How does a practice analysis help your profits?
By Marc H. Sencer, MD

Regular analysis of your practice statistics can mean the difference between being in the black or in the red. Today's quiz will help put you on the right track.

Which of the following statements about practice analysis are correct?
A. It is essential to review and analyze your accounts receivable and aging report at least every three months.
B. Analysis of reimbursement by provider, and by procedure code, broken down for different payors is generally too much work for a small practice.
C. Keeping a log of all collection efforts and reviewing it with your billing personnel is a necessary part of your collection analysis.
D. You should review every explanation of benefits (EOB) that contains denials or reductions with your billing staff.

öThe correct answers are "C" and "D."

"A" is false. You should analyze the receivables monthly, not quarterly. Your accounts receivable, along with the aging report, provides valuable information about your business' health and is the starting point for further financial analysis. Key statistics include the average number of days outstanding (which indicates how long it takes to collect your money) and the percent outstanding more than 45 days (which you can compare to benchmarks for similar practices to see if you are collecting efficiently).

Your practice management consultant can help with these calculations.

"B" is false. You should analyze reimbursement patterns for each major insurance carrier you deal with. For example: If you know XYZ insurance won't pay for a nerve block done with a trigger point injection, then you shouldn't bill an XYZ patient for those two together. Similarly, if you know XYZ will pay $11 for mechanical traction, but it costs you $9 to provide the service, you may choose not to bill for this modality.

You should also analyze the profitability of each provider in your practice — especially if you are part of an integrated group practice — and know your approx-imate costs to provide each billable service. In order to calculate this, take into account the cost of the provider, any supplies used, the ancillary staff, and the general office overhead during the time the procedure is taking place.

"C" is true. One of the most important, and often overlooked, responsibilities of collection personnel is a detailed log of collection efforts. Review this log every month with your collections people to determine where your money is, approximately when you can collect, or if it is uncollectible, and should be written off. When you insist on a log, your collection staff knows you expect them to be accountable for their efforts.

"D" is true. It is vital that you review EOBs with denials or reductions with your billing staff as they come in. Once you know the different reimbursement patterns for each payor, the review becomes much easier. For example: If you know that a particular insurance plan always denies an evaluation when you do a procedure the same day, this denial will not trigger a time-wasting analysis. Instead, create a profile for each payor and focus on denials that are out of line for that particular payor.

Marc H. Sencer, MD, is the president and founder of MDs for DCs, which provides intensive one-on-one training, medical staffing, and ongoing practice management support to chiropractic integrated practices. He can be reached at 800-916-1462 or www.mdsfordcs.com.