I got the idea for this post from an article titled “18 Financial Terms Every Leader Should Know,” by Dan McCarthy at Great Leadership.I thought it was a great post and created one of my own, borrowing a few good ones from Dan and adding examples for typical scenarios in healthcare. Oh, and I decided on 17.
1. Cash Basis Accounting.This was a question on a management test I took a long time ago! In this method when you pay a bill it is accounted for and when you receive payment, it is accounted for. Your receivables are recorded when you make deposits and your payables are recorded when you generate your payments online or by checks. Most physician-owned practices use the cash method of accounting, give the doctors a draw against their earnings, then distribute any additional earnings on a quarterly basis. To smooth out expenses, any bills that are quarterly (malpractice sometimes is) or annual (profit-sharing usually is), are accounted for to make sure money is not distributed prematurely.
2. AccrualAccounting. In the accrual method, when you receive a bill, it is accounted for, and when you bill someone, it is accounted for at that time instead of when you are paid. Your receivables are recorded when you charge the patient and your payables are recorded when you receive a bill. (I’ve never worked in a practice that used this method of accounting.)
3. Allocation. The process of deciding how each expense should be attributed, whether to the practice at large or to an individual physician. For example, individual physicians may be allocated expenses for specific staff, or allocated overhead for resources that only they use.
4. Amortized expenses. The costs for assets such as medical equipment and computers, which are depreciated (expensed) over time to reflect their usable life.
5. Cost/benefit analysis. A form of analysis that evaluates whether, over a given time frame, the benefits of the new investment, or the new business opportunity, outweigh the associated costs. This could be an analysis for a new lab machine, or a new satellite office.
6. Gross Collection Ratio. The total collections divided by the total charges gives a gross collection ratio, but this number usually is not meaningful as most practices make significant adjustments for contractual rates with payers.
7. Net Collections Ratio. The total collections divided by the charges less contractual write-offs gives a net collection ratio. The number should be meaningful, and ideally is not decreasing in this high-deductible, medical bankruptcy, high-unemployment economy. Collections ratios are the least useful when used for a monthly analysis, and most useful when used to evaluate charges and collections over a year or more.
8. Revenue Cycle. The process of collecting insurance and billing information from the patient, collecting any monies due at the time of service, documenting the medical service provided, translating the service into ICD9 and CPT codes, filing the claim and collecting the contracted amount from the payer.
9. Equipment lease. A contract to purchase or rent equipment and/or purchase service over a period of time. The monthly cost includes the purchase price and interest and although the cost over the life of the lease is significantly more, it allows the practice to avoid a significant cash investment all at one time.
10. Capital expenses. The purchase of a piece of equipment, furniture or sometimes software (usually $500 or more) that will be expensed through depreciation. A capital budget is one that includes all large expenditures the practice anticipates making during the year.
11. Operating expenses. Expenses that occur in operating a business, for example employee salaries, benefits, rents, utilities and marketing costs. An operating budget is one that includes all expenses incurred in the daily running of the business.
12. Revenue Budget. A budget that estimates the revenue the practice expects to collect based on physician and ancillary productivity and applying the previous year’s average collection percentage to the anticipated charges.
13. Benchmarks or Key Indicators. Indicators such as cost per RVU (relative value unit), cost per case in surgery, or days in A/R (accounts receivable) allow practices to compare their performance to the performance of successful practices.
14. Return on investment (ROI). A financial ratio measuring the cash return from an investment relative to its cost. You may calculate the ROI on an automated appointment reminder system and calculate the cost of the system versus the reduction in no-show appointments over several years.
15. Time value of money. The principle that a dollar received today is worth more than a dollar received at a given point in the future. Even without the effects of inflation, the dollar received today would be worth more because it could be invested immediately, thereby earning additional revenue. This is important in collections, as getting a partial payment from a patient today may have more value than getting a full payment from a patient in 2 years.
16. Variable Costs. Costs/expenses that are incurred in relation to providing services to patients. Examples include the cost of medical consumables, patient education materials and merchant services fees for taking credit cards. As the volume of patients increases, the expenses increase.
17. Fixed Costs. Costs/expenses that are incurred regularly regardless of patient volumes. Examples include rent, utilities, and liability insurance.
Note: Here is an updated (October 2010) list where you can find NPIs.
UPDATE on July 4, 2009: I’ve been having problems with the links in this article and I’ve found that the HITTG website has vanished! I’ve not been able to find out where it went. If anyone has any information, please let me know.
Until recently you could download one directory during every update cycle completely free of charge.
