Building Real-Time Analytics for Practice Improvement

Transcription

1 Benchmarking and Data Analytics: From Data to Dollars MGMA 2017 ANNUAL CONFERENCE OCT. 811 ANAHEIM, CA Building RealTime Analytics for Practice Improvement Mandi Clossey, CPA Principal, Somerset CPAs and Advisors Indianapolis, Ind. Mandi Clossey does not have any financial conflicts to report at this time. 1

2 Learning Objectives Evaluate how to quantify a gap between your practice and best practices Identify key core practice, revenue cycle, and ancillary service metrics to drive performance Implement a dashboard to report key financial, operational and provider productivity benchmarks Data You don t know what you don t know. Without data, you re just another person with an opinion. You can t manage what you don t measure W. Edward Deming In God we trust, all others must bring data 2

3 Data My personal favorite when dealing with an angry physician where data refuted a position the physician was taking on a matter. Don t let data get in the way of how I want to feel. Introduction Even in the most advanced practices, it is very unlikely that any financial reports, dashboards or other financial analysis are identical. Practices build on the history of what they have published and have likely added to and taken away over time. We will cover this from an educational perspective and not from the perspective that your data must look like what is presented. 3

4 Introduction Data should be compared to benchmarks where applicable Benchmarks starting point for additional analysis, not the end point or the conclusion Research is required before conclusions or recommendations can be made Benchmarking is to help with your aim! Intentional focus on comparison of your practice to benchmarks could result in economic benefits. Do not fear comparisons, embrace as opportunities. Introduction Many practices participate in many data sets, the problem is many practices fail to research and institute an action plan based on the data If an action plan is determined, practices fail at defining who is accountable for the action plan and what the timeline for completion will be 4

5 Key Financials & Data Analytic Tools Balance Sheet and Income Statements Physician/Provider Productivity Operating & Capital Budgets Financial Pro forma Dashboard Benchmarking Financial Reporting Financial Reporting For Your Physicians: Monthly Quarterly Annual Considerations Financial Reporting For Your Practice Management Team: Daily Weekly Monthly Quarterly Annual Considerations 5

6 Statement of Income Current Month Year to Date Current Month Compared to Same Month Prior Year Year to Date Compared to Same Period Prior Year Current Month Compared to Budget Year to Date Compared to Budget Statement of Income Income Statement January 1, 2017 December 31, 2017 Professional Ancillary Service Ancillary Service Ancillary Service Ancillary Service Practice MRI Audio/Allergy PT/OT Pharmacy Research Total REVENUE Patient revenue Patient refunds Bad debt recovery Hospital ER/call coverage payments Bundled payments Other Income: Independent medical examinations Rental income Consulting income Other Other nonpatient income Total Patient Related Revenue Other Revenue Interest income Gain/(loss) on sale of assets Total Other Income Total Revenue 6

7 Statement of Income Income Statement January 1, 2017 December 31, 2017 Professional Ancillary Service Ancillary Service Ancillary Service Ancillary Service Practice MRI Audio/Allergy PT/OT Pharmacy Research Total EXPENSES Staff Expenses Salaries & wages revenue generating staff Salaries & wages clinical staff Salaries & wages patient care support staff Salaries & wages admin/other support staff Salaries & wages xray technicians Salaries & wages PT/OT Salaries & wages other medical technical Contract labor/personnel (non W2) transcription Contract labor/personnel (non W2) nursing Contract labor/personnel (non W2) radiology Contract labor/personnel (non W2) front office Contract labor/personnel (non W2) temp services Contract labor/personnel (non W2) other Staff employment taxes Staff benefit expenses health related Staff retirement plan contributions Transcription services Other staff benefits Total direct staff expenses Statement of Income Income Statement January 1, 2017 December 31, 2017 Professional Ancillary Service Ancillary Service Ancillary Service Ancillary Service Practice MRI Audio/Allergy PT/OT Pharmacy Research Total EXPENSES Technology Expense Salaries & wages Staff employment taxes Staff benefit expenses health related Staff retirement plan contributions Other staff benefits Software expense Hardware expense Computer repairs & maintenance EMR expense Practice Management Software expense PACS expense IT consulting Online research Internet usage Depreciation expense computers Computer equipment expense Telephone Technology expense other Total technology expense 7

