Why practices lose money

Having worked with over 1,000 hospitals, clinics and physicians in private practice across all specialties and all states, what I've found is that most lost revenue can be traced to a handful of controllable factors.

Quantifying this information, demonstrates that each of these factors can add 2% to 8% in revenue. In other words, if all of these were issues in a practice, and were corrected, it would result in an eye popping 38% increase in revenue.

While it would be highly unusual to see all of these problems in a practice simultaneously, in my experience it is common for a practice to have at least 3 or 4 at any given time so it is quite realistic for a practice to expect to see revenue increased by 12% - 25% if the following items were closely controlled:

1) Inability to recruit and retain qualified medical billing and collections staff.

Hiring unqualified people, relying on questionable staff, inadequate reporting and access to information, insufficient training and oversight leading to staff turn-over.

2) Picking the wrong software or using a subscription service rather than purchasing the program outright

I've seen a number of physicians make the mistake of choosing software that isn't up to the job or using the wrong type of program or service. Even though I co-founded a medical billing software that is based on monthly subscription service (Kareo Inc) these types of services are not right for everyone. When it comes to software, there is no "one size fits all" so do your diligence and choose wisely

3) Improper Contract Set-up and Management.

Setting physician fee schedule and charge master incorrectly without current codes and optimal pricing. Making the mistake of not regularly reviewing contracts or past negotiations

4) Unverified Eligibility.

This is the area where I've probably seen the most issues; scheduling, registration, verification and eligibility issues often lead to lost physician time, inaccurate information and denied or missed claims.

5) Not Conducting Coding Reviews.

Over coding leaves a practice susceptible to fraud risks, while under coding could lead to compliance issues, missing modifiers and incorrect or sub optimal CPT/ICD usage resulting in significant lost revenue

6) Misdirected/Lost Claims.

No pro-active or consistent follow-up process for re-filing charges for the 2 to 3% of claims which are submitted but never received or subsequently lost by insurers.

7) Denial Management/Reporting

No aggressive follow-up system with denial reporting or trending for re-filing and training internal staff to reduce denials by developing/implementing clean claims programs.

8) Secondary Insurance.

Not billing and/or following aggressively on secondaries. Staff under trained or overwhelmed and unable to manage this properly leaving revenue uncollected

9) Unsent Patient Statements.

Not having front office payment collection policies and non-paying patient procedures
with unsent/not followed patient statements becoming an increasingly large percentage of uncollected debt.