Physiatry Practice Management Resources

Gregory H. Nizich

Many physicians face a common problem that can be frustrating and can cause a practice to become stagnant. The situation occurs when, to the outside observer, the practice appears to be in chaos. Boxes, papers, and books are piled all over the business area, as well as every other area of the office. Cash flow is tight, morale is low, and you just don’t know where to start to turn your practice around.

In many ways, this situation is similar to when you try to tackle the job of cleaning your garage or basement. The task seems so immense that it’s easy to walk away from it. Yet, the job clearly has to be done if you want to be organized and reduce the stress in your life.

If you find yourself faced with this problem, start by tackling the simple tasks first—those that give the greatest visible evidence that progress is being made.

. . . start by tackling the simple tasks first—those that give the greatest visible evidence that progress is being made.

Clean up your act.

It’s impossible for your practice to function efficiently and effectively when paperwork is in piles on the counter and desktops, books used for reference are misplaced, or out of date, and patient charts are strewn across the office on table tops and desk tops. Use these four simple steps to organize and streamline your office:

• Buy some multicolored round stickers to identify the procedure to be followed for the tagged item. The tags might have the following meaning: A green tag might indicate that this document is useful for reference, or is required to be maintained by law. This item should be filed in the appropriate place. A yellow tag might indicate that the particular item may be useful and that this item should be kept in storage in the event that it is needed. A red tag might indicate that this item is not needed and should be thrown away.

• Close the office 2 hours early, on a Friday, and ask your staff to place a colored sticker on any items, boxes, books or paraphernalia that are not in the right place.

• On a separate occasion, have your staff go through the office taking the items that were tagged with the red label and packing them in boxes to be thrown away. File the yellow tag items in boxes with a label indicating the date they were placed into the box. Finally, have the staff organize the items tagged with a green label and split up the filing responsibilities so that everything gets put back in its proper place.

• Six months after this procedure, review the yellow-tagged items stored in boxes. Any items that still remain in the box were not accessed by the office in 6 months. It’s probably safe to say that such items are not useful or relevant in day-to-day operations and should be thrown away.

Find More Cash

The next step is to try to increase the practice’s cash flow, always a good way to boost your morale. Given the requirements of today’s managed care climate, and the volume of administrative responsibilities, it’s a full time job just to see patients and get bills out the door, let alone follow-up and manage the accounts receivable. In fact, accounts receivable management is severely neglected in most practices today.

The first thing to understand is that the aged accounts receivable report is a tool to help you determine the type of follow-up activity required for each account, based on the length of time each is outstanding. In many practices, accounts are left in the billing system, and never removed. Some balances are more than 2 years old! To clean up accounts receivable, take the following steps:

• Reclassify any account with a balance over 180 days old as a collection account or some special classification. This removes the account from the active file and or places it in a separate category. With many computer systems, assigning a collections code to an account will remove it from the active accounts receivable system but still allow you access to the information through a separate collections module or through a basic inquiry function.

• Assign the responsibility of researching these accounts to one individual. The individual will investigate each account to determine why it has not been paid for more than 6 months. He or she will be responsible for correcting any problems to help stimulate payment.

Assign the responsibility of researching these accounts (more than 6 months old) to one individual.

• Most billing systems will allow you to print an aged accounts receivable report that gives you the patient name, the amount of the claim, and an indication of how old that claim is. Print the computerized report for your top four insurance payers. Assign responsibility of investigating these accounts to four separate individuals. By splitting up these responsibilities, you should learn about the status of insurance balances four times faster than if you assigned the responsibility to one individual.

• Print out the aged accounts receivable report for the remaining insurance carriers in the system. Call in some temporary employees, whether friends, relatives, sons, daughters, or employees from a temporary agency. Split up the list so that they can make telephone calls to determine the status of these claims.

You will be amazed by the number of claims that “were never received” according to the third party payer. Although this is not likely the case, when insurance companies get overwhelmed with volume, anything can happen. This effort will result in a surge of cash flow 4 to 6 weeks later. If you do experience this surge, maintain this type of pressure to ensure that the practice’s cash flow continues to be favorable in future months.