I wish we could keep doing that, but here’s what happened:
- Literally hundreds of downloads were being taken “against the rules,” that is, people were creating multiple accounts and downloading multiple states every month. That cost us serious bandwidth problems, and slowed down our site for everyone. Eventually, it crashed our site, broke some stuff, and threw us offline for quite awhile.
- We put about 45 hours of work each month into processing the data, turning it into software, and uploading it so you can access it. Unfortunately, so few people were buying our non-free products that we were frankly losing money.
Those two things, taken together, meant that if we were going to keep doing NPIdentify Desktop — the best NPI directory on the planet — we would have to start charging a little bit for it, both to prevent the download avalanche, and to hopefully at least break even.
We’re truly sorry! But the good news is that we’ve reduced the price, so for those of you that have been paying for multiple states, now you’ll be paying far less! For those who were, well, shall we say “fibbing,” you’ll be paying a little bit more. It’s still the best NPI directory out there, and it’s still the least expensive, with all of the others running at least $39 per state!
Here’s my original article:
I had the pleasure of interviewing Marti Jensen of HITTG Consulting recently. Marti was kind enough to answer lots of questions about himself, the company, and their new product NPIdentify.
The Health Insurance Portability and Accountability Act (HIPAA) of 1996 requires the adoption of a standard uniqueidentier for health care providers. The NPI Final Rule issued January 23, 2004 adopted the NPI as this standard.
The NPI is a 10-digit, intelligence free numeric identier (10 digit number). Intelligence free means that thenumbers do not carry information about health care providers, such as the state in which they practice or their provider type or specialization. The provider’s NPI will not change and will remain with the provider regardless of job or location changes.
- Provider name, including AKA
- Type of provider (organization, male, female)
- Practice location address
- Mailing address
- Zip code, 3, 5 or 9 digits
- State License Code and licensing state
- Taxonomy Code(the 9-digit numbers assigned under the HIPAA provisions to health care providers, to digitally encode their specialty in order to facilitate electronic billing) and specialty/subspecialty description
- Other Identifiers, including:
- Medicare NSC (National Supplier Clearinghouse for DME)
- Medicare PIN
- Other Medicare IDs
- Medicaid Number
- Date provider updated the information
HITTG was originally formed in 1993 as Computer Quality Associates, Inc., and, from its first day, worked almost exclusively in healthcare information technology. Ten years later, its HIPAA Transition Weblog became a respected independent voice amidst the difficulties of implementing the HIPAA standards. HITTG now publishes theHIT Transition WeblogandHITSync eMagazine, devotes substantial resources to healthcare IT standards development on the national level, andserves clientsin varied capacities within healthcare IT.
I do not, however, care for their acronym. I just can’t remember it! I’m sure they’d rather we all just remember NPIdentify and find them from there, but I’d rather they do something interesting by calling themselves something like Shaboom!, HealthLookup or NeedGovNum.
- All practice management and billing software should integrate HITTG products as standard issue.
- One of the most hit and miss mailing lists ever are those for doctors – how about a “Where are they now?” ability to get a fast mailing list customizable by specialty, location, etc. I don’t know of a list that keeps up with docs moving locations and practices. (I do believe Marti told me they could produce mailing lists for specific needs for a reasonable price, but you’ll have to speak with him about that.)
- How about a list from the insurance department by state of all plans operating in a state and any other gritty information we could could get about them?
Browsing the Web (as I usually do most Sunday nights deciding what to write about for my Monday Special) I tripped over the site “Slacker Manager” and immediately liked it! The post from Slacker Manager Phil Gerbyshak that caught my eye was one on writing effective emails. Here is an exerpt:
1) Use the subject line in your e-mail for initial clarity and add as much information as you can without making it too long.
Example: Subject: Need your answer by Tuesday March 1st at 3 PM
2) Consistently use the To line for all those who you require a response from, and put those who need the information but dont need to respond, in the CC line.
Example: If you want a response from John, Jane and Sam, but you want to make sure Sally and Tom know the information, you put John, Jane and Sam in the To line, and Sally and Tom on the CC line. Simple, huh?
3) State the main point in the first sentence of the e-mail so folks dont have to guess what youre trying to say.
Example: We have 2 options for a meeting date: Friday March 5th at 3:00 PM or Monday March 7th at 10 AM. Please respond with your preference by Tuesday March 1st at 3 PM.”
These are the bare bones, so visit his site for the rest of the article and many more great topics.
I would add these ideas to his list:
Use the high importance flag sparingly.
Do not use the bcc. I think it’s sneaky and rarely warranted. If you want to share something with someone, add them to the cc.
Don’t ever say anything in an email that would embarrass you if your Mom read it, or could get you fired if your Boss read it. Remember, email is forever.
