Moving Forward: Ten Keys to Profitability

Transcription

1 Whitepaper Moving Forward: Ten Keys to Profitability By Jerry Henderson, P.T Applied Business Intelligence: A Systematic Approach to Continuous Improvement Being a Great Therapist is Just the Beginning You re already a great care provider. You know how to work with your patients to address their needs, and to bring about positive outcomes in their lives. It s not enough to just be an excellent physical therapist. With ever-decreasing payment schedules and the shortage of therapists, clinics are getting squeezed from both sides. What was already a tight margin is getting tighter. Just as we ve gotten good at evaluating our patients and developing a plan for their care, we need to apply a similar system to our businesses if we are going to see the outcomes we want. By applying some straightforward management principles, your clinic can increase profitability while continuing to provide high-quality care. Remember back in Physical Therapy school, how difficult it was to develop your first treatment plan? Which symptoms mattered? Which were unrelated? In time, you developed the skills you needed to intuitively diagnose and treat your patients medical issues Over time, you developed a system to evaluate, plan and treat your patients. Similar to the process applied in patient care, getting the outcomes you want from your business requires a data-driven, systematic approach we call Applied Business Intelligence. Here s how it works: Measure It starts with defining and gathering business metrics, or key performance indicators (KPI) for your business. Key performance indicators help organizations achieve goals through the definition and measurement of progress. The key indicators are agreed upon by an organization and are indicators which can be measured that will reflect success factors. We re not talking about pages and pages of reports here: in fact, quite the opposite. Instead, we re talking about boiling your business down to a small set of performance indicators you track regularly. Analyze Once you have measured the key performance indicators, it is important to drill down from the result and investigate the underlying drivers (i.e. what s causing your KPI). You start with the key performance indicator, and then look for changes in underlying factors that lead to results. For example, if revenues are down at a particular clinic, what was the cause? Was there a drop in referrals? Was a therapist working fewer hours? Did therapist productivity drop? Did the payer mix change? Act Once you understand what is changing and why, you can take specific action. When you re armed with understanding backed by facts, you re in a good position to address the issue.

2 For example, let s say revenues for a clinic have dropped by 10%. By drilling down, you find that the clinic has fewer scheduled visits with new patients this month than last month. Drilling down on your key performance indicators further, you find referrals have dropped off. Investigating further, you discover it was a specific doctor that stopped sending referrals. You re ready to find the root cause. You call the doctor, and find she stopped sending patients because no one was following up to ensure those patients scheduled a visit. You ve now established the link between lost revenue to follow-up on referrals. You implement a program to have the front desk staff contact all referrals to schedule appointments, and notify the doctor of your renewed commitment to their patients. You ve turned a problem into a business opportunity. Systematize Your business is like any living system, always changing. That s why it s important to have a system that makes it easy to constantly measure and manage your business. One thing is certain the easier it is for you and your staff to measure, understand, and apply learning, the more likely you are to achieve the results that you re after. Applied Business Intelligence The Importance of a Drill-Down Analytics Approach Most rehabilitation practice management systems create a multitude of reports. Getting key performance indicators back out of the system is often a difficult process. You re left to sift through pages of data to decipher what information is important, and then what to do about it. This can be time consuming, and risky, as you don t know what you re missing. It s important that you have a system that enables you to drill down from the top-level metrics, to easily find the root causes of your issues, and to understand how issues affect your clinic. Example: Analyzing Therapist Productivity Consider a key performance indicator that compares the average number of appointments per therapist in an office. Chris averages 17 visits per day, whereas Terry averages just 11. On the surface, it seems that Chris is working more and bringing in more revenue than Terry. What is the root cause of this difference? Drill Down All patient visits aren t created equal. The root cause of this metric is that Terry s appointments are mostly evaluations, while Chris are follow-up visits. Terry s visits are longer, so she does fewer each day. She s booking more evaluations because her referral rate is significantly higher than Chris referral rate. She has a slightly higher number of billable units. How does it impact the clinic? Terry is bringing in more new clients, which means more potential revenue. Even though Chris is seeing a commendable number of patients, he could probably learn something from Terry when it comes to referrals. Terry could spend ten minutes at the weekly all-clinic meeting sharing her techniques for getting new referrals. If you can t drill down, you re stuck with the time-consuming process of manually correlating metrics to get to the meaning; or, you run the risk of making assumptions and treating the wrong problem. Applying Business Intelligence: Ten Principles These principles were gleaned from our interactions with hundreds of therapists in clinics of every size and stage of growth. While this list is by no means exhaustive, we hope it will inspire you to develop your own principles, establish key performance indicators, and implement a system for regularly monitoring and improving the core processes that drive your business outcomes. 2