8 Statement of Income Income Statement January 1, 2017 December 31, 2017 Professional Ancillary Service Ancillary Service Ancillary Service Ancillary Service Practice MRI Audio/Allergy PT/OT Pharmacy Research Total EXPENSES Marketing Expenses Salaries & wages Staff employment taxes Staff benefit expenses health related Staff retirement plan contributions Other staff benefits Gift expenses Advertising Sponsorships Promotional items Marketing Marketing expense other Total marketing expense Office Expenses Outside services Stationery and forms Office supplies Courier/delivery/postage/shipping Furniture & equipment expense Bank service fees Retirement plan management fees Retirement plan administration fees General insurance Professional fees accounting Professional fees legal Professional fees consulting Outside billing expense Outside collection expense Depreciation expense Personal property tax Office expense other Total office expense Statement of Income Income Statement January 1, 2017 December 31, 2017 Professional Ancillary Service Ancillary Service Ancillary Service Ancillary Service Practice MRI Audio/Allergy PT/OT Pharmacy Research Total EXPENSES Medical Expense Drugs Medical supplies XRay supplies (supplies, film etc) Depreciation expense medical equipment Depreciation expense surgical instruments Medical expense other Total medical expense Facility Expenses Rent facilities Facility taxes Utilities Water Custodial expenses Equipment rental Repairs Maintenance snow, lawn, general Service contract Depreciation expense buildings Depreciation expense building improvements Depreciation expense leasehold improvements Facility expense other Total Facility Expenses Other Expenses Interest expense Charitable contributions Corporate income tax State & Federal Other expenses Total Other Expenses Total Oper. Expense before Physician Exp. 8

9 Statement of Income Income Statement January 1, 2017 December 31, 2017 EXPENSES Professional Ancillary Service Ancillary Service Ancillary Service Ancillary Service Practice MRI Audio/Allergy PT/OT Pharmacy Research Total Physician Compensation & Bonuses Physician Direct Expenses Physician employment taxes Physician benefit expenses health related Physician retirement plan contributions Other physician benefits Physician direct expense other Total Physician Expenses Net Income Statement of Income December 31, 2017 and 2016 REVENUE Month To Date Year To Date Patient Revenue 12/31/2017 % of Rev 12/31/2016 % of Rev Change 12/31/2017 % of Rev 12/31/2016 % of Rev Change Surgical fees 377, % 362, % 15,505 4,533, % 4,347, % 186,057 Office visits 114, % 116, % (2,330) 1,370, % 1,398, % (27,964) Ancillary services 104, % 106, % (2,132) 1,253, % 1,279, % (25,589) Patient refunds (16,146) 2.70% (20,558) 3.5% 4,412 (193,756) 2.7% (246,697) 3.5% 52,941 Total Patient Related Revenue 580, % 564, % 15,454 6,963, % 6,778, % 185,445 Other revenue 16, % 20, % (4,499) 197, % 251, % (53,992) Gain/(loss) on sale of assets 2, % 2, % (685) 27, % 35, % (8,225) Total Other Income 18, % 23, % (5,185) 225, % 287, % (62,217) Total Revenue 599, % 588, % 10,269 7,188, % 7,065, % 123,228 9

10 Statement of Income EXPENSES Month To Date Year To Date Staff Expenses 12/31/2017 % of Rev 12/31/2016 % of Rev Change 12/31/2017 % of Rev 12/31/2016 % of Rev Change PAs and NP Wages 11, % 11, % , % 137, % 2,869 Ancillary Services Wages 33, % 32, % , % 390, % 8,151 Administrative Wages 19, % 19, % , % 234, % 4,891 Clinical Wages 28, % 28, % , % 339, % 7,076 B/O Insurance Wages 19, % 18, % , % 225, % 4,707 Managerial Employee Wages 11, % 11, % , % 139, % 2,904 Reception/Appointment Employee Wages 23, % 22, % , % 272, % 5,676 All Other Employee Wages 18, % 18, % , % 217, % 4,545 Outsourced Labor % % 16 9, % 9, % 197 Employee Health Insurance 17, % 17, % , % 207, % 4,324 Employee 401(k)/Profit Sharing Plan/Pension 7, % 6, % , % 82, % 1,731 Other Employee Benefits (incl Payroll Taxes) 20, % 20, % , % 245, % 5,118 Total Staff Expenses 212, % 208, % 4,349 2,554, % 2,502, % 52,190 Statement of Income Operating Budgets Review projected for the next 12 months (2017 or 2018 for instance) to prepare expectations for revenue generation, expenses to be incurred and estimated physician compensation Practice as a whole Various departments lab, allergy, MRI, urgent care Each physician/provider 10

11 Operating Budgets Revenue Patient revenue Ancillary department revenue (lab, allergy, MRI, etc.) Operating Expenses Staff expenses Facility expenses Medical supplies and drug expenses Office expenses Other expenses Ancillary department expenses (lab, allergy, MRI, etc.) Physician compensation and direct expenses Operating Budgets Could be produced using a very granular approach: Revenue Use each physicians projected total RVUs or work RVUs Factor in expected reimbursement and collection rate for each payer based upon each physician s payer mix This would also incorporate status of each physician: ramping up, slowing down, retiring, new hires, etc. Ancillary revenue based on new patient visit or new and established patient visit conversion ratio to an ancillary patient visit; incorporate any new volume to be expected 11

