8 Ways to Make Your Practice Recession Ready
“When people are scared, they don’t spend money,” Standard & Poor’s Chief Economist David Wyss recently said.
To be sure, most folks aren’t buying new Manolo’s or hybrid SUVs - or remodeling the kitchen this year. But in the face of so much uncertainty, consumers are going farther than that by scrutinizing everything. Including whether or not to spend money on deductibles and co-insurance for elective surgery.
And the recession is causing another problem – newly-minted uninsured, and lots of them. For every 1% increase in unemployment, 1.1 million Americans become uninsured. In November, unemployment hit 6.7%, and the layoff announcements continue. Add these newly uninsured Americans – most of whom can’t afford COBRA coverage - to the already 47 million uninsured, and practices are facing a new reality: thousands of previously insured patients are putting off non-life threatening visits and procedures.
The result is that appointment books and surgical schedules of practices across the country are taking a hit as same-month visits decline from last year. And accounts receivable are rising as more and more patients find it harder to pay their bill.
In order to stay afloat in 2009, you need a laser beam focus on running a tight ship. If you aren’t making your practice recession ready, your bottom line will suffer in 2009.
The good news is that most practices have potential extra dollars available, just waiting for someone to save them. They just may not realize it. So act now, before falling revenue and physician bonuses result in staff layoffs or desperate marketing measures.
1. Call a staff meeting to discuss the “little stuff” – this is all those things that tend to slip through the cracks when bank accounts are flush. For example, make sure someone is assigned to, and accountable for, reviewing your clearinghouses “front-end edit report.” This report flags easy fixes (such as a transposed social security number) that can be made immediately so claims can go out on the day charges are posted. That will help cash flow. Be certain you’ve got referral authorizations for HMO consultations before you see the patient. You’ll avoid unnecessary write-offs. And ask the surgery coordinator to follow up by phone with the patients who are on the fence about scheduling elective surgery. Your surgery schedule has a better chance of staying full.
2. Make your 2009 mantra, “does our practice really need this (insert item) right now, or do we just want it?” Be thoughtful about everything you purchase. Look at every purchase and action through this lens and defray the cost of new equipment, furniture, or a new facility that can wait for better economic times.
3. Review a monthly “diagnostic dashboard” of critical financial indicators – just as you review a CT scan or fluoroscopy video to make your diagnosis, you’ve got to stay on your toes with the indicators that can help you identify an impending financial crisis. In 2009, it will be important to look at monthly new patient visits and surgeries against the same month last year to track the impact on cash flow – which should be monitored monthly, along with bank account balances. And watch the days in receivable with a keen eye – especially patient balances. An increase in this area should lead to actions such as payment plans and staff phone follow up.
4. Analyze variable expenses – It’s easy to be careless about these – especially when times are good and physicians are busy. But now that every penny counts, price shop your land line, cell phone, and ISP service providers – any chance that bundled services could reduce the monthly bill? Look at physician journal subscriptions – could you get the same information online? Evaluate supply purchases – are you carrying more inventory than you really need? Review (and question) all large checks being written to vendors. Monitor overtime – is it necessary, and is it approved before it’s paid?
5. Train staff to discuss money with patients. Collecting pre-surgical deposits, unmet deductibles, and surgical co-pays takes finesse. And those patient phone calls you’re asking them to make aren’t easy if they aren’t prepared. Most office staff have little or no training in these areas. In 2009, these skills will be critical. A small investment in the one-hour audio CD-ROM Successfully Talking with Patients About Money could yield a tenfold return for the practice. That’s better than Wall Street! Make it required listening for staff.
6. File fast –This year, cash flow could be an issue for insurance companies. Make sure your operational systems are set up to bill office charges daily and surgical charges within 48 hours of the case – or risk not being paid at all for claims that sat for 30 days. In other words, no more tolerating Dr. Late.
7. Make sure your coding is pitch perfect. You can’t afford to leave money on the table – make 2009 the year you learn how to code correctly. Attend a specialty-specific coding workshop this year.
8. Raise your antenna about employee theft. Unprecedented economic realities and financial stresses are being felt by employees as well as patients. Honest staff may be tempted to get themselves out of a personal money hole by “borrowing” from your practice. For example, unnumbered encounter forms open the opportunity for staff to pocket cash co-pays. Other schemes have seen employees using the practice’s credit card machine to process fictitious refunds to their own personal credit card – or depositing insurance company checks into the ATM. Talk to your accountant about conducting monthly financial ‘safety checks’ that include balancing computer system deposit reports to the bank statement, validating that Electronic Funds Transfers are sent to the correct account, and verifying that insurance write-offs are appropriate.
3 Quick Ways to Reduce Your Electric Bill
Turn It Off! Your mother was right: turning off the lights saves money – so turn them and all office equipment off every night and weekend. If you can't turn off all computers, at least turn off all monitors and printers. This simple step could save you thousands in 2009.
Install Motion Detectors in frequently unoccupied exam rooms and restrooms. The handy little devices cost as little as $32. (Elights.com)
Switch All Light Bulbs to Compact Fluorescents – which use about 75% less energy than incandescent bulbs. (Source: EnergyStar.gov.). Not a fan of the spiral shape? GE just announced a new product line of CF bulbs that look like incandescent bulbs. Available at Target and Ace Hardware in January.
Cheryl Toth is a consultant with KarenZupko & Associates, Inc., a Chicago-based practice management consulting and training firm. She specializes in business management, technology optimization, and marketing for surgeons.