Checking the List
It is always good to know that collections have increased, but sometimes this is misleading. Changes in case volume, acuity of care and payer mix can have a delayed impact on collections. The following list of categories should provide an outline for your analysis. Collections totals should be based on date of entry; but make sure that all transaction amounts are accurate based on date of service. It is also quite important that all activity should be divided by the following:
- Surgical cases
- Obstetrical activity
- Non-time-based services (such as invasive monitoring), follow-up visits and other procedural interventions (such as blood patches).
Digging Deeper into the Bag
Groups must consider new venues or lines of business. It is important to understand the impact of venues that are ramping up because it may take a while for collections to reflect actual activity. By the same token, when you discontinue lines of business, there may be a tail to the revenue stream. It is always useful to identify new and expiring lines of business. The key is to understand the additional staffing requirements.
Acuity of care is measured in average units per case. An increase in endoscopy activity will inevitably result in a drop in average units per case, while an increase in vascular or cardiac activity will push the acuity up. Changes in acuity will have an impact on the total units billed. Since anesthesia services are paid by unit, even a small drop in acuity can have a significant impact on total revenue.
Perhaps the most important factor is payer mix. Changes in Medicare and Medicaid percentages can be significant. Shifts in the commercial lines of business in your market also impact revenue based on your contracts. Most practices find it especially useful to track the public payer percentage over time because these units are so significantly discounted. By the same token, self-pay patients may be impactful, although it is important to distinguish patients with no insurance from those that are prepaid for cosmetic cases. Make sure surgical yields are distinguished separately from obstetric units. Many obstetric payments are capped or based on a case rate and are not tied to units. A comparison of 2025 data to 2024 will prove especially useful once your 2025 numbers have been finalized.
Diligent practices review such reports using a SWOT analysis format. What are the practice’s strengths and weaknesses, and what are the opportunities and threats? The objective is to evaluate weaknesses and look for ways to make them strengths. Threats can be challenging and may require creative outside the box thinking.