Goal Setting
Using Personal Income as the Basis
by AJ Riviezzo
The new year is a great time to review where your practice is at and where you would like it to go. One goal that is foremost in anyone's mind is their personal income. Below is one way to create some targets and goals based on the desired personal income.
Let us assume, for discussions sake, your personal income goal for 2010 is $700,000. The numbers all flow from this goal number.
The first number we need to determine is your profit margin before physician salary. Take all of your non-physician salaried expenses and add them together. Divide that number into your total collected dollars for the year. This will generate a percentage hopefully somewhere between 50% and 75% (unless you are a new practice). Using an assumed percentage of 60% in all non-physician compensation, our 'practice' will need a total income of $1,750,000.
The second number we now need is the average income per ablation (see previous article) for last year. In this example I am using $2,500 as the average income. If you divide $2,500 into the needed total income of $1,750,000 divided by 12 it shows we have to average 58 ablations per month to achieve our desired goal.
The third number we need to calculate is how many ablations were performed on each unique patient on average. For this example the number is 2 ablations per patient. In other words, we will be treating 29 to 30 individual per month over the course of the year.
To be able to treat thirty people per month, we now have to determine how many people we have to scan. Assuming that 75% of the patients who receive an US scan show evidence of reflux, we have to scan 40 people per month to find 30 that need treatment. As not all individuals that have reflux will receive treatment, I am assuming a 10% drop rate (four people) so we actually need to scan 45 people per month to be able to treat our goal of 30.
Finally, we need to determine how many free consults actually receive a bilateral diagnostic ultrasound. If you are tracking how many free consults you are performing, you can divide this number into the number of diagnostic ultrasounds. For ease, I am assuming 80% of the free consults return for the diagnostic US. This give us another 'drop' of 11 patients per month who will not agree to have a diagnostic US performed.
Or, stated in the reverse, we now know we have to see at least 56 people in a free consultation in order to generate a sufficient number of diagnostic US's, who then go on to receive treatment. This last number is one of the keys, therefore, for ensuring you are going to meet your desired income goal for the year.
The goals and numbers for your practice will vary from the above. Do let me know if you run into any problems in calculating all the way through. I am happy to help.
Monday, January 18, 2010
Billing and Collections Item
Deductibles and Plan Changes
by AJ Riviezzo
'Tis the Season for annual deductibles. Make sure your practice has a plan in place to collect at least some of the deductible amounts up front. If not, you and your billing department will be spending a lot of time and effort in chasing those dollars.
Do not forget that many employers change insurance carriers the first of the year. Be sure to ask the patient for a copy of their new card to both determine the payer and to ensure the appropriate copayment, coinsurance or deductible is collected.
Deductibles and Plan Changes
by AJ Riviezzo
'Tis the Season for annual deductibles. Make sure your practice has a plan in place to collect at least some of the deductible amounts up front. If not, you and your billing department will be spending a lot of time and effort in chasing those dollars.
Do not forget that many employers change insurance carriers the first of the year. Be sure to ask the patient for a copy of their new card to both determine the payer and to ensure the appropriate copayment, coinsurance or deductible is collected.
Annual Data Review
Looking Forward by Looking Back
by AJ Riviezzo
With the end of the year, it is a great time to assess how you have been performing and to establish some performance goals. This first section is one quick way to assess how you have been performing.
First, create a simple spreadsheet that details (for medical services) the billed charges, the collected dollars, and the number of ablations performed month-by-month. Complete this for the past three years (2007, 2008 and 2009).
The format would look something like:
Month: January, 2008 January, 2009
Billed Chrgs $500,000 $600,000
Collected $'s $165,000 $205,000
# of Ablat.'s 50 61
Month: February, 2008 February, 2009
etc., etc.
Total each category (billed charges, collected dollars, and ablations) for each year. Now you have some data with which you can work.
Second, let's analyze your data. The first step is to simply compare the three years in general. Are the numbers going up or going down. Can you identify some seasonality in your numbers or is the seasonality a known issue since you take half of December and half of July as vacation?
Next, divide the total collected dollars into the total billed charges. Unless you have changed your billed amount, this should give you a ratio that remains relatively consistent. If it is not consistent, this may indicate a problem with your collections or a major change in your payer mix. Either way, it should be investigated.
Now divide the total number of ablations into the collected dollars for the year. This will generate your average income per ablation. This dollar figure can be used in two different ways. The simple review is to see if your average income per ablation, from year to year, is trending up or down (typically slightly down due to payment changes from Medicare). The more interesting review is to compare the dollar number derived against your average Medicare allowable amount.
For example, if your average total income per ablation is $2,000 and Medicare allows $1,600, this indicates you are only generating an additional $400 in all other services pre and post ablation. This additional revenue margin may be low if you perform a large number of ablations on non-saphenous veins.
If you are primarily only performing ablations on the greater and lesser saphenous, it is an indication that either additional medically necessary services may not have been performed (such as closing of perforators using US guided sclerotherapy or stab phlebectomies) or that the aftercare plan is not being sufficient followed by the majority of your patients.
Please note that I am not advocating performing unnecessary services. Simply that you may need to review what services are being performed, and in what time frames, on an average case.
Looking Forward by Looking Back
by AJ Riviezzo
With the end of the year, it is a great time to assess how you have been performing and to establish some performance goals. This first section is one quick way to assess how you have been performing.
First, create a simple spreadsheet that details (for medical services) the billed charges, the collected dollars, and the number of ablations performed month-by-month. Complete this for the past three years (2007, 2008 and 2009).
The format would look something like:
Month: January, 2008 January, 2009
Billed Chrgs $500,000 $600,000
Collected $'s $165,000 $205,000
# of Ablat.'s 50 61
Month: February, 2008 February, 2009
etc., etc.
Total each category (billed charges, collected dollars, and ablations) for each year. Now you have some data with which you can work.
Second, let's analyze your data. The first step is to simply compare the three years in general. Are the numbers going up or going down. Can you identify some seasonality in your numbers or is the seasonality a known issue since you take half of December and half of July as vacation?
Next, divide the total collected dollars into the total billed charges. Unless you have changed your billed amount, this should give you a ratio that remains relatively consistent. If it is not consistent, this may indicate a problem with your collections or a major change in your payer mix. Either way, it should be investigated.
Now divide the total number of ablations into the collected dollars for the year. This will generate your average income per ablation. This dollar figure can be used in two different ways. The simple review is to see if your average income per ablation, from year to year, is trending up or down (typically slightly down due to payment changes from Medicare). The more interesting review is to compare the dollar number derived against your average Medicare allowable amount.
For example, if your average total income per ablation is $2,000 and Medicare allows $1,600, this indicates you are only generating an additional $400 in all other services pre and post ablation. This additional revenue margin may be low if you perform a large number of ablations on non-saphenous veins.
If you are primarily only performing ablations on the greater and lesser saphenous, it is an indication that either additional medically necessary services may not have been performed (such as closing of perforators using US guided sclerotherapy or stab phlebectomies) or that the aftercare plan is not being sufficient followed by the majority of your patients.
Please note that I am not advocating performing unnecessary services. Simply that you may need to review what services are being performed, and in what time frames, on an average case.
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