Outstanding aging Accounts Receivables pose significant challenges for medical practices and can be the driving force behind vital business development decisions both good and bad. Having an inflated AR will impact both your financial health and operational efficiency. AR that is not managed and maintained to at least industry standards will directly effect your cash flow, staff burnout and productivity, increased write-offs, patient satisfaction & operational efficiencies.
Why we choose private practice
In the last 10 years the number of physicians working in private practice has fallen more than 13% leaving more than half of the physician work force being employed by a larger health system. Private practices play a crucial role in the healthcare system and offer many advantages to both the patient and the work force.
Patient-Centered Care: Private practices often provide a more personalized and patient-centered approach to healthcare. Physicians in private practice have the flexibility to tailor their services to meet the unique needs and preferences of their patients.
Relationship Building: Private practitioners have the opportunity to build stronger doctor-patient relationships. Consistent care from the same physician can lead to better communication, understanding, and continuity of care, enhancing overall patient satisfaction.
Flexibility and Autonomy: Private practitioners have greater autonomy in decision-making and practice management. They can adapt quickly to changing healthcare trends, implement innovative approaches, and create a work environment that aligns with their professional values.
Community Engagement: Private practices often have strong ties to the local community. Physicians in private practice may be actively involved in community events, health education, and outreach programs, contributing to the well-being of the community.
Innovation and Efficiency: Smaller private practices can be more agile in adopting new technologies and innovative healthcare practices. This flexibility allows them to enhance efficiency, implement electronic health records, and adapt to advancements in medical care more swiftly.
Timely Access to Care: Private practices can offer more immediate access to care. Patients may experience shorter wait times for appointments, receive more attention during visits, and have easier access to their healthcare providers.
Specialized Services: Some private practices specialize in specific medical areas, offering highly focused and specialized services. This allows patients to seek care from physicians with expertise in their particular health concerns.
Entrepreneurial Opportunities: Private practice provides physicians with entrepreneurial opportunities. They can establish and run their own businesses, making decisions about staffing, services offered, and overall practice management.
Job Satisfaction: Private practitioners often express a higher level of job satisfaction compared to physicians working in larger healthcare systems. Autonomy, the ability to shape their practice, and direct interaction with patients contribute to professional fulfillment.
Economic Contributions: Private practices contribute to the local economy by creating jobs, supporting local businesses, and paying taxes. Their presence has a positive economic impact on the communities they serve.
Diversity of Services: Private practices contribute to the diversity of healthcare services available. Different practices may focus on various specialties, ensuring a broad range of medical expertise within a community.
So why are physicians moving away from private practice?
Financial Pressures: Running a private practice involves significant financial responsibilities, including overhead costs, staff salaries, and the investment in technology. Some physicians find it challenging to manage these financial pressures, especially in the face of declining reimbursement rates and increasing administrative burdens.
Regulatory Compliance: Private practitioners must navigate complex healthcare regulations, coding requirements, and billing procedures. The administrative burden associated with maintaining compliance has increased over time, leading some physicians to seek alternative models that may have better resources for handling regulatory complexities.
Economic Considerations: Economic factors, such as uncertainties in healthcare policy, changes in reimbursement models, and shifts in market dynamics, can influence physicians' decisions about practice ownership. Some physicians may perceive a greater level of stability and financial security in other employment models.
Administrative Burden: The administrative burden associated with running a private practice has grown with increased documentation requirements, insurance processing, and technology adoption. Physicians may find that joining larger healthcare organizations or hospital systems can relieve some of the administrative responsibilities.
Technology Implementation: The adoption of electronic health records (EHRs) and other healthcare technologies can be costly and time-consuming for private practices. Some physicians may prefer employment models where the burden of technology implementation and maintenance is shared with larger entities.
Work-Life Balance: Physicians in private practice often face the challenge of balancing clinical responsibilities with the demands of managing a business. Employment models that provide more structured working hours and less administrative responsibility may appeal to those seeking better work-life balance.
Risk Management: Private practitioners assume financial and legal risks associated with malpractice claims, compliance issues, and other liabilities. Joining larger organizations may offer better risk management support and resources.
