Episode 135: Managing and Measuring Your Revenue Cycle - What's the Difference?

Speaker 1:

You are listening to Your Practice Made Perfect. Support, protection, and advice for practicing medical professionals brought to you by SVMIC.

Renee Tidwell:

Hey everyone, welcome back to your Practice Made Perfect. My name is Renee Tidwell and I will be your host for this episode. In today's show, we will be discussing revenue cycle management and how SVMIC can help you assess your revenue cycle. Before we kick this episode off, we will add a little disclaimer that we are assuming the listener here has a basic understanding of your practice's revenue cycle. If you're in need of a more basic understanding of the revenue cycle management process, we will link one of our new courses, Practice Management 101: Finance in the show notes. This could be a great place to start and then you can return to this podcast. To discuss this with us today we have our very own Jackie Boswell. Welcome, Jackie.

Jackie Boswell:

Thank you, Renee.

Renee Tidwell:

Before we get started, let's kick off with an introduction. Tell us a bit about yourself.

Jackie Boswell:

Sure, Renee. I have been at SVMIC for almost 18 years and prior to coming to SVMIC, I managed a large medical practice called Nashville Medical Group affiliated with Ascension St. Thomas, and prior to that I was with Blue Cross Blue Shield. One of my responsibilities with Blue Cross Blue Shield was installing physician practice management systems, so most of my background in revenue cycle came from the days of installing practice management systems and then managing a physician practice.

Renee Tidwell:

Thank you, Jackie. You're obviously the perfect person to dissect this complicated topic. We're going to take a bit of a different approach here today. SVMIC offers complimentary tools and services to our policy holders to help with revenue cycle management, in order to give our listeners an idea of what those tools can help with, where to start and how to evaluate their revenue cycle, I'll be approaching this as someone who is responsible for or has oversight of the revenue cycle in my practice. I'm here to learn what you typically might cover when you have a practice request, a revenue cycle assessment, and also how do I know I need a revenue cycle assessment.

Jackie Boswell:

Renee, before we start, I think it's important to clarify the difference between managing your revenue cycle and measuring your revenue cycle. The difference between the ins and outs of managing a revenue cycle is different than preparing for a revenue cycle assessment. The course you mentioned earlier will help listeners understand the best practices for managing their revenue cycle and their daily operations, but in this episode I'd really like to dive into the importance of taking that a bit further with assessing and measuring the revenue cycle by conducting a revenue cycle assessment.

Renee Tidwell:

Great point, Jackie, in separating those two, measuring versus managing, the distinction is really good to know. Let's say I'm in charge of or have a large role in my practice's revenue cycle, about the complimentary services SVMIC offers in regards to a revenue cycle assessment. Can you walk me through exactly what the revenue cycle assessment is?

Jackie Boswell:

Sure, Renee. A revenue cycle assessment involves collecting data and reviewing processes and workflows to determine the efficiency of your revenue cycle. Since each revenue cycle is customized for the practice, we start with an initial discussion regarding the practice's specific needs. Based on that conversation, we'll collect appropriate data and reports and those might include an age trial balance, which shows the aging and categories of your outstanding accounts receivable. Once all of that information is collected, we'll then analyze and benchmark key performance indicators. This process may involve onsite review of workflow and processes as well as interviews with the key staff. This analysis will result in a presentation that includes recommendations and actions to help improve the effectiveness of your revenue cycle.

Renee Tidwell:

Jackie, this sounds like a really customized way to approach each practice's revenue cycle assessment. You mentioned key performance indicators. Can you explain that a bit further for me? I'm not sure I fully understand what that means.

Jackie Boswell:

Another way to reference key performance indicators is KPIs. And you'll hear KPIs mentioned in the industry, they are specific to the revenue cycle and measure the overall performance of your revenue cycle team, which basically includes everyone on your team from the scheduler to the central billing office, and even includes your providers.

Renee Tidwell:

Jackie, can you give me an idea of what KPIs I should be looking for? Are there any in particular I should start monitoring and tracking now? Maybe tips for how to start doing that?

Jackie Boswell:

Definitely two of the most important revenue cycle KPIs are days in accounts receivable or days in AR and the percent of accounts receivable or AR over 120 days. Both of these KPIs are calculated from your age trial balance report, which may also be called your outstanding accounts receivable report. Days in AR tells you how long it takes to collect an average day's worth of charges. To calculate this, you would take your total accounts receivable divided by your average daily charges. Typically, you would want this number to be 30 days or less depending on the specialty. We also look at AR over 120 days as a percent of your total accounts receivable. This is important because the older a balance is the harder it becomes to collect. An ideal benchmark for this number would be around 15%. Again, depending on the specialty. For example, it takes a surgical practice longer to collect in most cases because of the price for a surgical procedure is much larger than an office visit.

Renee Tidwell:

Okay, Jackie, how do I know whether I need an assessment in the first place? What are things you may have heard from folks who have called you in the past that might help me understand whether I need to call in for one of these assessments or not?