3 Principle 1: Turn Referrals into Patients KPI: Referrals with no first visit Action: Outreach to newly referred patients Some practices rely on the patient to schedule their appointment. Doctors get frustrated when their patients don t get treated. An assertive approach to scheduling referrals gets the patients in the door, and ultimately, gets them treated. Having a practice management system that keeps track of referrals without appointments makes it easy for the front desk to take a minute and make a phone call. Your system should create an updated list of referrals without appointments every two or three days, or at the very least, once a week. Many issues that can affect key performance indicators can be proactively identified and acted upon. Here, front desk staff can quickly identify which referred patients have not made appointments yet. Drill down capability allows them to quickly click through to the patient record, call and schedule the appointment. Principle 2: Make sure every visit is an authorized visit KPI: Pending appointments with expired authorizations or referrals Action: List all upcoming visits that need renewed referrals or insurance authorizations The most common cause of denied claims is an expired authorization or referral. The best way to prevent this problem is to have an automated way to count down authorizations and referrals, both dates and visits. You should always know a patient s referral or authorization is expired when you are scheduling the patient, and you should always know that this week s patients have a valid authorization and referral. You need a system that generates the list for you. Principle 3: Stay on top of documentation KPI: Undocumented visits Action: Let therapists know exactly which visits need documentation An undocumented visit is a problem waiting to happen. While charges may have been sent on the superbill, not having the documentation completed creates an audit risk and forces everyone to scramble when the payer or the doctor needs documentation on the patient. You should always have a list of which visits are undocumented. Principle 4: Collect early KPI: Patient balance Action: Give patients an updated statement at the time of visit Let s face it with margins as tight as they are, the difference between a profitable and unprofitable visit is often collecting the co-pay and co-insurance. The best time to collect is when the patient is in the office. To do this, you need to be able to tell the front desk what to collect from the patient, including a way to print an up-to-date statement. You ll probably also want a way to notify the front desk when they re scheduling patients so they can remind the patient to bring payment with them. Principle 5: Get paid for what you do KPI: Potential Under-billed Visits Action: Compare visit time to billed procedure time Statistics indicate that as many as 25% procedures performed during a visit may not end up getting billed. When you don t accurately account for the time spent in a visit and cross-check against the reported procedure times, you run the risk of 3

4 under-billing. The problem can be compounded when procedures are reported or documented after the visit. By accurately tracking the visit time, and comparing it to the total procedure time, you create a cross-check that catches potentially missed procedures while ensuring maximum productivity. A pop-up warning at the point of care can help remind therapists to document all relevant procedures. Principle 6: Know your therapists KPI: Therapist productivity total visits, procedures per visit, dollars per visit Action: Investigate differences and changes in therapist productivity This is a sensitive subject. No therapist wants to be treated like a piece of machinery: blindly measuring dollars of output for hours of input. You know that every therapist is different and every visit is different, yet you need to know who your top performers are. This is why drill-down capabilities are critical. If a therapist s billing rate falls, you need to know why. Are referrals dropping? Were they doing more evaluations? Were the patients largely from payers with a lower paying contract? If you re going to manage your therapists, you have to have data. The key is having the data you need to find true productivity problems and address them early. Principle 7: Know your referral sources KPI: Referral source productivity total patients, value of referrals Action: Track your best referrers and follow up at the first sign of a problem Often, we don t know that we have a problem with a referring physician until it s too late. Referrals have dried up, but you never knew there was a problem. This is why it s critical to know who your best referral sources are. When you know your best referral sources, you can develop a proactive plan to make sure they re getting what they need. You may even find you have a referral source that is sending you a lot of referrals, but these referrals may not be profitable. This allows you to focus your resources where they have the greatest impact. Tracking referrals can start with something as simple as breaking down who refers, for what, and how often. 4

5 Principle 8: Stay on top of your patients KPI: Inactive patients with active referrals Action: Create an outreach plan for inactive patients Life is busy for all of us, including our patients. It s easy to let those appointments slip, and before you know it, a missed appointment becomes a chronic condition. No one benefits from this. The referring physician is counting on you to get the patients in. Sometimes you have to push. You need a system that makes it easy to create a list of patients that need to be called to schedule appointments. At the very least, you can tell the doctor you tried to get them scheduled. Principle 9: Manage your expectations Metric: Expected versus actual payment Action: Identify denials, coding problems and contract issues Contracts vary significantly from one payer to another. This fact has created a lot of complexity for your business. Every payer has different rules and pays at a different rate. You know roughly what to expect, but sometimes your expectations aren t met. When your expected versus actual payment differs significantly, you need to do something. Sometimes you need to lower your expectations. Sometimes you may want to opt-out of a contract, or possibly renegotiate your contract. Sometimes it could be a correctible problem. Perhaps charges are being denied or underpaid because of the way they re being coded. You ll only know if you keep track of what you expect, and compare what you re getting. Knowing what to expect will help you to manage your business better; knowing what you get will help you to manage your payer relationships and your business better. Principle 10: Cash is king Metric: Accounts receivable aging Action: Stay on top of aging receivables The squeaky wheel gets the grease. You want to be that squeaky wheel, and to do that you need to know who to call first. You need a system that alerts you to past due accounts, as well as habitually past due payers. You need a system that lets you keep track of conversations and commitments and reminds you to follow up. You need a system that lets you divide the collections work and creates dynamic lists of accounts or payers needing follow up. Moving Forward: Next Steps Implementing a system for managing your business is the first step in a continuous improvement process. You don t have to undertake this task alone. At Clinicient, we ve been partnering exclusively with outpatient rehabilitation clinics of every size and stage to define and implement systems that help these growing clinics stay on top of their businesses and increase profitability. We believe choosing a software provider is more like hiring an employee than purchasing a piece of equipment. You need to choose a partner that understands the unique needs of the outpatient rehabilitation business, and can provide the benefit of learning from businesses that have gone through similar transitions. It s most important to choose a system that everyone in your clinic can use. If you can t easily gather all of your required information, you ll never be able to measure key performance indicators or provide the drill-down data you need. It s especially important to choose a system that your therapists will use, and have them buy in during the selection process. Look for a system that alerts you to potential problems before they impact your key performance indicators. You ll also want to find a system that can integrate information gathered by the front desk (schedules, demographic information, insurance authorization, referral information) with clinical information entered by the therapist (treatment time, procedures, evaluation data), and billing and collections information. An integrated approach also supports a collect once, 5

6 use everywhere approach. This helps avoid redundant data entry, and allows everyone to enter and access the information they need, when they need it without unnecessarily involving others. We hope you found this information and approach useful, and we wish you great success. We look forward to working with you to move your business forward. If we can further assist you, please contact us at or call (503) extension 1. 6