12 Operating Budgets Operating Expenses Staff wages (hourly/salary) and benefits by employee by department Rent expense for each facility by square footage, using rate times escalator, plus CAM (Common Area Maintenance) charge estimate Ancillary expenses based on anticipated new patient growth Other expenses by the same detailed approach Special one time or new items also accounted for and usually highlighted in operating budget presentation Operating Budgets Detailed Approach More intense and time consuming but likely more accurate Function of whether seeking accuracy or estimate High Level Approach Base operating budget on prior year financial results Less time consuming but less detailed 12

13 Capital Budgets Annual estimate of large expenditures to be made for assets or long term beneficial items. Capital budgets would include: Practice management system or EHR Medical equipment purchases Build out, tenant improvements on new space Furniture and fixtures to upfit a new location Debt needed to acquire capital budget items Terms of debt, years, interest rate and whether personal guarantees are required Annual depreciation budget expensing capital items over 5, 7, or 15 years Hopefully depreciation and interest expense match up with principle payments on debt Proforma A projection (statement of income) of the financial results of a new service or new office location Prepared to evaluate the feasibility of adding a new service (Lab, Pharmacy, MRI, Urgent Care, ASC, building to be purchased) or new location May incorporate a balance sheet and statement of cash flows May be a 12 month, 24 month or even 60 month/5 year projection of the results 13

14 Benchmarks and Dashboards Sources of KPIs/Benchmarks MGMA Trellis/InfoDive HFMA AMGA Internal (historical results) Benchmarks and Dashboards Sources of Dashboards and Data Tools Dashboard MD CrossCurrent Trellis/InfoDive Arrowlytics Each practices home grown dashboards 14

15 Benchmarks and Dashboards Organization of Data Physician Productivity Revenue Cycle Operating Expenses Ancillary Services Physician Compensation Other Practice Management Data Benchmarks and Dashboards Once you understand and begin pulling data, the next step is to begin thinking in terms of short summarized sheets of results (i.e. dashboards). Data from benchmarks and dashboards are not necessarily answers but may lead to questions and additional research needed to obtain an answer. 15

16 Benchmarks and Dashboards There's an old saying, "you can't manage what you don't measure." If you cannot measure your progress, you have no way to know if you are moving toward your intended outcome. Dashboards are an effective tool to measure your progress on reaching your goals. High Level Dashboard Data Current Month Year to Date Actual Prior Year Variance Actual Prior Year Variance Revenue $ 1,500,792 $ 1,495,647 $ 5,145 $ 18,384,702 $ 17,723,417 $ 661,285 Operating Expenses 785, ,923 22,243 9,421,992 9,002, ,501 Net Income before Physician Comp $ 715,626 $ 732,724 $ (17,098) $ 8,962,710 $ 8,720,926 $ 241,784 Revenue per MD $ 166,755 $ 166,183 $ 572 $ 2,042,745 $ 1,969,269 $ 73,476 Operating Expenses per MD 87,241 84,769 2,471 1,046,888 1,000,277 46,611 Net Income before Physician Comp per MD $ 79,514 $ 81,414 $ (1,900) $ 995,857 $ 968,992 $ 26,865 Operating Expenses as % of Revenue 52.32% 51.01% 1.31% 51.25% 50.79% 0.45% 16

17 Key Core Practice Productivity Metrics/KPI s New Patient Visits Established Patient Visits Surgeries and Procedures Relative Value Unites (RVUs) Work Relative Value Units (wrvus) Call Days and Days Worked Gross Charges Net Charges Collections Report all data elements for the Practice in Total and by Provider Report both Current Year and Prior Year for comparative purposes Production Metrics This can all also be done for each physician/provider. The ability to do this will be a function of internal resources and your technology/data management skills and whether the practice wants to invest the time in the physician/provider level data Some of the dashboard tools will do this automatically and refresh nightly 17

18 Patient Visits New Patient Visits For Practice in total By Location By Physician All compared to same month prior year & year to date Established Patient Visits For Practice in total By Location By Physician All compared to same month prior year & year to date wrvus and Total RVUs wrvus For Practice in total By Physician By Payer By Physician by Payer Per Full time equivalent (FTE) physician All compared to same month prior year & year to date Total RVUs For Practice in total By Physician By Payer By Physician by Payer Per Full time equivalent (FTE) physician All compared to same month prior year & year to date 18

19 Gross Charges/ Net Charges/Collections Gross Charges/Net Charges/Collections For Practice in total By Physician By Payer By Physician by Payer Per Full time equivalent (FTE) physician All compared to same month prior year & year to date Production Practice Level Current Month Year to Date Actual Prior Year Variance Actual Prior Year Variance Gross Charges $ 7,154,304 $ 6,924,792 $ 229,512 $ 44,714,400 $ 40,510,033 $ 4,204,367 Contractual Adjustments (4,077,953) (3,867,496) (210,457) (24,467,718) (22,431,477) (2,036,241) Net Charges $ 3,076,351 $ 3,057,296 $ 19,055 $ 20,246,682 $ 18,078,556 $ 2,168,126 Gross Charges per MD $ 794,923 $ 769,421 $ 25,501 $ 4,968,267 $ 4,501,115 $ 467,152 Contractual Adjustments per MD (453,106) (429,722) (23,384) (2,718,635) (2,492,386) (226,249) Net Charges per MD $ 341,817 $ 339,700 $ 2,117 $ 2,249,631 $ 2,008,728 $ 240,903 19

