Strengthening the Financial Core, Part I Karen White CPA KSW Healthcare Consulting Auburn, Alabama May 14, 2015
Fee schedule When was the last time the fees was updated? Method used to set the fees? Do the fees cover your cost? Were local prevailing rates considered? Why are fees so important?
Calculating your costs Based on the RVU method Total encounters Total RVU Total costs
Example CPT code report Medicare RVU http://www.cms.gov/medicare/medicare-fee- for-service-payment/physicianfeesched/pfs- Relative-Value-Files-Items/RVU15A.html Total Costs See example
Cash on Hand Recommended 30-60 days Plus the amount needed to transition to managed care see calculation in the next presentation
Cash Do you have a line of credit? Percentage or $$ left to draw down?
Days in A/P How long does it take to pay your bills? How large is A/P balance Is it growing or shrinking?
A/R Who is reviewing the A/R Is someone working the old balances? How do you know all claims are billed? What reports do you run? How do you know that denials are being worked Are you billing old unpaid claims?
Days in A/R Do you know how many days are in A/R? divide your total A/R by the average daily gross charge. The average daily gross charge is the total gross charges for the past year divided by 365 days.
Calculation Total A/R $1,038,582 Annual total gross charges $10,830,000 Average daily charge $29,671 $1,038,582/$29671 Days in A/R 35.36 days
A/R Reports to Analyze Charges by provider: on average how many $$$ does each provider bill in a given year? Net revenue by provider Claims denials by provider
Provider reports Average coding level by provider How patients are seen each day by each provider? How many hours a day does each provider see patients? Admin time?
The role of the finance committee The role of the finance committee is primarily to provide financial oversight for the organization on behalf of the board of directors. Review the budget Monitor adherence to the budget Review reports and work with staff to understand the implications of each report
Finance committee s role Review policies Present financial report to the BOD with assistance from CFO Recommend the budget is approved by the BOD after review Some times acts as the audit committee
Finance Committee The financial work is done at the committee level and not at the board level. The members of the BOD with financial expertise should be on this committee Review audit proposals and recommend to the full BOD the auditor selection Accept the audit
Financial Ratio s Select the financial ratio s that are important to your organization What causes you the most concern as the CFO Is it cash, is it financial losses, A/R, etc.
Current Ratio Working Capital Charges by provider Ratio s Net revenue by provider Claims denials by provider Ratio of collections to salary dollars by provider Cost and average revenue per encounter, aggregate and by clinic location/department
Other Reports Aged accounts receivable Aged accounts payable Payor mix aggregate and by clinic location/department Appointment experience total volume, missed/canceled and walk-in experience by time of day and day of week
More finance reports Federal drawdown, current month and year to date Percent of revenues from patient services versus grants, budget to actual Charges by provider Ratio of collections to salary dollars by provider Year to day/quarter to date Average daily visits by provider as compared to budget BPHC Performance Indicators/UDS site specific and state and Federal rollup
BOD Dash board Summary of financial operations Days of Cash on Hand trend report Days in Accounts Receivable trend report Year to Date Payor Mix Pie Chart Monthly total medical encounters trend for a rolling 12 month period Monthly total dental encounters trend for a rolling 12 month period
Federal draw downs How much is drawn down each month? Is it 1/12 of the total health center cluster award? Are the total Federal expenses being tracked in the general ledger? Do you provide regular updates to the financial committee?
From the trenches Rapid draw down of federal funds A/R is out of control Bills are not being paid No cash on hand No internal controls or separation of duties
Questions??
Karen White, CPA kwhite4@gmail.com