Every practice will need a plan to ensure its future success. Reopening practices and restarting services won’t be easy. The success of that plan will require shareholders and practice administrators to keep their fingers on the pulse of their practice or risk reopening too quickly or too slowly. Practices have relied on some (or all) of these measures to inform their initial responses to the production decrease caused by the COVID-19 crisis. To effectively reopen, medical and dental practices will need to monitor financial metrics continuously.
Our society has mounted a heroic effort to slow the spread of the novel coronavirus. We have shuttered our businesses and schools while asking our communities to remain at home. While our healthcare community has stepped to the frontlines of treating those who are ill with COVID-19, many medical and dental practices that are not directly involved in managing the disease have seen their practices grind to a halt.
Statistics from state departments and provider associations show that the healthcare sector’s productivity has decreased more than just about any other economic industry. It rivals retail, accommodations, travel, and restaurants. While this seems counterintuitive during a healthcare crisis, the fact remains that the volume of patients seeking non-COVID-19 related care has been affected by the following factors:
Productivity: Your Your practice should monitor its most important measures of productivity weekly and trend that productivity to notice increases or decreases. Productivity is the earliest measure of how fast or slow your practice will be able to reopen. Every specialty has its most important measures, such as office visits, procedures, infusions, imaging, or lab. Whatever they are, you will want to monitor them closely as your practice reopens.
Charges: Weekly charges are an early measure of a practice’s productivity turning into income. It is essential to trend charges to measure growth and spot signs of trouble before they get out of hand. It is interesting to benchmark your charges against similar periods before the COVID-19 crisis, but weekly trending will help your practice reopen appropriately.
Accounts Receivable: Weekly monitoring of AR should reflect your charges and collections. A shrinking AR balance confirms that your practice’s production has slowed, and collections will slow next.
Collections: Weekly collections are delayed by your revenue cycle. However, they account for and are the accurate measure of your practice’s ongoing financial health. Just like charges, your practice should monitor collections weekly with the knowledge that they are 45-60 days behind your production.
Cash: It is crucial during this time to monitor the balances of your practice’s checking account balances frequently. If your balances become low, you may be forced to push off expenses to meet payroll or pay other necessary expenses. It is good to keep close tabs on cash so that your practice can plan to make changes early.
Days Cash on Hand (DCOH): DCOH is a measure of your practice’s cash in relation to its expenses. By monitoring DCOH monthly, you will be able to spot decreases in available cash or increases in expenses.
Credit Line and Credit Card Balances: Credit is a double-edged sword. It can allow you to survive times when cash is low, but your practice must be able to pay it back according to the terms of the credit. Watch these balances closely to ensure they do not get out of control.
Aged AR:Monitor your AR aging every month. Watch carefully to ensure that accounts beyond 60 days do not grow excessively. Look for payors that may be pushing payments out or having trouble paying telehealth claims due to confusing coding rules. Find our Telehealth code lookup tool HERE.
Patient Accounts Receivable: As patients lose jobs due to COVID-19, it may become harder for your practice to collect patient cost-share and other patient payables. Watch patient accounts receivable closely and ensure that all staff working with billing and collections understand and can communicate your practice’s patient assistance policies.
Accounts Payable Balance: Your practice may have agreed with its creditors to push out payments such as rent, IT support, or EMR payments. If this is the case, monitor these balances monthly to ensure you are prepared to repay these balances according to the agreements you have made. Don’t let these balances get out of control as the repayments may hit you as you are adding expenses back.
Every practice and specialty will have variations on these measures, and this is not an exhaustive list. However, these measures will help your practice ensure it reopens and restarts services in an informed and intentional way. Planning now will ensure your practice can make good, data-driven, decisions in the weeks to come.
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* suite of business intelligence reports offer one of the best ways to simplify this process. Once onboarded to our services, practices can easily monitor their production and finances. automatically trends your data, and it updates your data daily to ensure your practice has the latest data at its fingertips. Contact Jessica McBurney at firstname.lastname@example.org.