Keeping track of your practice's financial health can be a struggle. The best way to track your medical practice's successes, and to assess metrics like productivity, staffing costs, and revenue growth: benchmarks! By researching industry performance standards and creating measurable goals for your practice, you can track your group's successes see how you perform compared to other practices. It's also the easiest way to identify and solve problems. If you want to protect your practice's revenues and improve financial health, consider setting benchmarks for your billing performance. The MGMA has some great standards for billing benchmarks. Here are just a few.
Revenue Cycle Indicators
Knowing your total accounts receivable per physician is a crucial step to understanding your practice's overall financial performance. Make sure you know what percentage of accounts receivable are greater than 120 days old, and try to keep most A/R in the 0-30 days old range. You're much more likely to collect on accounts that are under the 120 day range, so if you see a large number of old accounts, it maybe time to adjust your collection practices.
Net Collection Rate
Low net collection rates can be a jarring reminder that it's time to look deeply into your practice's financial habits. Calculate your net collection by dividing the sum of gross charges, minus contractual adjustments. Your net collection rate, generally, should be at least 97%. If it's any lower, try calculating net collection rates by each payer, to see if a specific payer is responsible for the deficit. If this doesn't point out one weak link in the chain, it means you need to take a look at your practice's billing processes overall, and investigate the claims you're submitting. It seems like more work than it is--and it's a huge investment in your future peace of mind!
Understanding how your practice's overhead costs compare to others in the industry is one of the most worthwhile ways to measure your practice. The MGMA reports specialty-specific overhead rates, so make sure you're using those for comparison. Pediatricians will have very different overhead rates from orthopedic surgeons. How does your practice compare to the average cost? How could these numbers have an impact on physicians' take-home pay? Charting all this out is a simple way to make sure your practice is the most financially viable it can be.
We'd love to hear about which medical practice benchmarks have helped you improve your practice's financial health. Did one of these radically change your revenue stream? Have you used a benchmarking strategy we missed?
Tell us all about your experience in the comments!