20 Production Practice Level Current Month Year to Date Actual Prior Year Variance Actual Prior Year Variance Office Visits 9,200 8, ,500 51,919 5,581 New Patients 2,500 2, ,625 13,894 1,731 Surgical Cases 3,506 3, ,913 19,305 2,608 wrvus 23,750 22,625 1, , ,225 11,275 Office Visits per MD 1, ,389 5, New Patients per MD ,736 1, Surgical Cases per MD ,435 2, wrvus per MD 2,639 2, ,833 14,581 1,253 Production Physician Level Current Month Year to Date Actual Prior Year Variance Actual Prior Year Variance Office Visits per MD MD #1 MD #2 MD #3 MD #4 MD #5 New Patients per MD MD #1 MD #2 MD #3 MD #4 MD #5 Surgical Cases per MD MD #1 MD #2 MD #3 MD #4 MD #5 wrvus per MD MD #1 MD #2 MD #3 MD #4 MD #5 20

21 Revenue Cycle Performance Contractual Adjustments Gross Collection % Net Collection % Number of Days Charges Outstanding in A/R Number of Months Charges Outstanding in A/R Aged Receivables Net Revenue Collected per New Patient Visit Net Revenue Collected per New & Established Patient Visit Net Revenue Collected per RVU and wrvu Revenue Cycle Performance Current Month Actual Prior Year Variance Year to Date Actual Prior Year Variance Days in A/R (1.66) (0.95) Net Collection Rate 93.16% 94.98% 1.82% 92.23% 92.13% 0.10% Gross Collection Rate 40.06% 41.78% 1.72% 39.66% 40.53% 0.87% Days in A/R Net Collection Rate % 98.30% % 92.13% 92.23% Gross Collection Rate 41.72% 41.87% 45.11% 40.53% 39.66% 21

22 Payer Mix Analysis Gross charges, contractual adjustments, net charges, and net collections should be tracked from year to year and compared year to year for each payer Medicare Blue Medicaid Self Pay HMO Private Pay PPO Workers Compensation Benefit of Analysis Payer Mix Analysis Points out changes where your patients are coming from Points out changes in payment mechanism (fee for service, PPO contracts, HMO contracts, etc.) Points out potential risk having too much business concentrated in one payer or group of payers risk assessment 22

23 Referring Physician Analysis Marketing tool to identify referring physicians to be thanked Identify shifts in referral patterns due to quality of care issues or contractual relationships Identify trends from year to year to locate lost business By Gross Charges By Procedures By Net Charges For Practice in Total By Collections By Physician Practice Overhead Practice Overhead Performance Data 23

24 Practice Overhead Practice Overhead Staff Expenses % of Revenue % of Operating Expenses per FTE Physician FTE Core Practice per FTE Physician FTE NPs/PAs per FTE Physician FTE Ancillary Personnel per FTE Physician FTE Employees per FTE Physician Practice Overhead Practice Overhead Facility Expenses % of Revenue % of Operating Expenses per FTE Physician 24

25 Practice Overhead Practice Overhead Medical Expenses % of Revenue % of Operating Expenses per FTE Physician Practice Overhead Practice Overhead Marketing Expenses % of Revenue % of Operating Expenses per FTE Physician 25

26 Practice Overhead Practice Overhead Technology Expenses % of Revenue % of Operating Expenses per FTE Physician Practice Overhead Practice Overhead Total Operating Expenses: % of Revenue Per FTE Physician Per wrvu or Total RVU 26

