COVID-19 Updates & Alerts 07/02/20

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Lets start with some basics. Most everyone will ask at some point "how do I increase profitability" in a medical practice operation? There are two ways to increase profitability, either increase revenue or reduce expenses. Seems simple, but how do you begin to take the first steps to determine where your opportunities are? The following are metrics that you should monitor closely to begin this process. These, and others, can help you identify opportunity and track change over time. Monitoring these items over time will give you an excellent picture of how changes within your practice impact the bottom line.

It is important to note, though, that these metrics will likely produce some erratic looking results if your patient volumes have significantly declined during COVID-19. My suggestion would be to start with January 2020 or prior and produce the results monthly so that you can identify where the practice was, where it is now, and then monitor moving forward. Getting an understanding on how your revenue and expenses have shifted comparative to pre-Covid will help you begin to dissect where your challenges and opportunities may exist in the COVID-19 business environment.

Collections per Encounter (monitoring revenues)
What was your Collections per Encounter rate in fiscal year 2019? What was your Collections per Encounter in March and April 2020? What will your Collections per Encounter look like 6 months from now? This is an important metric that can be easy to lose sight of and can make a large impact with a minimal shift. With workflows changing, more patient encounters occurring virtually, patients foregoing preventative care, and elective procedures being minimized or halted all together, this metric is most definitely shifting and will likely be forever changed. Keeping a pulse on key metrics, such as Collections per Encounter and many others are vital to ensuring you are prepared to make educated decisions as the country moves forward.

The metric:
Total Collections / Total Encounters = Collections per Encounter

Encounter: A documented face to face contact between a patient and a provider (regardless of setting and including telemedicine) which results in a coded charge. Do not include, admin of immunizations, admin of chemo drugs, or visits performed solely by a nurse or technician.

Collections: Actual dollars collected for professional services, including revenue from the administration charge of immunizations and chemo drugs. Do not include, collections for supplies, drugs, vaccines, injections, immunizations, collections for the Technical Component associated with lab, radiology, medical diagnostic or surgical procedures, sale of eyeglasses, contact lenses or hearing aids.

Operational Expense per Encounter
Do you know what the Operational Cost is to see a patient in your office? If you made any changes to your practice during the COVID pandemic, then your expense per encounter has likely changed. This metric is important to track, and often an eye opener to first time viewers.

The metric:
Total Operational Expenses / Total Encounters = Collections per Encounter

Encounter: A documented face to face contact between a patient and a provider (regardless of setting and including telemedicine) which results in a coded charge. Do not include, admin of immunizations, admin of chemo drugs, or visits performed solely by a nurse or technician.

Total Operational Expenses: All expenses prior to provider compensation.

TIP: Comparing Revenue per Encounter and Operational Costs per Encounter can be a very powerful tool! Try breaking the metrics down by provider, does one provider have a richer payer mix, does one provider have an extra Medical Assistant? There are so many variations and opportunities with just these two metrics alone!

Average Reimbursement Telehealth vs Onsite
Monitoring net reimbursement of telehealth visits vs onsite visits will help you find a sweet spot when determining new scheduling templates. Currently, telehealth visits are identifiable by E&M codes with modifier 95 appended. Compare the reimbursement you are seeing for these claims to normal office visits. Medicare should currently be paying full E&M reimbursement for telehealth visits (modifier 95) but other payers may not. Depending on your payer mix and your current contracts with commercial payers, offering a large volume of telemedicine visits may or may not be right for your practice.

A/R Aging and Bad Debt Write Offs
The economy has been in an uncertain state for several months now due to COVID-19 and the ability of many to work during these times. Keep a close eye on your A/R aging and monitoring bad debt write off volumes. This will ensure you are in touch with the volume of patients who may be struggling financially and the impact it will have on your bottom line. Looking at your aging by payor class (i.e. Medicare, Commercial, self-pay) can also be very useful to determine if you have an opportunity to improve with a specific payer.

So now you know a bit about your financial footprint! Now let’s talk about Patient Satisfaction.  ACCESS, ACCESS, ACCESS! You want your patients to be able to be seen quickly and with excellent service so that they are not shopping around for another healthcare provider! Here is a metric that can help you tie in Patient Satisfaction, outside of actual survey scores.

Appointment Lag Time
As you continue to see development of your new normal it will be important to keep sight of your patient’s perspective. We all know that patients want quick access to care. Luckily, telemedicine has made that extremely attainable for a lot of patients. Whether you implemented telemedicine during the COVID pandemic or not, as you begin to get back to full schedules you will most definitely note a difference in access to care. A great way to keep a pulse on access is to measure the availability of your provider’s third next available appointment. That metric may now be same day for telehealth visits but likely is a few days (or more) out for face to face, in office visits.

The metric:
Measured by provider, note the 3^rd next available appointment time and calculate the number of business days out that 3^rd next available appointment is.

It is important to note that the standard is the 3^rd next available appointment slot because there can be a huge amount of variation in 1^st and 2^nd next available due to no shows and, more specifically, cancellations of previously made appointments.

Overall, there is one important thing to keep in mind. Much is shifting in this new business environment. The more you understand the data story available to you, the more likely you will make evidence based decisions in a time that is fraught with high emotions.