The Bottom Line
PRACTICE MANAGEMENT
Ray Foxworth
DC, FICC, MCS-P
As a business owner, one of the most important pieces of information that I review is my bottom line. How profitable were we this month over last month? How about this year over last year? Although I spend a great deal of time focusing on improving the patient experience and improving outcomes in my practice, I also must devote time to working on the practice itself Each year, my team and I meet offsite to develop a strategy for the practice’s success. Each quarter, we meet to review our goals. Are we on target? Where can we improve? Although we spend a good bit of time reviewing statistical information (number of new patients, reacts, collections, etc.), we also spend time reviewing our income and expenses. While minimizing wasteful and unnecessary expenses is done easily, our greatest success came from maximizing our revenue.
When it came to maximizing our revenue, we spent several hours reviewing our provider agreements. We created a spreadsheet that compared our actual fees and reimbursement rates. We also gathered published fee schedules (workers’ comp, PI, etc.). After gathering this data, we calculated our cost to provide an office visit. This
number fluctuates annually and gives us our break-even number. This is crucial when it comes to deciding whether to participate in health plans. To do this:
• List monthly fixed expenses (rent, business loan payments, equipment leases, etc.) and a 12-month average of variable and non-monthly expenses (utilities, payroll, taxes, etc.).
• Determine your average number of offices visits per month for the past 12 months.
• Determine your average actual reimbursement per visit (total income divided by total visits for the year).
• Divide the average overhead expense by the average number of office visits. This is your average cost per visit.
• Divide the average cost per visit by the average income per visit to determine your average overhead percentage.
Next, we did a fee analysis to determine if our fees were set appropriately. Using fairhealthconsumer.org, we were able to pull the market value by zip code of every code that we use in the practice. More importantly, it isn’t
just chiropractic data, but all healthcare providers in your area. Be aware that this site only allows you to pull information on 20 codes per week, so it can take a lot of time and patience to gather the information for your practice. Many other helpful resources are available that are faster. Once we had all of the information available, we took the time to determine if we needed to make any changes to our fee schedule. Some fees went up a little, some went up by a lot, and others stayed the same.
Setting a proper fee schedule is key to the success of your practice. Patients should easily understand it, and it must be compliant with provider agreements, as well as state and federal regulations. Most importantly, it should be profitable. However, there is very little information on how to find comparative pricing information by region or zip code. Many doctors are left to figure it out on their own. The result is that many practices are leaving money on the table and missing out on revenue that can help grow their businesses.
Now that you are armed with your new fee schedule and your cost per office visit, it’s time to review your provider contracts. Are you signing contracts for less than what it costs to deliver care? You must read your provider agreements and understand every stipulation that you agree to. Far too often, doctors find out well after the fact that a procedure regularly performed in the practice isn't covered or bundled under the terms of the contract. Additionally, providers may choose to add a new service or product, such as spinal pelvic stabilizers, and find that their provider agreement allows for reimbursement in the fee schedule at a level lower than the cost of the product or service.
Also, make sure you read the medical policy. This is not typically part of the provider agreement. It is usually on the payer’s website, and you are responsible for knowing their policy. For example, in some states, use of electrical muscle stimulation may be covered, but interferential may be considered investigational. Some policies stipulate how long a therapy must be used to bill a unit of therapy, and other policies get so detailed that you must log the actual clock-time versus just recording that it was performed for 15 minutes. Some follow the Medicare eight-minute rule regarding therapy, and you are responsible for knowing the policy of each carrier you deal with, whether you are in-network or not. Even if you are not a participating provider, the patient is still a participant in the plan, and when you see them, if you don’t follow the medical policy, the patient may not be reimbursed. When that happens, as you can imagine, you look like the bad guy.
In our practice, if we determined that some provider contracts no longer made sense financially, we began the steps to cancel the provider contract, tn some cases, reimbursement rates were brutal, but the number of
referrals to the practice was high. For those instances, I reached out and requested an increase in the reimbursement rate. Many doctors are unaware that you can negotiate for a better rate with a little persistence and hard work. Provide data on the market values in your area. Provide data demonstrating the quality of care you provide and how you measure outcomes. If there are few other chiropractors in your area, provide demographic information. This is particularly useful for situations in which you provide chiropractic care to children who participate in youth sports. Your services help reduce overall injuries and improve recovery time compared to children who do not see a chiropractor, so share those statistics. Including patient reviews can also be useful.
If they decline to improve the reimbursement rates for your practice, don’t be afraid to counter offer. You can ask for better terms on the window for resubmitting claims or for ways to streamline the prior authorization process. In the end, if you have a payer who is unwilling to negotiate, you can determine if it makes sense financially to stay in that network.
Benjamin Franklin said, “An investment in knowledge pays the best interest.” If it has been a few years and it looks like a major overhaul is needed to bring your fees into the twenty-first century, consider utilizing the help of a consultant. Consultants can evaluate your existing
fees, contracted rates, and published fee schedules for your area. They can also make recommendations on when, and how, to implement fee changes in your office. If you have a small office and limited time to gather all of this information initially, this is a great option and investment in your practice success. Don’t be afraid to see where you stand when it comes to your fees, and don’t be afraid to ask for what you need when it comes to provider contracts. You may be surprised by the results.
Ray Foxworth, DC, FICC, MCS-P, is a certified medical compliance specialist and president of ChiroHealthUSA. As a practicing chiropractor, he remains “in the trenches” facing challenges with billing, coding, documentation, and compliance. He has sewed as president of the Mississippi Chiropractic Association, former staff chiropractor at the G. V. Sonny Montgomery VA Medical Center, and is a fellow of the International College of Chiropractic. You can contact Dr. Foxworth at 888-719-9990, [email protected], or visit the ChiroHealthUSA website at chirohealthusa.com. Join us for a free webinar that will give you all of the details about how a DMPO can help you practice with more peace of mind. Go to chirohealthusa.com risky to register today.
To access a simple spreadsheet that will allow you to identify your cost ofproviding care per visit and a ballpark idea of your percentage of overhead, visit chirohealthusa.com overhead. This chart is interactive to allow you to modify the numbers and determine “what-if” scenarios for your practice.