27 Key Overhead Metrics Overhead Metrics Total Overhead Expenses 13,528,692 13,983,750 16,398,540 18,882,344 19,629,150 Dollar Change 455,058 2,414,790 2,483, ,806 Percent Change 3.36% 17.27% 15.15% 3.96% Satff Expenses 7,727,256 8,110,926 9,015,192 10,317,359 10,384,700 Dollar Change 383, ,266 1,302,167 67,341 Percent Change 4.97% 11.15% 14.44% 0.65% Facility Expenses 2,040,228 2,647,926 2,990,682 3,443,146 3,678,800 Dollar Change 607, , , ,654 Percent Change 29.79% 12.94% 15.13% 6.84% Medical Expenses 1,297,512 1,264,230 1,492,416 2,245,271 2,900,375 Dollar Change (33,282) 228, , ,105 Percent Change 2.57% 18.05% 50.45% 29.18% Marketing Expenses 309, , , , ,625 Dollar Change 9,216 (2,898) 157,957 (5,818) Percent Change 2.98% 0.91% 50.07% 1.23% Technology Expenses 724, ,762 1,113,012 1,073, ,425 Dollar Change (19,170) 407,250 (39,778) (87,809) Percent Change 2.64% 57.70% 3.57% 8.18% Key Overhead Metrics Overhead Metrics Percent of Revenue Staff Expenses 33.59% 34.24% 33.82% 27.87% 27.68% Facility Expenses 8.87% 11.18% 11.22% 9.30% 9.80% Medical Expenses 5.64% 5.34% 5.60% 6.07% 7.73% Marketing Expenses 1.34% 1.34% 1.18% 1.28% 1.25% Technology Expenses 3.15% 2.98% 4.18% 2.90% 2.63% Total Expenses 52.60% 55.07% 55.99% 47.42% 49.09% Overhead Metrics Percent of Operating Expenses Staff Expenses 57.12% 58.00% 54.98% 54.64% 52.90% Facility Expenses 15.08% 18.94% 18.24% 18.23% 18.74% Medical Expenses 9.59% 9.04% 9.10% 11.89% 14.78% Marketing Expenses 2.29% 2.28% 1.92% 2.51% 2.38% Technology Expenses 5.36% 5.05% 6.79% 5.68% 5.02% Total Expenses 89.43% 93.30% 91.03% 92.96% 93.82% 27

28 Key Overhead Metrics Staffing per FTE Physician Core Practice FTEs Ancillary Personel FTEs PA/NP FTEs Total FTEs Ancillary Services Ancillary Services Performance Data 28

29 Ancillary Services Ancillary Performance Data: CT Imaging Revenue per Scan Scans per Hour Scans per Machine Scans per New Patient visits Scans per Established Patient Visit Ancillary Services CT Current Month Year to Date Actual Prior Year Variance Actual Prior Year Variance Ancillary Services: CT Revenue $ 220,702 $ 245,125 $ (24,423) $ 1,379,388 $ 1,532,031 $ (152,643) Operating Expenses 116, ,315 9, , ,887 58,687 Net Income $ 104,606 $ 138,810 $ (34,204) $ 682,813 $ 894,144 $ (211,331) Net Income per MD $ 11,623 $ 15,423 $ (3,800) $ 75,868 $ 99,349 $ (23,481) # of Scans (14) 3,958 4,042 (84) Revenue per Scan $ 335 $ 364 $ (29) $ 349 $ 379 $ (30) CT Scans per hour (0.02) 29

30 Ancillary Services CT Ancillary Services: CT Actual Current Month Prior Year Variance Actual Year to Date Prior Year Variance Scans per Physician MD # 1 MD # 2 MD # 3 MD # 4 MD # 5 Ancillary Services: CT Actual Current Month Prior Year Variance Actual Year to Date Prior Year Variance Scans per New Patient Visits MD # 1 MD # 2 MD # 3 MD # 4 MD # 5 Ancillary Services: CT Actual Current Month Prior Year Variance Actual Year to Date Prior Year Variance Scans per Total Patient Visits MD # 1 MD # 2 MD # 3 MD # 4 MD # 5 The Future of Data The future of where we are headed The need for live, real time data Fancier dashboards But more expensive 30

