By Rich Santilli
Over the course of nearly twenty years as founder and CFO of a revenue cycle management company with clients in almost 25 states, I have had the opportunity to speak with many other CFOs. Some are extremely smart and savvy business people in full command of their business entity. Others, I would describe as “over their head” trying to put out fires without the knowledge or resources necessary to do so. In truth, first impressions can be deceiving. The major difference between the two types of CFOs is that successful ones realize they need to spend the majority of their time working “on” their Health Center and far less time working “in” it. The struggling CFOs do the exact opposite. So how do the successful CFO’s do it? In a word, DATA.
Let me give an example of a typical conversation with a CFO at a financially struggling health center.
Me: Are you seeing more or fewer patients?
Struggling CFO : “I think we are seeing more patients.”
Me: Are you having problems in your billing department?
Struggling CFO: “No. We have had the same people running it for a long time.”
Me: Have you looked at your top denials?
Struggling CFO: “No.”
Me: Have you seen a decrease in your blended encounter rate or average payment per visit?
Struggling CFO: “What is that?”
Me: Have your days in accounts receivable increased?
Struggling CFO: “Yes. It goes up every month.”
Me: Do you know why?
Struggling CFO: “Not exactly. I know we have some credentialing issues
and the billing department blames it on the front desk or provider coding
issues, so I assume it’s due to that.”
Me: Has your payer mix changed?
Struggling CFO: “I don’t think so.”
At this point, to me it is clear this lost soul has no idea what is going on in the billing department and is just assuming (hoping) the billing manager is truly competent.
And now, the successful CFO conversation:
Me: Are you seeing more or fewer patients?
Successful CFO: “I can see the last three months on a weekly basis
at each location, we are seeing an increase of about 12%”
Me: Are you having any issues with your billing department?
Successful CFO: “No. I spend a few minutes each day looking at billing KPI
that tell me they are doing a solid job.”
Me: What Key Performance Indicators (KPI) are you evaluating?
Successful CFO: “Revenue received month to date, collection rate, and
provider productivity are things I like to review daily. On a monthly
basis, I will also review our blended encounter rate, days in accounts
receivable, top 5 denial reasons, and any changes in payer mix.”
After hearing this, it is clear this CFO is on their game and knows the KPI necessary to determine how well their center is performing.
Gathering and understanding information on the billing, coding, and reimbursement process may seem daunting, but it doesn’t have to be. Data are accessible via your billing system, EOBs/RAs (Explanation of Benefits/Remittance Advices), and reports from clearinghouse vendors are chock full of useful info. Admittedly, these are disparate sources of data and unless you have a company or software product that rolls them up into a meaningful dashboard, some time is necessary to crate MS Excel sheets and charts/graphs to tell the tale.
Regardless, once the problem areas are identified, your time and energy become much more focused and results are more rapidly achieved. Slow or lagging revenue can be caused by many factors; e.g., decreased patient visits, providers not credentialed, poor performance of your billing team, elevated claim denials, increase in self-pay patients, increase in Medicaid volume (lower payment per service), etc. Regularly analyzing optimal data allows you to quickly identify a potential problem and get it resolved before it broadly impacts your overall payments. Being proactive rather than reactive is always preferred. Being armed with this information not only makes focusing in on and fixing the problem much easier, but it also makes preparing for your board or leadership meeting much easier. Having definitive reasons for any problems alleviates concern about future fiscal health.
To elevate performance, arm yourself with “actionable” data. Data which allows you to have access to fix issues vs. guessing about financial performance. You know where the problems are and can focus on mitigation vs. searching for understanding. You will be one of the successful CFOs that spends a few minutes each day monitoring results and the rest of your day on other potential opportunities. Time is spent working “on” the business rather than “in” it. All you need is the data.