We have written extensively about medical practice issues in the past year, with a focus on improving performance in many areas of management and productivity. It seems timely to focus on medical practice management reports to help you track and realize potential improvements in various areas of your medical business.
In this Article …
Practice Management Reports and Key Performance Indicators for Financial Performance
In a blog post last December, we identified several key performance indicators (KPIs) for a medical practice. But what types of reports are required to track the KPIs we identified?
There were 3 key indicators for monitoring financial performance:
Accounts receivable (AR)
Accounts receivable (AR)In “Measuring and Monitoring Performance“, we explained how to calculate your days in AR. To do that, you will need a report showing your total dollar amount of uncollected accounts receivable. You will also need a report showing the average daily charges for the past several months. You may have to create that by keeping a 6-month running total of the charges per month and dividing it by the total number of calendar days in that 6-month period. That will show you the average number of days it takes to collect your charges during that period. In some healthcare practices, an adjustment is made to the balance of the account to reduce the value of the claim to the amount the payor is expected to pay. If this is the case, you will need to do reports by a payor, since the AR for some payors may be at the rate of billed charges, and for others, it may be at the rate of expected payments.
Cash Flow
This is pretty straightforward, but you want to identify trends and see if a trend is supported by other evidence. So a report showing cash collections over the past six months, and then divided by the total number of days in that 6-month period, will show you how your cash flow is trending over time. For example, if your days in AR are increasing, and your average cash flow per day is declining, you can be pretty sure something serious is going on. Unless a provider (or providers) in the office have been on vacation for a significant portion of the reporting period, your practice or clinic may be experiencing a slowdown in payments or an increase in denials by payors.
Profitability
Detailed reports that help you analyze your practice revenue and expense would depend on having access to a reasonably robust accounting system. Or you may have to rely on reports from an outside accountant or bookkeeper. In any case, reports should include information on overall profit or loss, taking into account all income and expenses of the practice. The accounting system will also help you look at specific variable expenses such as staff salaries, benefits for employees, and supplies.
Consistent monitoring of financial health is important, so all of these types of reports should be prepared monthly, but in any case at least each quarter.
Reports for Operational Efficiency
The availability of effective reporting for operational efficiency will probably depend on having an electronic health record (EHR) system.
There were also 3 key indicators for monitoring operational efficiency:
Patient Waiting Time
Patient Waiting TimeAverage patient waiting time is an important source of patient complaints. Most EHR systems have a function for reporting the time patients arrive (or at least get checked in at the front desk or at a kiosk). After that, you may have a choice of data points to monitor. For instance, the time period between when the patient is checked in and when a medical assistant takes the patient into an exam room is one data point. Additional metrics include the time it takes for a provider to begin assessing the patient (and entering information in the medical record), and the the time for the entire visit. An appropriate date range for these types of reports is monthly. But if you are hearing complaints from time to time, date ranges of two weeks or even weekly may be indicated so you can respond quickly.
Claims Denial Rate
As noted in the blog on KPIs, claims denials are an irritant everywhere. Insurance plans seem to find new ways to deny claims monthly. Denial management reports should be a feature of your patient billing and accounts receivable system, so that is the place to start. Since the dates the revenue cycle covers often overlap at the end of the month, you want to make sure you are matching the insurance claims billed in a month with denials on those claims only. Otherwise, typical fluctuations in billing and recording of payments may throw off your claims denial rate. And it is also important to make sure this report includes only one payor at a time, so look for custom reports in your system if necessary.
Days in Unbilled Charges
Although modern systems make it easy to potentially push new claims out the door quickly, there still can be hang-ups between the date of patient visits and the date a clean claim goes over the wires to the clearing house for transmission to the payor. Some systems that encompass electronic medical records and practice management services such as billing, may not permit a claim to drop until the providers have completed the encounter note for the visit.
The claims process is dynamic even from day to day. New claims are ready to bill and others are going out that same day. So this is an indicator to monitor on an ad hoc basis. Pick a week, and track the billed charges for the claims that week. Construct a report that shows when all the claims were finally billed and the dollar amount of claims billed per day after the end of the week. Over time, the curve of the dollars billed against days after the end of the week should tighten up if you want to realize prompt cash flow.
In any case, make sure you are meeting the requirements of government payors. A condition of submitting claims to Medicare is certifying that the claim meets all the requirements – including medical record documentation of the services to patients. One practice we came across was having difficulties with getting physicians and other providers to complete their electronic medical record encounter notes timely after patient visits. Since the system they were using would not drop claims without a signed-off encounter note, the practice management gave medical assistant users licensed provider privileges. Soon they were submitting claims authenticated by the office medical assistant or the practice administrator. And the providers never went back to review the encounter note and authenticate the note, the orders and any referrals. Knowingly engaging in a practice like this could be considered submitting false claims to Medicare!
Risk Management Reports
There are at least two types of risk management reports that are useful to medical practices.
Collection Reconciliation Report
Collection Reconciliation ReportReports to monitor the amounts of collections against the funds deposited in the bank account. Every practice should have a daily report of the collections received in the practice and the amounts deposited electronically. This report should be reconciled to the amounts applied to patient accounts on the same day. This reconciliation may have to be done the next day so there is time to post the payments received electronically. In some cases, with electronic posting from the clearing house, this type of reconciliation can be done on the same day. Embezzlement in medical practices is endemic, so eternal vigilance is necessary if you want to be in the “it didn’t happen to me” club.
Patient Safety and Complaint Report
Reports of patient safety incidents and/or patient complaints. This type of reporting may still rely on manual collection and compilation, but it is another important way to monitor the quality of services in your healthcare organization.
Final Thoughts
Of course, there are other types of reports that medical practices will want to monitor. Most practices carefully monitor provider productivity, and certainly need to continue to do so. Here we have tried to cover some of the other reports that can be useful in improving a medical practice in several other areas. Good luck!