31 Benchmarks and Dashboards 2016 Benchmarks My Practice Variance Revenue My Practice Percentile Average 25th 50th 75th 2014 to to 2016 per FTE Physician 1,560,825 50% 1,692,177 1,473,748 1,631,597 1,934,986 $ (46,031) $ (161,384) $ $ $ $ $ $ (85,405) per Provider 732,160 $ 50% 794,194 $ 679,132 $ 769,711 $ 871,097 $ 2,002 $ $ (62) per wrvu 86 $ Below 25% 118 $ 100 $ 116 $ 133 $ 35 $ $ 75 per New Patient Visit 1,237 $ Below 25% 1,821 $ 1,475 $ 1,802 $ 2,140 $ (291) $ $ (92) per New and Established Patient Visit 364 $ Below 50% 401 $ 321 $ 391 $ 459 $ 42 $ 2016 Benchmarks My Practice Variance A/R Aging My Practice Percentile Average 25th 50th 75th 2014 to to % Above 75% 51% 43% 52% 60% 1% 15% Days Days 13% 25% 15% 12% 15% 17% (5%) (11%) Days 10% Above 75% 8% 7% 7% 9% 2% (2%) Days 5% 50% 6% 4% 5% 6% (0%) (1%) Days 4% Below 50% 8% 3% 5% 11% (1%) 1% Greater than 150 Days 7% Below 25% 17% 9% 14% 21% 4% (2%) Total Aging A/R Balance per FTE Physician 337,333 25% 516, , , ,517 (11,883) 82 $ $ $ $ $ $ $ 2 Avg. Days Charges Outstanding 35 50% Benchmarks Ozark Variance Payer Mix (Collections) Ozark Percentile Average 25th 50th 75th 2014 to to 2016 Commercial % 64% Above 75% 52% 46% 53% 60% (0%) 4% Medicare % 19% 25% 24% 19% 24% 27% 1% (2%) Medicaid % 5% Above 75% 3% 1% 2% 4% 0% (1%) Workers Compensation % 11% Below 75% 11% 7% 10% 13% 1% 1% Self Pay % 2% 50% 5% 1% 2% 8% 0% (0%) Benchmarks and Dashboards 2016 Benchmarks My Practice Variance Overhead Expenses My Practice Percentile Average 25th 50th 75th 2014 to to 2016 as % of Revenue 48% Below 25% 59% 53% 59% 64% (4%) (1%) per FTE Physician 747,340 Below 25% 1,001, , ,947 1,145,314 (94,388) (102,065) $ $ $ $ $ $ $ $ (52,662) per Provider 350,566 $ Below 25% 465,488 $ 404,578 $ 447,730 $ 504,064 $ (32,076) $ $ (32) per wrvu 41 $ Below 25% 70 $ 56 $ 68 $ 78 $ 13 $ 2016 Benchmarks My Practice Variance Staff Expenses My Practice Percentile Average 25th 50th 75th 2014 to to 2016 as % of Total 58% 50% 58% 54% 59% 62% (1%) 3% Operating Expenses as % of Revenue 28% Below 25% 34% 31% 34% 37% (3%) 1% per FTE Physician 432,919 Below 25% 578, , , ,908 (61,432) (29,588) $ $ $ $ $ $ $ $ (16,485) per Provider 203,076 $ Below 25% 267,170 $ 230,569 $ 258,760 $ 293,850 $ (22,095) $ $ (16) per wrvu 24 $ Below 25% 40 $ 31 $ 40 $ 46 $ 6 $ 2016 Benchmarks My Practice Variance Facility Expenses My Practice Percentile Average 25th 50th 75th 2014 to to 2016 as % of Total Operating 8% Below 25% 13% 10% 12% 15% 1% 0% Expenses as % of Revenue 4% Below 25% 7% 6% 7% 9% 0% 0% per FTE Physician 61,196 Below 25% 124,879 97, , ,607 1,410 (5,386) $ $ $ $ $ $ $ $ (2,902) per Provider 28,706 $ Below 25% 58,279 $ 46,793 $ 55,830 $ 67,069 $ 1,549 $ $ (2.34) per wrvu 3 $ Below 25% 9 $ 7 $ 8 $ 10 $ 1.56 $ (662) Square Footage per FTE Physician 3,323 50% 3,266 2,657 3,205 3,846 1,303 Square Footage per Provider 1,559 50% 1,517 1,295 1,480 1, (333) Square Footage per Employee 466 Below 75% (254) Rent per Sq. Foot 8 $ Below 25% 29 $ 23 $ 27 $ 32 $ (2) $ $ 1 31

32 Benchmarks and Dashboards 2016 Benchmarks My Practice Variance Core Practice FTEs My Practice Percentile Average 25th 50th 75th 2014 to to 2016 per FTE Physician 4.9 Below 25% (0.5) per Provider 2.3 Below 25% (0.3) 2016 Benchmarks My Practice Variance Ancillary Services FTEs My Practice Percentile Average 25th 50th 75th 2014 to to 2016 per FTE Physician 3.0 Above 75% (1.5) 2.0 per Provider 1.4 Above 75% (0.7) Benchmarks My Practice Variance NP/PA's FTEs My Practice Percentile Average 25th 50th 75th 2014 to to 2016 per FTE Physician 0.3 Below 25% Benchmarks My Practice Variance Total Employee FTEs My Practice Percentile Average 25th 50th 75th 2014 to to 2016 per FTE Physician 8.3 Below 50% (0.7) 1.6 per Provider % (0.2) 0.7 Benchmarks and Dashboards 2016 Benchmarks My Practice Variance Physician Productivity My Practice Percentile Average 25th 50th 75th 2014 to to 2016 New Patient Visits per FTE Physician 1,141 Above 75% (188) New and Established Patient Visits per FTE Physician 3,913 Below 75% 3,618 2,810 3,620 4,032 (640) 488 Surgical Cases per FTE Physician 509 Above 75% (183) New Patient Visits per Surgical Case 2 Below 75% wrvus per FTE Physician 15,471 Above 75% 11,646 10,153 11,279 13,171 (3,869) 5, Benchmarks My Practice Variance Compensation My Practice Percentile Average 25th 50th 75th 2014 to to 2016 per FTE Physician $ 682,431 Below 75% $ 634,292 $ 545,435 $ 609,281 $ 717,484 $ (142,605) $ (147,215) per wrvu $ 38 25% $ 47 $ 40 $ 46 $ 54 $ (11) $ (19) per New Patient Visit $ % $ 830 $ 598 $ 769 $ 981 $ (214) $ (26) per New and Established Patient Visit $ % $ 187 $ 142 $ 177 $ 221 $ 3 $ (68) 32

