Managing a successful medical practice requires much more than excellent diagnostic skills. Private practice owners must also have the business acumen necessary for making critical financial decisions that determine whether the practice is a profitable one that stays in business or one that loses money and eventually has to close its doors. One way to determine if a practice is thriving or struggling is to review a variety of financial reports generated by a medical practice management system, accounting system or billing system.
1. Determining Referral Patterns
A referring doctor report tells a private practice owner which physicians have been referring new patients, so it is a valuable financial tool. This report can help physicians determine if there are drops in referrals from a particular physician or practice. Once these drops have been identified, a physician can initiate an investigation to determine the reason for the decreased number of referrals.
2. Compare Income Between Years
The comparative income statement allows healthcare providers to review income data from two years and determine if there was an increase or decrease. If there was a decrease, providers can investigate the causes and implement policies to prevent additional decreases in the future. If income increased, the provider can continue following the policies that led to the increase.
3. Identify Large A/R Balances
Accounts receivable, or A/R, refers to the money owed to physicians by patients and insurance companies. The current aging of accounts receivable report shows how long money has been owed to a physician practice, making it possible to compare account age and compare it to industry benchmarks. Private practice owners can also use this information to implement new collections procedures and accounting policies.
4. Improved Efficiency
The employee job listing report contains a list of all practice employees and a description of their job duties. Reviewing this report can help practice owners determine if several employees are performing the same duties unnecessarily. The practice owner can use this report to improve efficiency.
5. Identifying Cash Flow Problems
Vendor accounts payable refers to the amount of money a practice owes to its vendors. The current aging of vendor accounts payable report shows how much money is owed to vendors and how long that money has been owed. If a practice owner cannot pay vendor bills in a timely manner, this is a sign that the practice is in financial trouble.
6. Identifying Refunds Owed
Practice owners should review the current summary of accounts receivable report to determine if any money is owed to patients or insurance companies. Credits may be issued if a patient overpays a bill or an adjustment is made to a bill sent to an insurance company. Reviewing this report can help a practice owner determine why these A/R refunds are not being made in a timely manner.
7. Determining Top Payers
Reimbursement rates vary by managed care company, so it is important for physicians to know how much each company pays. The top managed care payers report shows the highest-paying companies and their current reimbursement rates. This report can help physicians determine if they should stop accepting patients with insurance plans that have low reimbursement rates.
8. Ranking Physicians by Patient Visits
In a multi-physician practice, it is important to determine which physicians are seeing the fewest patients. The patient visits by provider report lists the number of patients seen by each provider for a specified period. The practice owner or manager can investigate any declines and determine if new policies are needed to prevent declines in the future.
9. Identifying Large Payments to Vendors
Reviewing a report on the amount of payments made to individual vendors each year can help practice owners determine if any one vendor is receiving an excessive amount of payments. This can help practice owners determine if they want to continue working with a particular vendor.
10. Identifying Insurers with Lowest Reimbursement Rates
Because insurance companies have a wide range of reimbursement rates, it is important to know which ones pay the most and which pay the least. The comparative listing of gross charges by payer helps identify insurers with low reimbursement rates.
All of these financial reports are valuable to physicians, as they help practice owners identify growth opportunities and determine when new policies and procedures are needed.