5 Ways to Drive More Revenue for Your Medical Practice
- David
- Jan 7, 2023
- 5 min read
I've spoken to a bunch of practices over the years who are struggling to grow. They've hit a plateau and revenue has stagnated or flatlined. Often times, its because you're capped out...the physicians are seeing as many patients as they want to see and are happy where they are.
However, more and more, we're seeing practices with aggressive growth plans looking to expand with hungry eyes. Maybe they are gunning to be acquired by a private equity firm or just looking to build a strong organization.
Regardless of your plan, if you are focused on growth, there are really 5 tried and true ways to drive more revenue for your medical practice.
1. See More Patients
Duh. If you want to get more revenue, see more patients. Sounds simple enough. However, in order to drive more patients you have to first ask if your providers are underutilized or overutilized.
Can Dr. Fishbein see more than 10 patients a day? Are there a lot of day-of cancellations that are leading to idle time? Do you have more patient demand than you can handle?
Once you identify the core issues, you can decide on a go forward plan of action. Some successful ways of seeing more patients include"
Spend more marketing dollars to draw more patients inside the practice
Get the providers to see more patients per day
Get the providers to work more hours / days
Hire more staff to handle the demand in patient volume
Use technology to create waitlists and fill cancellation spots efficiently / Improve schedule management
Increase the number of ancillary services provided to patients
Conduct patient outreach and follow-up by using appointment recalls to bring patients in for annual / quarterly check-ups
At the end of the day, supply has to intersect with demand. As a practice administrator, you have to either drive more demand from patients, or increase supply of providers to accommodate the patients.
2. Perform Higher Value Services
This one is trickier. You don't want to start upcoding your level 3 consults to level 4 consults because you'll get a fraud charge thrown at you (rightfully so).
You can still improve your service complexity or total RVU's per visit by going a bit broader or expanding your service offerings. Can you expand into a new specialty? Add on DME services, maybe?
In business (Software as a Service businesses especially), there is a useful concept called ARPU or Average Revenue Per User. Driving more ARPU is the main reason you see all these EMR companies offering their own billing services, adding new product lines, or selling higher tiered offerings. They want to sell more product to the same set of customers.
It's similar for a medical practice. What types of services lead to higher billing? Don't just upcode fraudulently, but instead reposition your business to cater to the higher cost procedures. It's why you see LASIK centers out there exclusively focused on LASIK and not bothering to deal with the low cost ophthalmology procedures that won't drive profit. It's why dermatologists are focused on Mohs. It's why orthopedic docs specialize in hips and knees.
You should study your top procedure codes and the total RVUs associated with those codes. Can you focus your efforts on those codes. Increase your marketing to attract patients who are searching for specific procedures? It's a worthwhile exercise regardless of the outcome.
3. Improve Payer Contracts
I used to hate negotiating with payers on an annual basis. I never felt like I won. It always felt like they had all the cards and I was just playing blindly.
The first thing to do when it comes to payer contracts is to analyze your payer mix in detail. Is 60% of your revenue coming from BCBS and Aetna, or are you primarily focused on patients with CMS (Medicare and Medicaid)? This will help determine the leverage you have with any particular payer.
Some people may disagree, but you should be shrewd about what payers are giving you low reimbursements. Every year, it's worth determining if you want to cut out your low reimbursement payers. Obviously, if you're struggling for patients and have a lot of idle time, this is not a good strategy. But, if you have more patient demand than you can service, its worth focusing your efforts on the high reimbursement rate payers.
In my experience, it's perfectly reasonable to get a 5% increase in payer reimbursements every couple years or so so make sure you actually negotiate higher contracted rates. It's tough, but worth the effort.
4. Increase Collections Yield
The absolute killer for a medical practice. Looking at this number is the single biggest indicator for if your practice is well run or not. The concept is simple, are you doing a good job collecting what you billed. If your operations are good, you are coding properly, submitting clean claims in a timely manner, and billing appropriately, you should be in good shape.
It's always a good idea to break this out between insurance collections and patient collections. With patient pay on the rise because of the rise of high deductible health plans, we are seeing a much higher percentage of total practice revenue come directly from patients.
The problem is that most practice administrators look at the total yield. This clouds the impact of patient yield (for those math nerds like me...a much lower n, so they impact on the denominator is not very large).
There are a ton of strategies to employ to increase collections yield, but having a strong revenue cycle management (RCM) leader will take you to the promised land. Make sure they are tracking the following metrics:
Total collections yield (Broken out by Payer vs Patient)
Bad debt
AR in the 90-120 aging bucket
AR in the 120+ day aging bucket
Monthly dollars sent to collections
Outstanding AR
We'll have a lot more detail on this subject in future posts but reducing denials, increasing time of service collections and adopting technologies like electronic billing are some of the ways to improve collections yield.
5. Get Paid Faster
The notorious DSO (Days Sale Outstanding) or Days in A/R. So many providers and practice leaders don't recognize how important it is to get paid in a TIMELY manner. Instead they just focus on getting paid. However, there is a big difference in getting a bill paid in 15 days verses 100 days. CASH FLOW.
The concept of working capital is foreign to many physician leaders, but a good practice administrator will always keep this number front and center. As a an example:
Practice A and B each have $100,000 of collections. Practice A collects the money in 30 days and Practice B collects the money in 90 days. Which practice has more revenue for the year?
A common answer I hear is that they both have the same revenue. It doesn't matter how fast Practice A collected the revenue. However, that is incorrect because you have to account for the frequency of collections. If both practices bill the same amount month after month, then Practice A will have 2 more months of cash flow by the end of the year (90 days - 30 days = 2 months). In this case, Practice A would have $200,000 more in revenue than Practice B for a given year.
There are many strategies to get paid faster including electronic billing, entering charges in a timely manner, capturing charges for all services rendered, and just managing your AR effectively.
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