You will be amazed by the number of claims that “were never received” according to the third party payer.

Vendor Assessment

The next step to refresh your practice is to put vendors to the test. As your practice gets busier and busier, your staff spends less time investigating prices. You also pay less attention to how attentive your advisors are to your particular needs.

Assign someone the responsibility of going through the invoices and identifying some of the major supply purchases made over the past few months. Have this person look through various catalogs and price shop to determine whether you paid the best price for those items. If you didn’t, establish policies to ensure that your staff doesn’t simply buy where, and when, it’s convenient for them It is imperative that they take into consideration the cost of the item to be ordered. Limit the dollar level of items or of total order that can be purchased without your specific approval.

Advisor Assessment

The same process should be applied your advisors. Your accountant may also have grown a bit lazy about how he or she attends to your practice’s needs. Review your invoices and determine how much you are paying your accountant per year. Try to make a list of the services your accountant provides. Ask yourself whether such services are desired or whether you want more than just income tax form preparation, for example.

Make a list of the additional services that you want your accountant to provide. Schedule a meeting with him or her to discuss the additional services. Let him or her know that if a significant increase in your monthly fee will be required, you need to research whether another accounting firm might be willing to perform the services for less. This should “wake up” your accountant and make him or her a little more attentive to your needs. Perhaps your accountant will now help sift through some of the more delicate financial decisions needed to improve your practice.

Take an inventory of the insurance premiums you are paying and determine whether you’re getting the best possible price. Prepare an inventory of the types of coverage currently in effect for your practice. Ask a few insurance agents to provide prices for equivalent insurance through other insurance companies.

Contact your pension advisor and schedule a meeting to review your current roster of employees, your personal financial condition, and the practice’s expense structure. The goal is to determine whether the plan you selected, perhaps many years ago, is still the best plan for the practice. Many physicians are finding that, due to changes in the health care industry, the expense of offering current retirement benefits has grown significantly. It may be time to alter the type of benefit offered to the staff.

Take an inventory of the insurance premiums you are paying and determine whether you’re getting the best possible price.

Work Distribution

The next area to review is your staff structure. As a medical practice evolves, responsibilities may be assigned to individuals due to the lack of alternative, rather than based on a fundamental strategy for the most effective assignment of that task. This is no one’s fault; it’s simply how small businesses develop. At this point, however, it may be helpful to make changes to the distribution of responsibilities to ensure that it is the most functional and fundamentally sound allocation of responsibilities possible. To accomplish this, follow these steps:

• Ask each employee to make a list of the tasks they perform on a daily basis. Encourage them to go into as much detail as possible. Many times, it’s not the major job requirements that consume an employee’s time, but dozens of menial tasks. Encourage your employees to be thorough in completing their list.

• Look at each employee’s list for inconsistencies in the type of responsibility that has been assigned. For example, having a receptionist post a Medicare explanation of benefits is inconsistent because the qualities and responsibilities of a receptionist are primarily patient-oriented. They generally have good people skills, rather than the skills required to post claims. The posting of an EOB is a more technical function that requires attention to detail. It would be appropriate to shift responsibility for posting EOBs from the receptionist to the bookkeeper or a billing clerk. These employees are number-oriented and are better suited to the task.

Look at each employee’s list for inconsis tencies in the type of responsibility that has been assigned.

• Make a list of what is not getting done. Is your practice confirming appointments, sending out recall notices, verifying insurance of new patients, following up on referral forms, and any number of other tasks that are important but for which employees don’t always have time.

• Take a look at the responsibilities assigned to current employees and determine whether any employees have time to perform these tasks. Don’t make the mistake you made before by assigning a task to someone because that person has time even though he or she is not suited for the assignment. If you don’t have anyone to assign vital responsibilities to, consider hiring someone to ensure that these things get done.

Conclusion

Each of the functions described above does not require a great deal of time; responsibilities can be spread across many employees. They also can be accomplished in a relatively short time frame—this whole project might span over a course of 60 days. When you look back at your practice after accomplishing all these things, you’ll find that it doesn’t look as chaotic as it did before. In fact, you’ll feel more in control and more confident that your practice is on the right path. n