Accounts receivable and staff management are often the biggest headaches for optometry practices. Health insurance and managed vision care plans are incredibly effective at attracting new patients to practices.
In exchange for Groupon-style marketing, practices lose control over retail pricing and take on an additional burden of filing claims and tracking reimbursements. For practices that use third-party payers, revenue cycle management (RCM or the process of getting paid) can become a significant challenge.
Nearly every practice leaves something on the table when it comes to receivables. But what happens when the collections process breaks down completely?
Benchmarks Tell Stories
From time to time, we run across practices where every expense category looks high—the cost of goods sold, non-OD staff, occupancy, etc. These aren’t start-ups where high expenses are expected as they grow their patient base. Instead, they are well-established practices with full schedules, yet all their expenses keep rising in unison.
These practices are busy and yes, it costs money to see patients. However, when expenses increase without a matching rise in revenue, it creates an overhead problem. While having more patients is generally a good thing, a practice that isn’t getting paid properly will have serious issues.
What Gets Measured, Gets Managed
Like any process, your RCM has KPIs to help you manage and confirm that all responsible parties are paying you for the care and products you provide to your patients. As a review, here are some key areas to monitor:
- Usual & customary pricing: Be sure they’re at or above the typical reimbursements from any third-party payer.
- Aging reports: If claims aren’t clearing in a timely fashion, either re-submit them or write them off.
- Rejected claims: Periodically (quarterly or semi-annually) review 5–10 rejected claims to ensure that all claims needing corrections are addressed and resubmitted.
- EOBs: Pull some two to four times a year and ensure they’re being coded to the appropriate allowable amounts.
- Remittances: Periodically review bank statements to ensure all reimbursed claims clear your checking account.
Resourcing Matters
Like any function in your practice, RCM needs an appropriate amount of time and attention to ensure cash keeps coming into your practice. Whether you have an internal billing team or outsource your RCM, be sure an answer is in place. If your aging reports are growing, don’t let the outstanding cash keep you from spending the money necessary to catch up and maintain your collections.
Data Illuminates Issues
One benefit of accurately tracking expense ratios across your practice is that it’s easier to catch changes as they occur, good or bad.
Full disclosure: Books & Benchmarks does not handle Accounts Receivable; our job starts once deposits and expenses clear your banking accounts. However, knowing that your expenses are moving in sync with revenues can confirm that collections are coming in consistently. If revenues and expenses diverge sharply, there’s a good chance something has broken in your revenue cycle.
If you don’t have consistently up-to-date financials, whether because you and your team struggle to keep them updated or your outside professional only updates them occasionally, let Books & Benchmarks take over. Our experts provide financial statements that are not only timely and accurate but also help you make sense of your practice.
