Managing medical practices is challenging even in the best of times. But what happens when situations outside of our control force temporary but significant changes upon us? Health systems, hospitals, and clinics need to be among the most stable of businesses no matter what the circumstances in order to best serve patients and the community’s urgent needs. The recent events of COVID-19 have illustrated the need to be adaptable in times of crisis. External changes may force us to modify how we do business for several days, in the case of extreme weather or natural disasters, to several months, in the case of the current pandemic. As leaders in these organizations – and indeed, in our communities – how can we best position ourselves to navigate through these turbulent times?
The key to being able to lay out a path forward, and to predict the obstacles that lie ahead, is leveraging analytical tools to help understand the wealth of data contained within a practice’s systems. Good strategy comes from good information and through analysis of just a few key metrics, we can forecast the road ahead and plan the most effective route. The following is a discussion of the key measures to understand when formulating your strategy.
Critical events will likely cause a great deal of variability in your schedules. In many cases, no-shows and short-notice cancellations will spike as patients are unable to get to the clinic. In other cases, emergency demand for care will go up. Often, different specialties will see widely varied impacts. Understanding each provider’s availability per session, or in some cases, even by hour, is the key to setting clinic staffing ratios to maximize throughput while minimizing exposure, understanding which non-urgent appointments can be delayed to free up emergency appointment time, and maintaining that critical and comforting presence for patients who depend upon your services.
Key patient access metrics to pay attention to include:
- Percentage of provider’s templated time booked and time available by hour
- Provider frozen/held time by hour
- Upcoming counts of scheduled appointments by visit type
- Same Day cancellation rates and no-show rates
- Average clinical cycle times (to minimize waiting room exposure)
Cashflow and Reserves:
No matter the impact crisis situations have on patient volumes, these events almost always place a strain on the organization’s cash position. Cash can be impacted by events preventing patients from getting to their scheduled appointments and impacting the practice’s monthly productivity. Extreme high-volume events may require immediate cash outlays for supplies and staff for services which will not be reimbursed for 30-60 days. Whether the crisis increases or decreases volume, the financial footing of the practice needs to be strong.
Key Cash metrics executives and management need to be aware of to maximize their financial position:
- Fixed expenses and the volumes required to meet those levels
- Variable expenses and the impact of spikes or dips in demand
- Available cash and current assets in hand available to meet these needs.
- Accurate AR valuation
- Current cashflow trends and timelines:
- Charge lag
- Claim drop lag
- 1st Insurance payment lags
- Zero balance lag
It can be difficult to predict the full financial impact of these critical events, but with a strong set of analytical tools, it is possible to model what a practice can expect to be paid for any spikes in services rendered, forecast lost revenue from services cancelled or delayed, and even predict the impact of anticipated denials from the payers. Moreover, good analytics will highlight if more will be required from the standpoint of patient collections from deductibles and coinsurance, higher true Self-Pay or Medicaid volumes, and overall reimbursement trends by individual payer. Being able to model this information with a high level of detail will assist the finance team in dynamic budgeting and forecasting the overall financial position of the practice once things return to normal.
Key metrics for the reimbursement team to focus on include:
- Payer mix by provider
- Expected reimbursement by procedure or payer
- Anticipated denials common during times of crisis:
- Registration denials due to inability of patients to provide current insurance
- Authorization denials
- Additional information denials due to lack of documentation time by providers
- Recovery rates for stated denials
- Self-pay collection rates at time of service and through the billing office
- Probability of collection by balance, age, and payer
What is predictable about the business of healthcare is its unpredictability. When a significant crisis occurs, leadership cannot rely on the same monthly management dashboards and reports to drive them successfully through a rapidly changing world. Using strong analytical tools, an organization can use their data in a new way in order to plan for challenges and implement a strategic plan of action. Strong, thoughtful leadership in difficult times is what will keep an organization on solid financial footing, allow physicians and staff to provide excellent care, and inspire the confidence in your patients that you will be there for them when they need you the most.
These are just a few things to consider. To learn more or to see Analytics In Action, come to our Webcast April 29, at 1 PM (Eastern-NYC) “Healthcare Practices: Navigating Through Turbulent Times”.
Written by: Scott Everitt, MBA, VP of Healthcare Solutions at Practical Data Solutions