008.92$ 123,000.00$ 275,000.00$ 215,000.00$ 204,333.33$

Adjustment Percentage 63% 33% 57% 51% 62% 33% 57% 0%Collection PerformanceTotal Net Collections (Receipts) 172,517.00$ 139,014.00$ 224,410.31$ 178,647.10$ 175,000.00$ 139,000.00$ 224,000.00$ 179,333.33$

Net Collection Ratio 141% 51% 104% 88% 142% 51% 104% 0%

Accounts Receivable ManagementAccounts Receivable 357,310.00$ 476,462.00$ 422,624.22$ 418,798.74$ 357,000.00$ 476,000.00$ 423,000.00$ -$ Patient Resp bc 117,277.00$ 116,545.00$ 115,745.48$ 116,522.49$ 117,000.00$ 116,000.00$ 116,000.00$ -$ Insurance Resp 235,387.00$ 359,917.00$ 306,878.74$ 300,727.58$ 240,000.00$ 360,000.00$ 307,000.00$ -$

A/R % of Charges 109% 116% 85% 103.24% 109% 116% 85% 0%DSO change ea mo per # days month 61 35 45 47 61 35 45 00-90 A/R 87% 90% 91% 89.33% 87% 90% 91% 89%91+ A/R 13% 10% 9% 10.67% 13% 10% 9% 11%

Patient/CollectionsEncounters counted in -Post Ops 1125 1216 1549 1,297 1125 1216 1549 0Charges per encounter $290 $339 $322 $317.12 $291 $339 $322 $0Collections per encounter $153 $114 $145 $137.51 $156 $114 $145 $0

Turned Over To Collection 2011 2030.46 3489.07 3288.38 2,935.97$ 2030.46 3489.07 3288.38Turned Over to Collection 2010 5695.13 9134.21 2597.61 5,808.98$ 5695.13 9134.21 2597.61Turned Over to Collection 2009 8015.37 5372.85 0 4,462.74$ 8015.37 5372.85 0

Active Accts This Month 2011 3060 3177 3198 3,145 3060 3177 3198New Accounts This Month 2011 444 334 383 387 444 334 383Surgeries This Month #1 physician 47 53 61 54 47 53 61Surgeries This Month #2 physician 54 55 90 66 54 55 90

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Management with SMART Ideas

• R Revenue Cycle– Is a practice leaving money on the table?

• Managed care contract analysis• Payer mix, service codes• Constantly changing payer requirements• Missing patient encounter information

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Management with SMART Ideas

• T Targeting the low hanging fruit– Staffing per FTE physician vs. provider– Co-payment collection rates– Surgery deposits prior to the encounter– Denial percentage

• Scrubbers/PPM prior to submitting to insurance• Knowledgeable coding staff

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Industry Benchmarks

• Available through the MGMA and other outside sources– RVUs by specialty and geographic area– Production, Cost and Compensation data– Overhead (See Exhibit B)– Revenue Cycle

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Industry BenchmarksXYZ Otolaryngology Year Ended 12/31/10

Comparison to Previous Year and Industry Benchmarks

2010 Y/E % 2011 Y/E % Industry %ACTUAL 12/31/10 ACTUAL 12/31/11 Benchmark

Total Revenue less COGS 2,006,112 100.0 2,348,071 100.0

ENT Gross revenue 1,629,388 2,010,156Audiology Gross revenue 376,724 337,915

OVERHEADNon-Doctor Staff salaries + Transcription 393,474 17.9 397,209 16.9 18.3Staff Fringe Benefits 74,293 3.4 59,118 2.5 0.9Staff Retirement Contribution 34,809 1.2 48,032 2.0 1.5

Supplies Audiology 164,436 8.5 126,235 5.4 Clerical 33,336 1.4 23,204 1.0 1.5 Clinical 15,868 0.6 34,729 1.5 1.9

Advertising (including referral services) 11,351 0.6 10,982 0.5 1.5

Dues, conventions, seminars etc. 24,549 0.6 20,112 0.8 1.1

Occupancy cost 117,058 5.1 116,931 4.9 6.5

Telephone 18,793 0.9 18,113 0.8 1.1

Malpractice Insurance 20,584 1.0 24,514 1.0 2.3

Insurance Business 6,670 0.3 6,713 0.3 0.7

Business taxes 67,555 3.3 71,152 3.0 3.5

Business Professional Fees 71,057 3.4 86,915 3.7 3.5

Equipment repairs, depreciation etc. 42,402 2.8 33,624 1.4 3.1

Auto 7,957 0.3 7,351 0.4 0.6

Interest 1,097 0.0 1,571 0.1 0.2

Laundry 1,782 0.1 2,254 0.1

Other Miscellaneous expenses 34,924 0.6 15,550 0.7 3.0Total Overhead 1,141,995 52.0 1,104,309 47.0 51.2

Operating Income 864,117 48.0 1,243,762 53.0 48.8

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The Business of Medicine

• Incorporate financial statement format aligned to the health care practice (see Exhibit C)– Income tax basis– Health care nuances– Owner/Doctor segregation

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Exhibit C

The Business of Medicine

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Flaws in the Analysis

• Bundling of owners’ benefits into operating cost

• Comparative analysis missing from the financial statements

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Overhead Analysis• Personal costs• Practice development costs• Malpractice practice insurance• Bank Charges• Staffing/Benefits• Rent• Computer service related expenses• Repair & maintenance expenses• Miscellaneous expenses• Other income

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Developing New Specialty Services• Add value to services

• Services independent of one another

• Identify additional skill sets/tool box– Employee benefit costs– Forensic accounting analysis– Internal control analysis– Revenue cycle system analysis– HIPAA privacy & security assessments

Polling Question

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Merging Medical Practices

• Consolidation in the independent physician group practice to:– Specialty groups merging (Ex., cardiologists,

cardiac surgeons and electro physiologists or ortho with physiatry and podiatry)

– Larger, multi-specialty groups– Hospital system purchase– Accountable care organizations

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Merging Medical Practices• Reasons

– Accountable care organizations benefits and organization

– Lower payer reimbursements– Payer contracting efficiencies

• Payment methodologies– Fee for Service – Episodic payments

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Merging Medical Practices

• Reasons– Overhead cost reductions

• Eliminate duplication of services and site costs• Gain multiple service discounts

(malpractice insurance etc.)

