Fine-tuning your practice's finances? Try these tools
By Margo Williams
Do you ever feel like you're drowning in numbers—but still don't have enough useful reports? Do you worry about how your practice is doing financially?
If you're looking for a better way to collect and use information from your accounting software, practice management system or bank, the College's Practice Management Center (PMC) can help.
Computers can gather lots of data, but converting that information into usable, standardized reports requires knowing what you need and how to organize it. A new Web-based "tool kit" from the PMC helps you condense, organize and present critical financial information about your practice.
The tool kit contains eight spreadsheets created in Microsoft Excel that will help you summarize data from your balance sheet, income statement, budget and other commonly used reports. Once you input that information into the spreadsheets, the tool kit will help you track exactly how your practice is performing.
Here is a look at some of the spreadsheets in the Financial Management Tools kit, and how they can help you evaluate your practice's financial performance:
Financial information. The first two spreadsheets in the tool kit will help you generate monthly and annual financial reports. You'll be able to monitor trends in collections, productivity and expenses, areas that often indicate potential problems—or strengths—in a practice. By tracking average measures like percent of co-pays collected, accounts receivable and operating expenses, you'll be able to assess the effectiveness of your practice management team. The spreadsheet also allows you to compare the productivity of individual providers.
By tracking several financial indicators over months or years, you can measure the financial health of your practice and evaluate your financial progress.
RVUs. Another spreadsheet in the tool kit tracks relative value units (RVUs) to help negotiate managed care contracts, revise provider income distribution formulas, set fees, conduct cost accounting or monitor relative resource use within your practice. To make data entry and analysis easier, the tool kit concentrates on only a few RVUs for key CPT codes commonly used by most internal medicine practices.
By examining your costs per CPT code, this spreadsheet can help you analyze whether your payers are profitable and whether you should renegotiate a contract—or drop it altogether. The spreadsheet can also help you determine whether a payer's proposed fees are adequate.
Collections. The collections monitoring spreadsheet can be used to keep track of whether payers are paying you promptly. By using the RVU and collections spreadsheets together, you can evaluate a contract's overall viability.
Fees. The fee spreadsheet lets you compare how much different payers are reimbursing you for the same service, as well as your costs per CPT code. Your billing staff can use this information to verify that payments received are correct—and to compare fees a payer is proposing in a new contract.
New services. Many practices are trying to combat stagnant reimbursements and rising expenses by adding new services or equipment to generate new revenues. The big question is whether these services will ultimately generate enough new revenue to cover expenses. (For more information, see "For these internists, in-house ancillary services can boost revenue—and physician morale.")
The tool kit includes a spreadsheet to help you conduct a cost-benefit analysis to evaluate the profitability of existing or new services. This spreadsheet can help you make decisions about whether that new piece of equipment or new service you are considering will be profitable, or whether you should continue referring the service.
The Financial Management Tool is online. At the bottom of the introduction, you'll see a link to the spreadsheets. You'll need Microsoft Excel 2000 or a later version to use them. (Free registration on ACP Online is required.)
Other PMC self-assessment tools are online. The self-assessment tools include the Practice Management Check-Up, which compares your practice to national benchmarks for internal medicine.
Margo Williams is a Practice Management Associate in the College's Washington office.
Internist Archives Quick Links
What will you learn from your Annals Virtual Patient?
Annals Virtual Patients is a unique patient care simulator that mirrors real patient care decisions and consequences. CME Credit and MOC Points are available. Start off with a FREE sample case. Start your journey now.
Products and Resources for Patients
ACP has developed easy- to-use materials designed to help educate your patients on self-management of a wide variety of common health conditions. Order yours today!