When you spend every day caring for your patients’ health, it can feel like a hassle to think about managing your practice’s financial health as well. As cumbersome as it can be, staying on top of your practice finances is the key to many years of continued operation.
Here are the top 5 metrics to base your finances on so you can get organized and start to improve your practice’s financial health.
1. Financial Reports
- Accounts Receivable (A/R) Aging
- Cost Reports by Department, Provider, and Location (if applicable)
- Income Statement and Balance Sheet
- Cash Flow
These financial reports are the most basic metrics that any business needs to remain on top of their finances. Making sure you’re aware of money that is coming in and being spent is the absolute bottom line for tracking financial health.
The easiest way to cut costs is to be aware of what you’re spending, so use these financial reports as a way to evaluate your expenses.
2. Practice Management Reports
- Collections Summary Analysis
- Encounter Forms Reconciliation
- Unbilled Revenue
- Billing Summaries
- Procedures Analysis
- Managed Care Profitability/Capitated Contract Analysis
These reports are a more in-depth breakdown of the information you learned from your baseline financial reports. That way, you can analyze your spending and income in various aspects of your practice.
3. Revenue Cycle Indicators
- Total A/R Per Provider
- Percent of A/R at 90+ Days
- Days in A/R
- Adjusted Fee For Service (FFS) Collection Percentage
Accounts Receivable is where you’ll have a detailed agenda outlining patient charges and whether or not they have been paid. This presents a way for you to determine if you need to contact any patients or insurance companies regarding unpaid balances.
4. Financial Performance
- Total Medical Revenue Per Provider
- Total Operating Cost Per Provider
- Net Revenue Per Provider (Total Revenue Minus Total Operating Cost)
Breaking down your practice’s revenue per provider will highlight how much revenue each of your practitioners are bringing in, as well as the operating costs for each of them. Those metrics allow you to determine your revenue per provider.
You can then take that information and use it to determine whether or not changes need to be made in the way your practice operates, whether that includes staffing or operating costs.
- Operating Cost as a Percentage of Total Revenue
It’s crucial to make sure that you’re seeing enough patients - if it’s costing you more to run your practice than you’re bringing in from revenue, there’s a major problem. This is a perfect opportunity to take a look at your operating costs and see if there is anywhere you can cut back to make more of an impact on your total revenue.
Whether you’re completely clueless when it comes to your practice’s finances or you’re a financial health expert, we hope these 5 metrics can help you develop a baseline for where your accounts should be, and how they can improve from their current state.
For more information on financial management in your practice, read this post on our tips to control operating expenses!