NOTE: Slacker Manager does not seem to be publishing as of November 2009, but the linke to b5media above is still active.
The older I get, the more I dislike going to the dentist. I don’t know if it has to do with the increasing number of root canals and crowns I’ve needed, or if it has to do with becoming more controlling as I age and feeling totally out of control in the dentist’s chair.
Regardless of my feelings about going to the dentist, I had a surprising customer service experience at my new dentist’s office recently. I had been putting off finding a new dentist since we moved to the big city over a year ago. It became urgent to find one when I started having a sensitive tooth that made me shriek (inwardly) every time I drank or ate something cold.
I did my research: asked people, went online to Yelp and tried to discover what I could about the local dentists. I also needed to find a dentist in my insurance network. I found the one that seemed to fit, called, made the appointment, and showed up at the appointed time after receiving a nice email reminder.
The receptionist greeted me, introduced herself and SHOOK MY HAND. I had barely sat down with my clipboard of forms to complete before the clinic door flew open and the dental assistant called me. She introduced herself and SHOOK MY HAND. She said we would deal with the paperwork as time allowed. She talked to me about x-rays, and asked if she could take new films and a dental impression. She asked about my former dentist in another state, and when I couldn’t remember his name, the receptionist returned with a page of names from the Internet and asked me if anything looked familiar.
The dentist came right in after the x-rays, surprisingly did not shake my hand, but proceeded to look in my mouth carefully, gently, and asked lots of questions. Then he discussed a tentative care plan with me, and when we agreed, he turned me back over to the assistant for some remedial gum care training. Magically, I completed my paperwork by the time I was done in the chair.
I stepped to the check-out desk feeling confident that my dental health was in very good hands. Then the receptionist (whom I found out later was the dentist’s wife) had some information for me about what the care plan would cost. She had called my insurance company and found out what my plan would cover and what I would be paying out of pocket. She explained it beautifully and I was so impressed I asked her for some advice about the financial counseling program I am starting in my practice. She had some interesting insights to share.
- Got positive feedback on dentist online.
- Was able to get an appointment within a week.
- Got an email reminder.
- Receptionist and dental assistant shook my hand.
- Dentist was gentle and talked things over with me.
- Receptionist explained my insurance plan clearly and what I would owe, and gave me choices for scheduling services.
- I felt cared for, respected, and that they were happy to have my business.
Note from Mary Pat: Please welcome Linda ClenDening, CMPE guest author for this post on maximizing efficiency using Outlook. Linda is COO at Premier Orthopaedics and Sports Medicine in Nashville, TN and she strives to manage internal processes well by monitoring the two “C’s”: communication and cash flow. As her blog post reveals, she lives by the motto “You can never be too organized.”
Maximizing Your Efficiency Using Outlook
By Linda ClenDening, CMPE
If you’re using Outlook, is it helping you as much as it could? Check this list; one or more items on it could be just the “aha” you’ve been looking for.
Use Color Coding. Color coding can give you information fast you can easily see what category your next to-do falls under. In the example above, green is personal, blue is for staff management, red is for meetings, and yellow is for phone calls. (A new one for 2009 could be purple for exercise.) You can change the names associated with the colors by using the Calendar Coloring option on the Outlook Calendar toolbar.
Assign Task Followup. Make sure you remember who you assigned what task, and when the task is to be complete. Use the task function, or add an appointment/reminder to yourself to follow-up, or write the person an email asking about the status of the task and schedule the email to be delivered on the day you want to follow-up. (Don’t forget that you can always drag an email over to your calendar to make an appointment or drag it to your tasks to make a new task!)
Attach Important Info to the Appointment.Use the blank notes section of an appointment to record any information associated with that meeting or task. Examples are work order #s, directions to the meeting, the dial-in directions for a conference call, agenda items, who is responsible for the food, etc. Also, when a meeting is complete, schedule the follow-up meeting immediately, and carry forward any open agenda items to that next meeting appointment in the notes section.
Use Recurring Meetings: Remind yourself of those important tasks: payroll, taxes, anniversary dates for staff, personal to-dos with family and friends.
Sync It. Sync Outlook to your Blackberry several times a day in order to update the calendar and the contacts list. The directions or contact phone information will come in handy when trying to find a meeting or calling to say you’ll be late.
Automatically Add Holidays to Your Calendar. On theToolsmenu, clickOptions, clickCalendar Options, and then clickAdd Holidays.
Compare Dates. Quickly display several days side by side in Calendar. In the date picker, drag over the dates that you want to view.
What’s your favorite way to save time using Outlook Calendar?