– Issues• Site(s) maintain or eliminate• Governance• Personnel reduction• Production and profit distribution formulas

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ACO/MSO/IPA Formation/Utilization• Accountable Care Organizations

– New type of organization • Members can be health care organizations and/or

employed physicians, independent providers

– Addresses accountability for new HC reimbursement type(s)

• Episodic care reimbursement (global payment inclusive of all care provided)

– Quality initiative components

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ACO/MSO/IPA Formation/Utilization• Accountable Care Organizations cont.

– IPAs (Independent Physician Associations)• Many merging to ACO structure• Primary purpose of IPAs are:

– Payer contracting– Quality Initiatives w/ Medicare or other commercial

payers– Service arrangement cost reductions– Provider system support

» PM system» EMR system

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ACO/MSO/IPA Formation/Utilization• MSO (Managed Service Organizations)

– Specialty specific– Payer contracting– Not as viable in the current insurance

environment

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Adding a Physician or Other Ancillary Staff• Basis for

– Volume expansion• New sites • Payer or service areas

– Expansion into another service• Ex. Ortho - foot & ankle

– Next generation • Owners are five or less years to retirement

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Changing the Physician Compensation Formula• Reasons for change

– Fairness– Current formula is not working– Stark provisions– Other client service issues

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Changing the Physician Compensation Formula• Factors in change

– Base formula factors; shared vs. direct compensation and expenses

• Managing physician director

– % change in baseline factors• 90/10 to 70/30 equalization• Meeting Stark provisions for ancillary services• Volume considerations

– Maximum OH allocations

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Changing the Physician Compensation Formula• Factors in change

– Initiating more factors on compensation on quality indicators, patient satisfaction and achieving certain disease quality indicators

– Adding Quality metrics• RVU compensation models

Polling Question

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Office Sharing with Another Practice• Assist a small practice to establish an

office with a shared overhead arrangement

• Assist the client with analysis of the shared overhead arrangement

• Establish the shared space

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Implementation of EMR

• EMR implementation activity increasing due to government incentives

• Practices need assistance with planning and project management

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Make Stakeholders out of the Employees• Driven by management

– Promote TEAM environment

• Merit bonus plans vs. COL increases

• Mission statement driven

• Patient quality and service areas– Patient surveys can facilitate the review – Hotline for patient complaints

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Help Build New Revenue Opportunities• Practice areas

– Use of EMR• Meet Meaningful Use attestation for incentive bonus

– Adding physician extenders– Review specialty specific competitors

• Ob/Gyn; weight loss clinic• Acupuncture; healing center (cancer treatment etc.)• Ortho; add OT/PT, podiatry etc

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Review and Implementation of Practice Internal Controls• Separation of Duties

– Controls in systems• Dual access and management

• Limitations on access

• Time off requirements; require staff to take vacations

– Workflow analysis and access• Determine weak areas in controls

– Work with CPA to monitor and provide business physical

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Look for Signs of Financial Problems

• Declining revenue current and over time

• Payer mix analysis

• No show rates

• Patient seen rates per day/provider

• A/R days outstanding increasing or higher than specialty specific benchmarks

• Prior authorization issue; UHC/Humana

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Are You Taking Care of the Physician’s Personal Finances?

• Risk management; insurance review

• Retirement plan options

• Wealth management

• Tax planning – Huge for 2013 and going forward

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Examples of Specialized Service• Physician compensation structure• Billing revenue cycle audit• Practice start-ups• Practice on-going management • Compliance plan development or update• Strategic planning• Shareholder code of conduct• HR services; recruitment

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Examples of Specialized Service• HIPAA Privacy and Security assessments• Technology deployment• Employment agreements• Buy/sell agreements• Structuring buy-in/buy-out• Merger and acquisition analysis and

facilitation• Practice valuations

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Practice Management Reports

• CPA prepared– A/R analysis– Provider analysis– Service line revenue/cost analysis

• PM: dashboards– Daily A/R reports– Denial rates – Referral base tracking reports

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Clinical Encounters

• Documentation and compliance

• Utilizing extenders

• Continuity of care

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Provider Work RVUs

• Portion of Medicare and other payer reimbursement formula

• Used in physician compensation formula

• Provider production analysis

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Referring Doctor Trends

• How do new patients get referred to the practice? Do you know?

• Is reporting available?

• Why are referral patterns important?

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Organizations to Join

• HCAA (National CPA Health Care Advisors Association)

• PVN (Physician’s Viewpoint Network)

• MGMA (Medical Group Management Association)

• State MGMA associations

• HIMSS (Health Information and Management Systems Society)

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Keys to Success

• Look for ways to add value– Go beyond the numbers

• Look for opportunities that can be replicated in other practices– Compliance plan

• Make your health care niche known– LinkedIn, Twitter, Facebook page etc.– Form an advisory group of professionals for

your area – quarterly meetings

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Questions and Answers

Thank you!

• Sue Denzine– sdenzine@KolbCo.com

• 800/461-8843

• www.KolbCo.com