Effective business decision-making requires closely monitoring key management metrics to prepare for critical practice challenges, according to Anesthesia Business Consultants' Jody Locke, anesthesia and pain management services vice president.
Mr. Locke said the following principles are crucial to an anesthesia practice's long-term viability:
1. Production data. There are at least three common means of measuring production: gross charges billed, number of cases and unit production. Monitoring specific business lines, however, requires more specificity. For instance, monitoring units per case can be useful in determining if acute pain services are being used for orthopedic cases. Data collected should either confirm production is on track or pinpoint areas of decline or weakness. Practices can anticipate challenges and opportunities by carefully monitoring production and payer trends.
2. Performance metrics. Performance metrics are key to evaluating whether billing staff are effectively resolving accounts receivable. AR management is assessed by four standard industry metrics: days in accounts receivable, percentage of total AR over 120 days, bad debt percentage and net collections percentage. Net collections percentage should measure how much of eligible collections are being collected. Using a combination of metrics is the most effective strategy.
3. Productivity analysis. An anesthesia practice can increase provider compensation by attempting to negotiate better rates with contracted payers; having the billing office aggressively pursue open accounts; finding ways to decrease the number of providers necessary; or improving nurse anesthetist and nurse practitioner utilization.
4. Profitability by business line. Anesthesia practices are becoming more complex, exploring expansion options such as ASCs, specialty surgical hospitals, endoscopy centers, physicians' offices and chronic pain management practices. Each business line's profitability can significantly impact the practice, but practices can avoid losing money with the right financial management tools. Organizations should conduct a careful financial analysis of the coverage requirements and revenue potential when considering new sites.
5. Quality measurement. Nearly all exclusive contracts now include quality metrics, so practices must empirically rationalize their value. As quality measures are continuously changing, practices should adopt a nimble, responsive data management strategy.