by Mario Fucinari •
DC, CPCO, CPPM •
Like many, you may have set New Year’s resolutions. Studies show that 88 percent of people who set New Year’s resolutions break them within the first two weeks. You may have made resolutions to get your practice back on track, organized, and increased profit. Why give up on those resolutions? Instead, make this the best year ever by taking an organized approach to set business goals by beginning with practice metrics.
Just as many of us use GPS on our phones to get where we are going, business goals provide a clear direction and focus for our practice. They define what you want to achieve and help align you and your team towards a common purpose. An unfocused practice is an unproductive practice. When we set goals, they give us a vision of where we want to go. They give us hope. Goals provide motivation and a sense of purpose, preventing burnout.
As we proceed through the journey to achieve our goals, we use practice metrics to make sure we are on the fastest route. Practice metrics are objective, quantifiable yardsticks that track the status of specific business processes. As we check our progress, we use certain key performance indicators (KPIs) to measure the practice’s performance against the goals we established.
The first step in the process of establishing goals is to first evaluate your performance over the last year. Although they have been around for many years and some want to minimize those KPIs, the tried-and-true KPIs provide a way to evaluate your practice, uncover trends, and identify areas for improvement. By financial managing your practice, it will ensure you are operating efficiently and making informed financial decisions. You should be working smarter, not harder. KPIs such as collection ratios, accounts receivables, new patient referral sources, and patient visit averages, can give a starting point in our journey and aid us in establishing corrective action.
Collection Ratio
The Collection Ratio, also known as the Net Collections Ratio (NCR) is a percentage of the payments divided by the charges minus the contractual write-offs, times 100.
Net Collection Ratio = Total Collections/ (Total charges – contractual adjustments) X 100
Ideally, your NCR should be 90% or above if you accept insurance of any kind. If you are a cash practice, then your ideal metric should be 96% – 99%.1 This metric will indicate how effective you are in the collection of money owed to your practice. If your NCR is at or below 90%, there is a problem at the front desk, your financial policy, or both.
Accounts Receivables Analysis
In my experience consulting with doctors, one of the most common complaints I hear is that the practice is not making money. When I ask about their accounts receivable A/R numbers, I often get the look as if I asked exactly how many stars are in the universe. By running an accounts aging report monthly and analyzing the measures, you can uncover warning signs of collection problems. Each classification in the A/R aging report will indicate how many days it takes to collect payments. The greatest percentage of outstanding collections are typically in the 0-30 day classification or bucket. From there, the percentages should drop. A cash practice will have lower amounts in the “buckets” since the practice should be collecting more money at the time of service. An insurance practice may have more money due in the 0-30 day bucket but will see a significant decrease in the 30-60 day bucket and minimal after 90 days. Anything over 17% may be a warning sign of a collection or billing problem. Is the claim submission behind schedule? Is the doctor out of the office too much? Are insurance companies denying claims? If so, what are the reasons for denial?
Patient Referral Sources
New patients are the oxygen of a practice. Chiropractors acquire new patients from various sources. A happy patient is a referring patient. Are you asking for referrals? When a patient expresses their gratitude and how well they feel, that is the ideal time to ask for the referral. I prefer the altruistic approach by letting the person know that we depend on word of mouth and we would appreciate it if they told others about our office so they are hurting unnecessarily.
How many patients are being referred to you by the insurance companies you are in network with? That’s right! If you are in a network with an insurance carrier, you are considered a “preferred provider.” By publishing your name in their preferred provider list and having the list available to beneficiaries, patients should be coming to your office because of their insurance carrier. That is why we take a PPO reduction. If you are not having patients calling you because of your status with the carrier, the PPO reductions are too great, or the insurance company is interfering too much between you and the patient by limiting your treatments to serve the insurance companies’ bottom line, then you must make a business decision to remain in that PPO.
If being in a PPO is not aligned with your business model, keep in mind that you may not opt out of Medicare, then that is when you want to use your metrics to determine if you want to have a legal discount plan. ChiroHealthUSA is a Discount Medical Plan Organization that provides simple solutions to offering legal discounts for cash, out-of-network, and underinsured patients. Some plans may call themselves a discount plan but may be skirting the edges when it comes to regulations. Chiropractors need to make informed decisions.
Other factors such as signage, location, marketing program, and community involvement should also be considered when analyzing your referral sources.
Patient Visit Average
Most would agree that chiropractic care is not only for pain control but serves to increase function and achieve a level of wellness. Therefore, when a new patient comes to the office, the patient visit average (PVA) is the average number of treatments a patient will receive over a specific period. You can calculate the PVA over the last year to analyze your treatment programs, including wellness, and how you are doing in educating your patients.
PVA is calculated by calculating the total amount of kept appointments divided by the total number of new patients over a given time.
Patient Visit Average (PVA) = Total kept visits/New patients
When assessing the results, a PVA of 1-3 is very poor, 4-6 is poor, 6-8 is average, 8-12 is good, 12 and greater is preferred. The higher the number, the better job you are doing in educating your patients and providing wellness care. If your numbers are lower than 12, you may want to evaluate your report of findings, treatment and front desk scripts, or your financial plans.
Overall, practice metrics are essential for monitoring performance, improving quality of care, managing finances, benchmarking against industry standards, and making informed decisions. They provide valuable insights that can drive continuous improvement and ensure the success of a medical practice.
- Feltenberger GS, Gans DN. Benchmarking Success: The Essential Guide for Medical Practice Managers. 2nd Edition. MGMA. 2017
Dr. Mario Fucinari is a Certified Professional Compliance Officer, Certified Physician Practice Manager, Certified Insurance Consultant, and a Medicare Carrier Advisory Committee member. As a ChiroHealthUSA Speaker’s Bureau member, he travels throughout the year, speaking to audiences nationwide and sharing his chiropractic expertise and insights about documentation, billing, and coding issues. If you wish to have Dr. Fucinari as a speaker for your organization, contact ChiroHealthUSA. Questions and availability requests can be sent directly to Dr. Fucinari at doc@askmario.com.
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Why is the Discount Challenge prize amount $15,024? Because that is the average “per-occurrence” fine for Medicare inducements. That’s not $15,024 per patient, that’s not per provider, that’s PER VISIT. Stinks, doesn’t it? To us, the prize amount is worth the investment if we can help our profession better understand proper discounting.