Jackie Boswell:

Often what we hear is that revenue or perhaps collection ratios are down in a practice and they aren't sure where that leakage is. Sometimes we're called in when there's turnover and management or staff working in the billing office and the practice wants us to assess the revenue cycle to see maybe where to best utilize a new person they're hiring or perhaps if someone in the business office might be qualified to take over a management position of the central billing office. We also hear from practices who would just like a checkup of their revenue cycle to establish a baseline of where they are and we can certainly do that for practices.

Just to give you an example of a practice that we assisted with by completing a revenue cycle assessment. During the assessment, we found that their days in AR were creeping up. In other words, it was taking longer to get their money, so we worked with their staff and discovered that they weren't utilizing all of the features of their practice management systems, so we helped them implement some new processes to improve those collections and understand how to better use their system and they were able in about six months to decrease their days in AR from around 40 days to around 32 days, so the practice manager was very excited and appreciative of that.

Renee Tidwell:

That's great. I know it makes a big impact on the practice when you can see such a difference. Jackie, I've heard you mention a couple times that there may be a need for this assessment when there's been a lot of staff turnover, you're looking to hire in someone new. I know staff turnover for practices has been a lot higher since the pandemic. Have you seen that have an impact on the revenue cycle?

Jackie Boswell:

Definitely staff turnover is a problem in all offices and finding someone qualified to do accounts receivable management or billing and collections is difficult, that's why it's important to evaluate your processes, maybe, through a revenue cycle assessment and have your revenue cycle management process be as efficient as possible, utilize every feature in your system that you can. Many practices aren't utilizing their practice management system to the top of its capacity, so a revenue cycle assessment could help with those things, but definitely turnover has been an issue in practices.

Renee Tidwell:

Jackie, I know that practices probably are no different than any other business right now. I feel like a lot of businesses are with the turnover, we're trying to pull people and sometimes putting people in positions they're not necessarily overly qualified for. Like you may pull someone from a front desk staff and put them into an accounts receivable role that they may not have a ton of training for. Does medical practice services or SVMIC offer any guidance or help with that?

Jackie Boswell:

Great question, Renee. Yes, we have a Practice Management 101 workshop that we offer online, so all practices that are members of SVMIC have access to those and the staff has access to those. We also periodically offer webinars and seminars, which are always advertised on our SVMIC.com website.

Renee Tidwell:

Great, Jackie. Listeners, I'll go ahead and get some of that stuff linked in our show notes. Now that I know that I could benefit from going through a revenue cycle assessment with you all, can we briefly touch on preparing for one, are there certain pieces of information, reports, data that I could pull together to be more prepared?

Jackie Boswell:

Well, I've mentioned one of the most important pieces of information for revenue cycle management and a revenue cycle assessment, which is your age trial balance or some practices have it called the accounts receivable aging report. If you can run that by payer or payer type, that's even more helpful. Just in case you had outstanding receivables that were really high with one particular payer that would point that out.

Understanding what balances are pending with the patient is also valuable. It's important to run a credit balance report when you're looking at your accounts receivable because these balances can affect your accounts receivable totals and may even be a compliance issue. We will likely also want you to run a payer mix report. Your payer mix may have an impact on your collections, especially if your payer mix has changed a lot or if you have a high volume of Medicaid patients, physicians often compare their collection percentages with each other and this could be affected by their different payer mix, so it's important to understand your payer mix and your practice. These reports would be a great headstart if you're interested in a practice revenue cycle assessment.

Renee Tidwell:

Jackie, now that I have a better understanding about what the assessment entails, where do I need to start as the practice executive or maybe even as a solo physician running my own practice?

Jackie Boswell:

I think, it's important to measure anything you do to determine if it's successful or not or if there's opportunities for improvement. Many of you may already be doing that with the revenue cycle, but if you aren't or would like someone outside of your practice to take a look at it with you, please don't hesitate to contact us for a revenue cycle assessment or for any of the other services we offer in the medical practice services department.

Renee Tidwell:

Jackie, what's the best way for us to contact y'all? Do you prefer email or a phone call?

Jackie Boswell:

An email is great, because then that email could be forwarded to the best person that's available to contact the practice either in that area or by scheduling. We often schedule weeks and months in advance, so that would be helpful. An email would be great.

Renee Tidwell:

We will link that information in our show notes. Do you have anything else to add, Jackie, today?

Jackie Boswell:

I just appreciate the opportunity to talk about the revenue cycle, our revenue cycle assessment, and how we can better help practices improve their bottom line.

Renee Tidwell:

This has been really informative for me. Listeners, I hope it has been for y'all too. Be sure to check out our show notes below for the information we've discussed today. Thanks for listening.

Speaker 1:

Thank you for listening to this episode of Your Practice Made Perfect. Listen to more episodes, subscribe to the podcast and find show notes at SVMIC.com/podcast. The contents of this podcast are intended for informational purposes only and do not constitute legal advice. Policy holders are urged to consult with their personal attorney for legal advice. A specific legal requirements may vary from state to state and change over time.