Six opportunities to raise your practice revenue
By Bradley K. Reiner
Practice Management Consultant, Reiner Consulting and Associates
How often do you find yourself wondering how to maximize revenue? Do you think that managing a practice is getting harder and harder? I hear these questions repeatedly from doctors I work with. When asked what struggles they have the answers are similar: volume of patients dropping, payments declining, and overhead rising. What can be done? Physicians wonder if the problems involved with running a practice are their fault or if blame can be placed on managed care plans. Is the cost of running a practice too high? The problem is complex and there are no simple answers. Unfortunately some things can’t be controlled. The good news is there are ways doctors can improve efficiencies, increase revenue, and reduce expenses in their offices. Here are some things that can be done to help maximize revenue and reduce expenses.
Renegotiate your contracts
Have you renegotiated your contracts? When was the last time you updated your contracts and how successful were you? Do you go back every year and renegotiate? If you have never updated your contracts, how long have the contracts been in existence? Contracts that have not been renegotiated in awhile contain opportunities to increase reimbursement if the negotiation is presented to the managed care plan in a formal manner.
Things to consider when renegotiating contracts:
- Start with the top payers—pick the ones with the biggest impact.
- Choose high-volume services representing the bulk of your revenue. Look for the codes that will have the most impact on your bottom line.
- Research the total revenue for each one of the plans you want to negotiate. This can be used as comparison when you get an offer.
A practice should develop a sophisticated letter that details what the practice wants to accomplish in the negotiation. Several items that should be included in the letter to the payer include:
- Specific strengths of the practice—toot your own horn!
- Things that make the practice unique, including special services.
- Conveniences and quality-improvement initiatives in place for patients.
- Cost-effective measures implemented to help reduce costs for the payers.
Once you have crafted this letter, submit it to the appropriate contracting managers for consideration. Develop a relationship with the payer’s contracting staff; such relationships can improve your negotiations. If the contractors know you personally, they’re much more likely to work a little harder to help you, which can be the difference between success and failure. Face-to-face meetings with the contractor can help as well.
One thing to remember is to never to accept “no” as the only answer. Contractors are trained to say no at the beginning of almost every negotiation. They do this because about 50 percent of the practices will accept this answer and not bother to continue negotiating. Do not let this happen to you.
“No” almost always means maybe. Tell them you will not accept no for an answer so they know you are serious and won’t go away easily. Contact the contractor to set up a formal meeting with the decision-makers to discuss the contract. Talk to them about access of care, quality, cost effectiveness, avoiding ER referrals, after-hours care, and other ways that your practice helps them. Make sure they understand that you care about the negotiation and expect success. Come to reasonable compromises. Remember it’s a negotiation, so work to get the best increase you can. Even a small percentage can have a significant effect on your bottom line.
Scrutinize your billing processes
Billing can affect your bottom line in many ways. This is a tremendously important area that is often overlooked because money coming in means everything is going well, right? Not always. You may only be generating a fraction of your potential income. Practices don’t realize that an efficient billing office can increase revenue.
So, how do you ensure successful billing in your office? Monitor the staff to ensure they are doing their job. Make certain you hire the best billing staff available. Having a certified biller is not critical, but they must be knowledgeable and experienced in your specialty.
Coding is another critical factor. Are you maximizing your coding in the office? Make certain you bill every appropriate code available to maximize your revenue. Be certain modifier use is maximized. Physicians should code the highest evaluation and management service based on their documentation. It might be a good idea to have an outside consultant complete a documentation audit to help you identify areas for improvement and help determine ways to maximize your revenue. This resource usually pays for itself.
Meeting deadlines is also a critical factor for billing. You must ensure charges are posted within 24 hours of the day of service. Payments must be posted within the same time period. How are you handling denied claims and zero-pay explanation of benefits? You need a system for how these cases should be worked. How are statements handled and when are patients referred to a collection agency? The practice needs to establish specific policies and procedures for billing so everyone knows their responsibilities and how to achieve defined goals. Incentives—such as a percentage of collections over a certain amount—are an excellent way to motivate and get the most of your billing staff.
Collect what you’re owed
Is your front office doing everything they can to collect money due at the time of service? Patients have more out-of-pocket responsibilities than they’ve ever had. High deductibles and co-pays are the norm for most patients today. It is critical for medical practices to implement collection policies that require front office staff to collect all balances at the time of service. You don’t want to be chasing these dollars after the patient walks out the door; it becomes much more difficult to collect on these balances and it delays and decreases revenue if you don’t collect the money while he or she is in your office. Outstanding balances are equally as important to collect when the patient is in the office. Do not let patients leave the office without a plan in place for resolving any balance.
The best way to ensure that patients are well informed about co-pays, deductibles, and outstanding balances is to improve communication. How you communicate with your patients makes a huge difference in the response you get. Appointments should be verified for every scheduled patient. This should be completed at least two days before the appointment to give patients time to reschedule if necessary. It also allows the practice to communicate specific insurance and payment information, such as the exact co-pay to be collected at the visit, deductible information to be collected, and any outstanding balances that need to be paid. By communicating information in this way, patients will be better prepared to resolve their balances before they are seen. It also helps streamline the procedure for all front office staff to follow regardless of the situation presented.
Consider ancillary services
Have you considered adding services to your practice? Many doctors are discovering that seeing patients in the office and hospital is just not enough to maintain viability. One way to increase potential revenue is to offer additional services. Things such as radiology, lab, DME, stress tests, echocardiograms, nerve conduction studies, and even pharmaceuticals in the office can be a revenue enhancer. Of course, before purchasing any equipment, make sure you complete a cost-benefit analysis to ensure you can increase revenue by adding these services. Review codes that will be billed for the services and the average reimbursement for providing them. Estimate the potential revenue impact of providing the service versus the estimated costs, including the cost of supplies and staff time. This cost-benefit analysis can give you a clear picture of whether adding a new service is the best option for your practice.
Is your volume dropping or do you just need to add more patients? Many offices have seen a significant decline in patients. As co-pays or deductibles go up patients have a harder time affording care. You have to work harder to attract the patients that are seeking care. Don’t assume that if you’ve been in business for 20 years patients are just going to automatically show up at your door. Competition increases choices for patients and you should position yourself to go after these patients. Clinics are popping up everywhere, even in Walmarts and grocery stores, making it more competitive than ever to attract patients. Practices should consider a user-friendly website, print media, radio ads, patient brochures, television, and other forms of marketing. These avenues can have a successful impact bringing patients into the practice. Consider utilizing a health care marketing professional to help you determine which methods will be the most helpful for your situation and goals. This is one resource that can have a real positive impact for your practice.
Sublease your extra space
Do you have extra space that could be generating money at times during the week? Why not investigate if someone needs a satellite office one to two days a week? Advertise in trade journals and determine the cost of the space charging in four-hour increments. You get the advantage of extra money and the satellite gets a new location. The cost of running a business is expensive and extra space may be one way to generate revenue.
Do not miss opportunities to generate more revenue. Be creative or try some of the discussed ideas. This article is by no means exhaustive, but might help enhance your revenue.
Bradley K. Reiner, formerly with Texas Medical Association, is now owner of Reiner Consulting and Associates. He can be reached at (512) 858-1570 or e-mail at email@example.com.