Healthcare banker Jeff Holt discusses ways to reduce risk, collections and expenses, while also improving the patient-practice experience
Focusing on improvements to a practice’s revenue cycle management (RCM) is the most effective way to mine operational inefficiencies and perk up the organization’s financial health.
Orlando Medical News spoke with Jeff Holt, vice president and healthcare business banker, of PNC Bank in Orlando, a well-known speaker covering healthcare business matters, about the most pressing RCM issues.
What are some ways that practices may reduce risk?
Because there are many areas of risk in a practice – embezzlement, fraud, taxes, HIPAA, and now FIPA (Florida Information Protection Act of 2014), it’s important to have the right partners in place: a healthcare banker who understands your industry, an industry insurance consultant, practice management consultant(s) and healthcare CPA.
Under practice management, you may need different consultants for HIPAA compliance, health information technology, billing and coding. You’ll want someone who’s aware of recent changes in the law, such as FIPA, which went into effect in July and centers around securing and securely storing patient information.
Besides getting the right partners in place, it’s important to review the revenue cycle periodically to identify those key areas of risks and inefficiencies, and look for resolution, whether through banking or non-banking services. I like to review revenue cycles quarterly, but sometimes it isn’t needed that often. It depends on the complexities of the practice, near future potential industry changes, and/or practice expansion.
After reviewing the revenue cycle with a healthcare banker, it might be prudent to pursue resolution to the risks identified because business practices change, employees change, and additional risks may pop up in areas that were once efficient and have quickly become inefficient.
What are some tips to improve collections?
Improved collections is one of the main areas of revenue cycle management that we focus a lot of attention on in practices, which have many obstacles and hurdles to overcome. For instance, we review how automated the collections process is. Are third-party payors set up through manual checks or electronically? We’ve found that quite a few practices need to convert checks to direct deposit. Practices may not be focusing on that option, yet there are sizeable checks that come in, which could be available sooner than later. Another tactic: reduce the volume of patient paperwork, which will lower inefficiencies and levels of risk.
Other questions we might ask: What is your level of patient invoicing, and status of the accounts receivable aging? Some things we typically find that need help: learning how to implement patient payment programs, collecting payments upfront, using credit card services through PNC or other banks securely and efficiently, and using ACH where patients may be debited electronically.
Other small steps to reduce risk: Store patient payment information securely that other employees cannot gain access to. Store the swipes so that instead of invoicing patients, just automatically debit their credit card information on file. Also, within the practice’s secure patient portal website, patients can electronically receive invoices and easily make payments online. Those are services we’ve done in the past that really seem to help reduce collections, reduce risks, and make the patient-practice experience better overall. Training employees to make sure they understand the processes and communicate them well with patients is a big key to making this step successful.
What are some tools to improve the revenue cycle?
Some tools include automation through the entire process of revenue cycle management, which by definition in the medical industry only revolves around the collection and billing process. At PNC and in healthcare business banking, we know it’s much more that practices need help with. We look at collections, deposits, while also monitoring account activities, review what’s being done with excess funds, expense side adjustments, and future goals of the practice in relation to the revenue cycle. We do a deep dive in all those areas.
Automation seems to be the greatest way to help create efficiencies, whether through automated patient payment programs, direct deposits, and monitoring accounts with online banking, high level concentration management services, electronically making payments and not incurring late fees or other penalties. Practices can better understand how the processes can be improved by letting healthcare business bankers identify the areas of inefficiencies and levels of risk with these in-depth reviews.
How can medical practices streamline and reduce expenses?
Industry benchmarking will show where the practice’s expenses are compared to the industry, last month, the same time last year, and so on. Looking at those items will help make sure expenses are in line, or determine if issues need attention. Look at primary expenses annually, and see which ones should be reviewed, re-bid for best pricing, and check to see if there’s anything the practice could do better. Improve payroll benefits? Reduce interest expense? Refinance for a better rate?
Also concerning expense control, get the right advice regarding making a large purchase. Is it better to pay cash? Lease it? Finance it? Typically, I’ll look at all the options, bring in the healthcare CPA, and ask about tax consequences. I’ll ask how this type of purchase fits with cash flow plans to make sure they’re in the best shape possible when it’s time to pay taxes. Partnering with the right healthcare professionals will help practices make the best choices.