33 Benchmarks and Dashboards Office 1 Office 2 Office 3 Office 4 Benchmarks and Dashboards Office 1 Office 2 Office 3 Office 4 33

34 Benchmarks and Dashboards Benchmarks and Dashboards 34

35 Benchmarks and Dashboards Benchmarks and Dashboards 35

36 Benchmarks and Dashboards Benchmarks and Dashboards 36

37 Pulling It All Together With Analysis and Action Monthly/Quarterly/Annual Financial Benchmarking Considerations First step in any analysis of financial performance: Benchmark to determine practice production compared with the industry. Practice production should substantially influence resource requirements (i.e., overhead) for the practice. 37

38 Monthly/Quarterly/Annual Financial Benchmarking Considerations Practice productivity measures should be compared to industry benchmarks to help establish the baseline for where your practice stands relative to the mean, median, 25 th, 75 th or 90 th percentiles. You want to look at multiple measures to verify where the practice stands relative to percentile of production in order to evaluate the rest of the practice performance. Benchmarking Data Staffing per FTE Physician FTE's Core Practice FTE's Ancilalry Personel FTE's PA's/NP's FTE's Total

39 Case Study Overall Data Analysis Revenue per FTE physician 50th percentile Staffing FTEs 50th percentile Staffing expenses per FTE physician 75th percentile Facilities square footage per FTE physician 50th percentile Marketing expenses per FTE physician 75th percentile **Concern that the practice has an overhead problem Case Study Action Item #1 Evaluate practice productivity before jumping to quickly to overhead being the issue: Where are Collections? At the Mean Where is wrvu production? At the Mean Where are New and Established Patient Visits? At the Mean 39

40 Case Study Action Item #2 Practice productivity metrics are at the mean so the practice should move on to the overhead analysis High level calculation shows $3.0M in overhead above the mean Conclusion: Dig deeper into overhead structure to see if savings are available Case Study Action Item #3 Evaluate Staff Expenses: Staffing FTEs 50th percentile Staff expenses per FTE physician 75th percentile Conclusion: Senior staff with little turnover over the years has most staff paid outside market rates for comparable positions Practice needs to decide if inflationary adjustments to be reduced or eliminated or forced turnover is needed 40

41 Case Study Action Item #4 Evaluate Facility Expenses Facilities Square Footage Per FTE Physician 50th Percentile Facilities Common Area Expenses 75th Percentile Conclusion: Very dated facilities with high cost to maintain Determine whether to begin looking for newer more cost effective space (likely higher rental rate per sq. ft.) or on renewal negotiate rental rate reduction due to high operating cost Case Study Action Item #5 Evaluate Marketing Expenses Marketing expenses per FTE physician 75 th Percentile Conclusion: No monitoring over marketing program, expenditures, individual physician activity, etc. Institute 18 month plan to bring marketing into line with benchmarks of 1% of revenue 41

42 Overhead Management Two more thoughts Overhead Culture Overhead Management 42

43 Overhead Management Overhead Management 43

44 Overhead Management An overhead percentage does not tell the entire story! Often times we have to spend $$$ to make $$$ long term. If the common solution for all problems is to cut overhead; the practice may be creating inefficiencies in their processes. Conclusion Overhead Management Are we better off with 50% overhead on $50 million? = $25,000,000 net profit OR Are we better off with 65% overhead on $85 million? = $29,750,000 net profit 44

45 Physical Therapy Case Study Benchmarking/Key Performance Indicator Physical Therapy Case Study My Practice 25th % 50th % Mean 75th % Total Revenue per FTE Physician $ 168,671 $ 121,328 $ 182,058 $ 177,247 $ 242,809 Number of Patients per New Office Visits 16% 16% 23% 25% 34% Number of Patients per New & Return Office Visits 4% 4% 5% 5% 7% PT Visits per PT Patient PT Billable Units per PT Visits PT Visits per PT Therapists 3,373 2,418 2,868 2,898 3,373 FTE Therapist per FTE Physician PT Square Footage per FTE Therapist ,114 Legend Under Performing to benchmarks Major Under Performing to benchmarks Performing to benchmarks Physical Therapy Case Study What Caused Group Concern Leading to Deeper Dive on Information? PT/OT visits per New Office Visits percent Lowest quartile PT/OT visits per New and Return Patient Visits Lowest quartile 45

