By Jennifer A. O’Brien, MSOD
Why and how to use an executive summary of practice indicators
Perhaps one of the toughest transitions an orthopaedic surgeon has to make is the shift from a one-on-one care provider to the executive leader of an orthopaedic practice, particularly in a group situation. At least once a month, physicians must be able to transition from looking at specific diagnoses and treatment plans to examining the business success and well-being of their practices.
To help make this transition, a “dashboard” of key monthly practice indicators can be useful. Capturing these indicators on two or three pages in tables and charts will make the information easier to understand and review regularly.
Arkansas Specialty Orthopaedics has been using these dashboards for about 9 months. Initially, they focused on core business measures; as the physicians became accustomed to using them, we added features specific to accessibility and growth. Figure 1 is a sample of the dashboard we use; an explanation of the key items follows.
Payor mix (A) is a pie chart showing the percentage of revenues from each payor type. Our dashboard shows the payor mix for the individual physician and for the entire practice. This enables the physician to see how his or her payor mix compares to that of the practice. An orthopaedic surgeon who specializes in joint replacement, for example, might have a larger Medicare piece than the practice as a whole.
The key indicators table (B) shows gross collection rate (GCR), net collection rate (NCR), days in accounts receivable (A/R), and percentage of A/R greater than
90 days for the individual physician, the entire group, and the Medical Group Management Association (MGMA) benchmark data for other orthopaedic groups throughout the region.
The GCR is the percentage of gross charges that are actually collected and is based on total net receipts divided by total charges. Because it compares gross charges to collections, without any adjustments for contractual rates, it can be quite low (some would say “depressing”). The GCR is useful because it can indicate the need for fee schedule revision. No benchmark data are available because the GCR depends on a practice’s fee schedule and contractual rates.
The NCR is the percentage of the charges that are collected after the contractual adjustments have been taken. First, subtract contractual adjustments from total charges. Divide total net receipts by the remainder to calculate the NCR. Assuming that contractual and noncontractual adjustments have been done correctly, the NCR reflects the percentage of collectible dollars actually being collected. In this example, Dr. X’s NCR is better than the practice average, but both are below the MGMA goal.
Days in A/R is the number of days that accounts spend in A/R before being settled. It is determined by subtracting external collections and liens from the total A/R and dividing the result by the average daily charges (annualized charges divided by 365). Like a golf score, the lower the days in A/R, the better. At 48, this physician’s Days in A/R is slightly better than the practice as a whole, but both are higher than the MGMA standard of 46.
Because the more time accounts spend in A/R, the harder, or less likely, they are to collect, the dashboard also shows the percentage of A/R greater than 90 days. Staying on top of collections will keep down the percentage of A/R greater than 90 days and optimize the value of your A/R. In this example, even the MGMA target is not ideal; no more than 20 percent of accounts should be in A/R for more than 90 days.
This small table (C) shows how productive an individual physician is compared to the practice average. The counts are relative value units (RVUs), which are more objective than dollars. The RVU comparison simply helps a physician see how productive he or she is relative to the practice.
Impact of time off
All a surgeon has is time and skill, and a month has only so many business hours or days. Although time off for vacation and education is important, it is equally important to recognize the impact of that time off on productivity. This table (D) shows the number of business days in the month, the number of those days the surgeon was off, and the percentage of the business days that time off equals.
This table is important because physician time off has the most direct impact on revenue of any of the indicators. The reimbursement services staff cannot become more effective at collecting on charges not generated.
The new patient visits and consultations section (E) is the “new business” feature. It tells the surgeon how many new patient visits and consultations he or she has had in the current month and year-to-date.
Next available appointment
Next available appointment data (F) are key to practice growth. People who need to see an orthopaedic surgeon often have a greater sense of urgency because they are hurting or experiencing immobility. The ability to schedule a new or established patient visit is an essential practice management indicator, and one that physicians can control to a degree. This feature was added by our physicians and has helped many of them make important decisions about clinic time and scheduling templates.
The noncontractual adjustments summary (G) tells you the reasons for noncontractual adjustments. The order of the adjustment reasons may differ for each physician. In this example, 55 percent of the noncontractual adjustments are due to bundling procedures that were initially reported separately. Another 13 percent are due to visits billed within the global surgical package. These percentages indicate a code interpretation problem, either within the practice or with the carriers.
Occasionally, “Professional Adjustment” may be the first reason listed. This monthly summary can show the total impact of any “courtesy write-off” directives. The total noncontractual adjustments give individual physicians and practice management personnel an idea of the value of these adjustments.
We include a second page that details A/R that are older than 60 days and more than $1,000 (H—not shown here). This feature was requested by our physicians and enables them to focus on the accounts that need the most attention. It brings executive oversight and clinical encounters together and helps physicians to work in partnership with collectors, financial counselors, and front desk staff. Because cases are listed by patient name, the physician can identify accounts that are beyond the practice standard and can contact the collector to see if a letter of explanation is needed.
Although some physicians may initially be reluctant readers and users of this information, these reports can help them become astute executives. We e-mail the dashboards to the physician, the practice management staff, and the collections staff specific to the individual physician’s processes around the tenth of each month. They help staff and physicians work more effectively together toward the same goals.
Jennifer O’Brien, MSOD, is the executive director of Arkansas Specialty Orthopaedics, a 22-physician group, which created and implemented this monthly dashboard. She also serves as a consultant to KarenZupko & Associates.