How do you track practice financial performance? Part 1
Allergy practices now have more performance data than ever before. In addition to the reports from EHRs, practice management systems, and/or patient surveys that many practices have, the College’s partnership with the Medical Group Management Association (MGMA) also provides allergy-specific practice cost and revenue data. But what should you actually be focusing on in your practice, and how do you convert all this data into useful information?
There is no one “right answer”, and metrics will vary by practice based on goals and priorities. For example, a practice focused on growth may want to measure total patient visits and new patient visits. If you’re trying to increase patient follow-up visits or rush therapy, start tracking charges for each of those codes. Stop and think about your practice’s priorities, and look for metrics available from your EHR or practice management system to measure their performance.
The College’s Practice Management Committee has identified some key revenue cycle, practice profitability and provider performance metrics that apply to most allergy practices. We’ll be sharing those with you in a series of articles over the next few weeks. We’ll start today with financial performance metrics, which reflect your practice’s revenue and profitability.
Financial Performance Metrics
Gross charges - total charges before any write offs or payments are applied; measuring this over time can help to show if your practice is growing. This metric, together with medical revenue, gives a more complete picture of revenue trends.
Total medical revenue – this measures the total revenue (actual collections) the practice receives.
Total operating cost – this includes costs for support staff and general operating expenses, but not physician or NP/PA costs.
Total medical revenue after operating cost and non-physician provider cost – this reflects the practice’s bottom line before physician compensation.
We’ve included these figures for allergy/immunology practices from the MGMA 2017 Cost and Revenue survey per full-time equivalent (FTE) physician and per FTE provider (including NPs and PAs) below.
|Allergy/Immunology Financial Performance Metrics|
|# of practices||Per FTE Physician||# of practices||Per FTE Provider|
|Median total gross charges||32||1,594,172||21||1,279,254|
|Median total medical revenue (FFS collections + Medicare / Medicaid collections + capitation payments + research)||34||958,771||21||825,748|
|Median total operating cost (total support staff + total general operating cost)||34||608,668||21||405,787|
|Median total medical revenue after operating cost and non-physician provider cost||21||397,680||21||265,120|
Source: MGMA DataDive™ Cost and Revenue 2017 (based on 2016 data). Copyright 2017. 34 allergy & immunology practices of all sizes participated. Not all practices reported all data.
Other items can be helpful to track periodically. One of these is payer mix, (a percentage breakdown of medical revenue by payer) so you understand where your revenue is coming from and where you should focus billing and collection efforts. Another is a revenue breakout by CPT / type of service (allergy testing, allergy vials, immunotherapy, rush therapy, E&M visits, etc.). This helps you understand what services are driving the most revenue.
“Our practice EHR and billing module routinely tracks all CPT codes, and we particularly pay attention to our E/M codes and allergy/immunotherapy codes,” notes M. Razi Rafeeq, MD, FACAAI, Practice Management Committee member. “Total patients, new patients, skin tests and allergy injections are all monitored closely. We track our E/M coding curve and make sure we are not under coding and are within the standard allergist coding curve.”
These financial performance metrics are a good place to start. Also consider the following benchmarking tips:
- Choose metrics that are easy for your practice to report.
- Benchmark your performance against other allergy practices using MGMA data to give you a sense of how you stack up and where you might have opportunities to improve.
- Most importantly, measure against your own historical performance.
- Consider reporting monthly and year-to-date figures along with a comparison to last year and/or budgeted numbers.
Watch for our second article in the series, which addresses efficiency and revenue cycle metrics. If you don’t have an efficient revenue cycle, your practice may not be collecting all the money you’re owed in a timely manner!