Read more from Corinne Z. Wohl, MHSA, COE.
Managing an ophthalmic practice includes many complex processes. It is as important to streamline administrative tasks as it is in the clinic.
A quick way to assess how each department in your practice is functioning is to monitor key benchmarks on a monthly basis. If the numbers fall within acceptable range, your management team can move on to other issues and projects for the month. If not, it is important to identify the causes and implement as quick a resolution as possible. The beauty of monthly reviews gives you the opportunity to make mid-course corrections. In times when revenues are falling and profit margins are tighter, conducting quarterly or annual reviews is not sufficient.
There are numerous benchmarks used within our industry, developed by long-time consultants like John Pinto and Bruce Maller, which summarize the numbers seen nationally. Having a national baseline helps by adding depth to the numbers. More important is for us to compare our practice to itself month to month, year to year, and track our own internal progress — a bit like a runner looking to make a new “personal best.”
In the billing department, my focus starts on accounts receivable over 90 days, billing staff labor productivity, the net collection ratio and claims rejection rates.
- For a general ophthalmology practice, a healthy range for A/R over 90 days is below 12%, although you want this to be as low as possible, and sub-8% is commonly found in well-run practices.
- Billing staff labor productivity, where the suggested range per FTE is typically $1 million of collections per year and higher, can be calculated by taking the annual collections and dividing by department FTEs (those employees are doing the charge entry, posting and collections work, not insurance verification). If each staff person is responsible for more production than this range, you may either be very efficient, or you could be leaving money uncollected because the department is overwhelmed. And if this metric is lower, it is time to review workflow requirements and management oversight.
- Your goal for net collection ratio should be 95% or higher; that is to say, you should be collecting 95% or more of the allowed charges. Divide your practice’s collections by the allowable charges to generate this benchmark.
- To evaluate claims management rejection rates, pull random samples on EOBs from your higher-volume payors. Run claims rejection reports and spot check each employee’s work. Look for rejection trends and errors. Be sure to research the causes of error (eg, mismatched diagnoses, demographics gaps) so you can correct the problem by either contacting the insurance payors, or by re-educating those doing the coding or the posting.
Corinne Z. Wohl, MHSA, COE, is the administrator at Delaware Ophthalmology Consultants and can be reached at firstname.lastname@example.org or 609-410-2932.