46 Physical Therapy Case Study Significant patient leakage which means there is substantial opportunity to enhance PT profitability. Leakage confirmed due to relationship of number of physician with large independent PT practice where they believe surgical referrals exceed benefit of keeping PT patients in their PT practice. Physical Therapy Case Study Economic Enhancement By Eliminating PT Leakage 46

47 Physical Therapy Case Study Our Practice PT Revenue per PT Patient $751 PT Operating Expenses per PT Patient $394 Average 50% Percentile 75% Percentile 90% Percentile Number of New Patient Visits Physicians 22,948 Number of New Patient Visits PA's 8,975 Number of New Patient Visits NP's 2,834 Total Number of New Patient Visits All Providers 34,757 34,757 34,757 34,757 34,757 PT Patients per New Office Visits 16% 25% 23% 34% 43% PT Patients 5,613 8,852 8,033 11,675 14,946 Actual Data Orthopaedic Forum Benchmark Data Projected Data Physical Therapy Case Study Our Practice Average 50% Percentile 75% Percentile 90% Percentile Therapist FTEs PT Visits per FTE Therapist 3,373 3,373 3,373 3,373 3,373 PT Visits per PT Patient PT Visits 45,531 71,807 65,164 94, ,233 FTE Therapist Additional Therapist FTEs required

48 Physical Therapy Case Study Our Practice Average 50% Percentile 75% Percentile 90% Percentile PT Revenue per PT Patient $751 $751 $751 $751 $751 PT Total Revenue 4,215,363 6,648,048 6,033,072 8,767,832 11,224,078 PT Operating Expenses per PT Patient $394 $394 $394 $394 $394 PT Operating Expenses 2,211,522 3,487,791 3,165,154 4,599,901 5,888,531 PT Net Income 2,003,841 3,160,257 2,867,919 4,167,931 5,335,547 FTE Physicians PT Net Income per FTE Physician 80, , , , ,422 Projected Additional PT Net Income per FTE Physician 46,257 34,563 86, ,268 Physical Therapy Case Study One data set (PT) with appropriate research, analysis and an action plan led to a $50,000 net income per MD improvement. 48

49 Project Grid PROJECT RESPONSIBLE PARTY DATE DUE DATE RESOURCES COMPLETED NEEDED COMMENTS I. REVENUE CYCLE A. PATIENT VISITS 1. Review procedures for established patient visits. 2. Determine if extenders could be better utilized by seeing established patient visits. B. COLLECTIONS 1. Review procedures for follow ups on patient balances due. Project Grid PROJECT RESPONSIBLE PARTY DATE DUE DATE RESOURCES COMPLETED NEEDED COMMENTS II. OVERHEAD EXPENSES A. STAFFING 1. Review Medical Records FTEs and develop a plan to reduce FTEs in this area. 2. Review Registration FTEs and develop a plan to reduce FTEs in this area with efficiencies gained from Data Warehouse tools. 3. Review Transcription FTEs and develop a plan to reduce FTEs in this area. 4. Review Xray FTEs and develop a plan to reduce FTEs by eliminating techs at facilities on days when no patients are seen. 5. Add a Billing department FTE to assist with revenue cycle issues. B. FACILITY 1. Inquire PT management company as to whether more space is needed if we reduce PT leakage. 2. Review OT space utilization and determine if reduction in OT is needed due to lack of profitability. 49

50 Project Grid PROJECT RESPONSIBLE PARTY DATE DUE DATE RESOURCES COMPLETED NEEDED COMMENTS III. ANCILLARY SERVICES A. PHYSICAL THERAPY 1. Develop proforma to illustrate net income opportunities to be gained if patient leakage is stopped. a. Inquire PT management company as to capacity to see additional patient volume. b. Inquire PT management company as to whether additional therapists are needed to cover additional patient volume. Conclusion Define a set of metrics relevant to your practice that is meaningful to your stakeholders Initial dashboards should be easy to construct The dashboards should help the practice to create action that leads to a goal 50

51 Conclusion To be successful, your practice will need a universally understood set of strategic objectives and priorities It would be helpful to have a culture that supports shared information sharing and decision making Conclusion The board should be willing to adopt new technologies, including the cost of equipment, software, applications and development costs. Most important, dashboards require leadership support to be successful. You will need someone at the top of the organization [administrator/physician champion] that will drive not just go along with the effort. 51

52 Questions? Continuing Education ACMPE credit for medical practice executives. 1 AAPC Core B, CPPM credit 1 ACHE credit for medical practice executives 1 CME AMA PRA Category 1 Credits.. 1 CNE credit for licensed nurses 1 CPE credit for certified public accountants (CPAs) 1.2 CEU credit for generic continuing education 1 Let the speakers know what you thought! Evaluations are available on the MGMA mobile app 52

53 Contact Information Mandi M. Clossey, CPA Principal Health Care Team Somerset CPAs, P.C / River Crossing Pkwy, info@somersetcpas.com Suite 300 somersetcpas.com Indianapolis, IN