Access to Resources: Larger healthcare organizations and hospital systems often have greater resources, including advanced technologies, support staff, and collaborative networks. Physicians may be drawn to these environments for enhanced resources that can benefit patient care.
Shift in Generational Values: Younger generations of physicians may have different values and preferences when it comes to work arrangements. Some may prioritize employment models that offer a more predictable income, mentorship opportunities, and a collaborative team environment.
Market Consolidation: The trend toward healthcare market consolidation has led to the formation of larger healthcare systems and networks. Physicians may choose to align with these entities for strategic reasons, such as gaining access to a broader patient base and more extensive referral networks.
Where does AR management come in?
The financial pressures physicians are feeling, compliance resource availability, economic factors, admin support, and yes even work life balance can all be effected by a properly managed AR system.
It is ingrained in physicians to care for the patients health. The majority of a physicians training is focused on clinical knowledge, patient care and medical science. Typically they are not given in-depth training on managing a business or their RCM. Unfortunately without that knowledge it will be next to impossible to operate a successful private practice. It takes collaboration with health information management professionals to properly support providers and allow them to be patient focused. AR is directly related to the businesses cash flow, with proper cash flow the revenue needed for experienced support professionals, up to date hardware and software is available for use. Positive cash flow has been linked to maintaining happy employees as satisfied and engaged staff tend to be more productive, reducing turnover costs and contributing to overall business success. Lastly it is well known that physicians, especially those running private practices in specialty clinics, don't tend to have great work life balance. The demands of managing both clinical responsibilities and the administrative aspects of running a business lead to long working hours, late nights and increased stress levels. With inflated AR your practices money is tied up with insurance companies and patients. You need specialized professionals to correct and maintain a healthy financial system but you cant afford it because your cash flow is low. Maybe you need another provider to share the patient load but you cant afford one due to low cash flow. What about an experienced operations manager to carry the business admin load? It all comes back to cash flow and if your revenue is tied up with insurance companies due to incorrect or even lazy billing practices then your stuck in a viscous cycle.
Interrupt the cycle & collect before its too late.
At the end of the month do you look at your practice AR summary? What should it look like?
Industry Standards:
Days in AR 30-45 days
Over 60 days- 30% of total AR
Over 90 days- 10-15% of total AR
Over 120 days- 10% of total AR
Top 5 RCM Issues Increasing AR
Denial management
Eligibility and benefits verification
Prior authorization errors
Claim submission errors/delays
Poor patient collection practices
AR Cleanup- What do you work on first when there is so much to work on? We use a detailed claim level AR report and sort by your largest payers, from there we categorize the claims within that payer by the age and dollar amount. We find that working the same payer in one sitting is most efficient and from there we want to work the highest dollar claim closest to timely filing expiration. While working through these claims our team will trend out your denials and provide feedback to you and your team in an effort to minimize repeat denials. This structure allows us to work from the front and back end of the AR creating the most efficient AR cleanup process. The timeframe expected for cleanup is dependent on the number of claims aging. While working through this cleanup we are looking for continuous improvement trending towards our benchmark.
The top two categories that make up outstanding AR.
Denial Management- How long are denials sitting before being worked? How many times are your claims being refiled before they finally pay? Is someone on your team trending out the payer specific billing requirements? If your denial management team is not communicating with your coding and claim submission team your claims will continue to deny and continue to require rework ultimately delaying your reimbursement. Analyze your top 5 denial reason codes and put a process in place to correct that workflow before the claim is submitted.
Eligibility & Benefits verification- With the advancement in EHR/PM software programs it is more common to have the capability to run real time eligibility for most major payers. The second most common denial category is for inactive, ineligible, incorrect plan information. It is vital that your front office administration staff take eligibility confirmation seriously. This team should work closely with the RCM team to ensure every patient that is serviced has verified active coverage.
To get an outline of you AR cleanup plan and timeline from a Sloan Medical professional click the link below, fill out our contact information and in the message list "Free AR Analysis". A Sloan Medical rep will contact you within 48 hours with a secure link to upload two reports and then we'll proved a generalized timeline back to you with out assessment of your current AR.
How Can We Support You?
2024 ICD-10 Updates
More Coding Guidance
Practice Operations & Support
Denial Management & Education
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