There are several aspects to running a successful orthopedic practice beyond delivering great outcomes and high patient satisfaction. Industry experts experienced in enhancing the business side of orthopedic practices discuss four tactics for increasing profitability.
1. Incentivize employees to keep a close eye on revenue cycle management. Not keeping track of the accounts receivable and billing process is one of the biggest mistakes orthopedic practices can make, says Nancy Moore, president of NBP, a practice management support company. "Often, the physician trusts employees to do the best job possible to manage the A/R and billing process, and sometimes it's not being handled well," she says. "Employees should be educated every year about reimbursement changes and carrier level changes. You also have to have good oversight from the management."
The trained employees who handle the revenue cycle responsibilities should be compensated appropriately because these employees are controlling the practice's cash flow. "In oversight, employees really need to be held accountable, incentivized and rewarded for good work," says Ms. Moore. "This doesn't always happen, especially now when it's tough to get reimbursement, but at the same time you can't cut corners." Orthopedic practices should set solid goals for the revenue cycle managers, such as maintaining the A/R greater than 120 days at 15 percent or lower of total A/R, a net collection ratio greater than 95 percent, and incentivize employees with compensation when goals are met.
2. Attract more cash patients. To ensure reimbursement for services rendered, orthopedic surgeons can focus on attracting patients who are willing to pay cash before the appointment. "Orthopedics as a specialty has quite a lot of patient turnover so practices need to aggressively find new patients," says Scott Sangster, CEO of Health In Reach, a website designed to connect patients who are willing to prepay for services with surgeons in their area. "Compared to insurance patients with low reimbursement rates, patients who pay cash can be much more profitable since the provider can set their own prices and there's less paperwork." Traditionally, referrals from cash patients have come through general practitioners or insurance companies, and these patients were difficult to come by. However, the website offers a third option for surgeons to market to these types of patients.
"Because the appointment is prepaid, the physicians don't have to worry about collections, delays in payment or no-show patients," says Mr. Sangster. "These patients also tend to help maintain the provider's schedule better because they have some skin in the game." He says that there are several types of patients who are willing to prepay for the appointment in exchange for a discount in cost, and the physician's office can benefit from working with the patients who deliver their payments upfront.
3. Find waste in expenditures. Analyze the practice's expenses and find where any waste in occurs. Many times, practices can find savings through renegotiating payor and supply contracts that impact the bottom line, says Ms. Moore. Focusing on efficiencies is another way to cut back the waste and improve the practice's top line. "Physicians are working to become more efficient in patient flow by getting more patients in and out of the practice and treating them more effectively and efficiently," says Ms. Moore. There are several tools to help orthopedic practices improve efficiencies, such as consulting companies, electronic medical records and revenue cycle management software.
4. Create a plan that includes practice goals and budget. If a physician practice is hurting, the partners should step back and create a plan that fits the personalities and goals of the practice physician partners. Initially, the physicians' goals may be rather nebulous, so be sure to also include goals with grounded and measurable outcomes. "Create your model and set your goals realistically," says Ms. Moore. "The practice also needs to have a written budget. Having financial accountability and control is huge for the practice's success." The initial focus for these goals can include appropriately setting fee schedules and gaining a firm understanding of what the insurance contracts pay to determine which procedures carry higher or lower rates of reimbursement. All will go a long way when trying to bridge the divide between furnishing quality care and reaching financial success.
Read other coverage on improving orthopedic practice profits:
- 4 Tips for Increasing Orthopedic Practice Profits Through Scheduling
- 4 Mistakes to Avoid at Successful Orthopedic Surgery Centers
- 5 Techniques to Make Spine Profitable at Your Orthopedic Practice
1. Incentivize employees to keep a close eye on revenue cycle management. Not keeping track of the accounts receivable and billing process is one of the biggest mistakes orthopedic practices can make, says Nancy Moore, president of NBP, a practice management support company. "Often, the physician trusts employees to do the best job possible to manage the A/R and billing process, and sometimes it's not being handled well," she says. "Employees should be educated every year about reimbursement changes and carrier level changes. You also have to have good oversight from the management."
The trained employees who handle the revenue cycle responsibilities should be compensated appropriately because these employees are controlling the practice's cash flow. "In oversight, employees really need to be held accountable, incentivized and rewarded for good work," says Ms. Moore. "This doesn't always happen, especially now when it's tough to get reimbursement, but at the same time you can't cut corners." Orthopedic practices should set solid goals for the revenue cycle managers, such as maintaining the A/R greater than 120 days at 15 percent or lower of total A/R, a net collection ratio greater than 95 percent, and incentivize employees with compensation when goals are met.
2. Attract more cash patients. To ensure reimbursement for services rendered, orthopedic surgeons can focus on attracting patients who are willing to pay cash before the appointment. "Orthopedics as a specialty has quite a lot of patient turnover so practices need to aggressively find new patients," says Scott Sangster, CEO of Health In Reach, a website designed to connect patients who are willing to prepay for services with surgeons in their area. "Compared to insurance patients with low reimbursement rates, patients who pay cash can be much more profitable since the provider can set their own prices and there's less paperwork." Traditionally, referrals from cash patients have come through general practitioners or insurance companies, and these patients were difficult to come by. However, the website offers a third option for surgeons to market to these types of patients.
"Because the appointment is prepaid, the physicians don't have to worry about collections, delays in payment or no-show patients," says Mr. Sangster. "These patients also tend to help maintain the provider's schedule better because they have some skin in the game." He says that there are several types of patients who are willing to prepay for the appointment in exchange for a discount in cost, and the physician's office can benefit from working with the patients who deliver their payments upfront.
3. Find waste in expenditures. Analyze the practice's expenses and find where any waste in occurs. Many times, practices can find savings through renegotiating payor and supply contracts that impact the bottom line, says Ms. Moore. Focusing on efficiencies is another way to cut back the waste and improve the practice's top line. "Physicians are working to become more efficient in patient flow by getting more patients in and out of the practice and treating them more effectively and efficiently," says Ms. Moore. There are several tools to help orthopedic practices improve efficiencies, such as consulting companies, electronic medical records and revenue cycle management software.
4. Create a plan that includes practice goals and budget. If a physician practice is hurting, the partners should step back and create a plan that fits the personalities and goals of the practice physician partners. Initially, the physicians' goals may be rather nebulous, so be sure to also include goals with grounded and measurable outcomes. "Create your model and set your goals realistically," says Ms. Moore. "The practice also needs to have a written budget. Having financial accountability and control is huge for the practice's success." The initial focus for these goals can include appropriately setting fee schedules and gaining a firm understanding of what the insurance contracts pay to determine which procedures carry higher or lower rates of reimbursement. All will go a long way when trying to bridge the divide between furnishing quality care and reaching financial success.
Read other coverage on improving orthopedic practice profits:
- 4 Tips for Increasing Orthopedic Practice Profits Through Scheduling
- 4 Mistakes to Avoid at Successful Orthopedic Surgery Centers
- 5 Techniques to Make Spine Profitable at Your Orthopedic Practice