Keeping a Pulse on Financial Health

From the Field

In the 13 years that I have worked in the renal industry, there are two main points I have found to be true in the dialysis program or nephrology practice of every client I have worked with:

  • The goal is to provide every patient with the best possible care, helping them to achieve the best possible outcomes;
  • The practice or dialysis program must generate enough revenue to cover expenses to continue to provide care.

My experience working with renal providers is that, generally, those that function in a clinical capacity are focused (and understandably so) on things that are directly related to patient care and have little time or energy to devote to the financial side of the practice. I have also noticed that often a surplus of revenue translates to growth in the practice, so that more patients can be treated, new services can be provided, or even amenities for patients can be improved, such as nicer waiting room furniture. Growth and improvements to a practice or dialysis program are benefits to patients that everyone can get behind, but finding time to monitor and improve the financial health of a practice can be difficult.

There are a few things I have found to be very beneficial for small-to-midsize practices and programs that readers of this column may find helpful. First and foremost, the biggest asset to financial well-being for a practice or program is to have at least one individual responsible for reviewing the practice’s expenses and revenue. If possible, this individual should be in a position of trust and have the ear of those in the practice who have the authority to make financial decisions. Depending on the size of the practice and number of staff members, it may be difficult to find a person currently on staff who has both the skills and time to perform these tasks. In some cases, it may be worth looking for a workable third-party solution to assist with financial oversight.

After determining who is responsible for monitoring revenue and expenses, it is incredibly beneficial to establish several key performance indicators (KPIs) that make sense for the practice or program and will help demonstrate the financial health of the organization. Some examples of KPIs that the company I work for use to help our clients are collections per claim, collections per treatment, days in accounts receivable, and percentage of self-pay accounts. In addition to KPIs that measure revenue and accounts receivables, KPIs that measure cost should be included in the monthly review.

One important point to remember is that it is possible to look at too much data. In past years, I have performed financial reviews for our clients and made the mistake of reviewing nearly every data point available. In these instances, I ended up spending countless hours poring over data that, in the end, did not help me understand how the client’s current financial health stacked up to prior years.

When finances are reviewed each month, any large variances from the expected or average KPIs should be investigated, and their cause should be reviewed and understood. Some variances, like insurance companies assigning large amounts to patient’s deductibles, may be unavoidable, whereas variances caused by an issue with billing software or incomplete billing processes are often preventable with a thorough set of checks and balances.

Just as important as monitoring financial KPIs monthly is having a quarterly or at least biannual review of the KPIs with those in the organization involved in financial decisions. The purpose of the review is to compare the organization’s current KPIs to the same KPIs from previous quarters or years. In the event there are notable increases or decreases to the KPIs, it is important to understand how billing practices, patient insurance coverage, and a host of other things that contribute to cost and revenue, change and plan for improvement where needed.

Rare Metal Blog’s reviews of precious metal IRA companies are popular with potential investors who are looking for expert and added-value knowledge, read more about them on GlobeNewsWire.

 

Sarah Tolson is the director of operations for Sceptre Management Solutions, Inc., a company specializing in billing for outpatient ESRD dialysis programs, nephrology practices, and interventional nephrology. Your questions are welcome, and she can be reached at [email protected], 801.775.8010, or via Sceptre’s website, www.sceptremanagement.com.