Physiatry Practice Management Resources

Max Reiboldt, CPA

Medical practices face the challenge of expanding their margins based upon a limited reimbursement structure. With inadequate reimbursement rates and expenses difficult to control, the challenge continually increases. A practice could attempt to boost revenue by expanding its number of patients. However, additional volume may only exacerbate the problem by increasing work load, reducing time physicians have with the patient, and raising the risk of mistakes that could potentially cause losses. This is especially true if new patients have inadequate insurance coverage.

Improved Cash Flow
Some initiatives can be addressed for the immediate challenges that practices face. First, most practices can improve billing processes that result in better cash flow. Often the practice is relatively productive and its cash flow and physician compensation problems could be minimized if collections on accounts receivable were enhanced. Practices should emphasize efficient billing and collections, which includes the areas below:

Defining the Revenue Cycle
Appointment scheduling
Registration
Coding
Charge capture
Point of Service (POS) payment posting
Patient and insurance billing
Account follow-up and collections
Patient refunds/credit balances
Collection agency performance
Pricing for medical services
Reimbursement
Coding, compliance, and education
Charge entry timing
Claim denial/rejection trends and reasons
Collection agency performance/success rates
Staff productivity

Outside of improving the revenue cycle, practices have other choices for improving profitability. Ancillary and retail services are opportunities to tap as a part of the medical practice offering. Freestanding ambulatory surgery centers (ASCs) have been very successful in many areas but require an initial investment and ongoing administration and management. ASCs also require a strong and reliable referral base.

Primary groups can add ancillary services such as radiology, diagnostics, ultrasound, mammography, bone densitometry, etc. When considering ancillary ventures, prepare a pro forma income statement and a pro forma cash flow statement to discover the investment requirements and the potential return on investment.

Often, finding a capital and/or a strategic partner assures a better investment. At all times, consider regulatory constraints when engaging investment partners.

In addition, some practices are looking at retail opportunities, such as pharmacy services, to supplement income. Few medical practices have opened full-scale pharmacies due to legal and regulatory constraints. Usually, it is not practical to have an extensive formulary that addresses chronic conditions, but for acute conditions such as infections, asthma, exacerbation of wounds, sprains, strains, etc., a limited formulary of medications may be a reasonable way to broaden the scope of service. Some practices sell nutritional supplements and vitamins as an alternative source of income. Also, physical therapy, chiropractic, massage services, herbal remedies, acupuncture, and weight loss programs are sometimes offered.

Although nontraditional, some medical practices must look for ways to maintain acceptable profit margins. Otherwise, they must settle for less compensation and increased stress in what is already a challenging career.

For assistance in preparing pro forma income and cash flow statements, and for assistance in financial matters, contact PM&R Resources at (877 )665-D or email