Diving into the Data
For purposes of establishing a template, data has been compiled for five Coronis clients, comparing calendar years 2023 and 2024. As is always the case, each practice has a variety of factors that determine its total revenue. Location and scope of the practice can be significant factors. As indicated in the chart below, two of the practices saw a small increase in annual collections from 2023 to 2024; two saw flat collections; and one experienced a significant drop. Overall, the average change was positive, at a 1.45 increase. While every practice hopes to see an increase in collections, this is obviously not the case, which is why this is an obvious starting point for a review. While every provider likes to see an annual increase in practice collections, this may not be the best way to assess the financial viability of the practice.
Many practices prefer to track collections based on the yield per unit billed. The chart below is calculated based on a simplified basis: DOE collections per year divided by the number of total billed units. The average for this sample of practices migrated from $39.65 to $40.20.
Challenges to Profitability
Profitability is the difference between revenue and expenses. The largest expense is provider compensation. Because of this, staffing is the most significant indicator of expense. Because of the national anesthesia manpower shortage, the past two years have been challenging from a staffing perspective.
There was a time when staffing was quite consistent and predictable. Once a provider has found a good practice, he or she would stay with the practice till retirement. This is no longer the norm. There is more movement from practice to practice than ever before. There are many reasons for this, but the reality is that recruitment and retention have become major practice management issues. Maintaining competitive compensation packages is a never-ending challenge and is often a significant factor in hospital contract negotiations and the determination of appropriate stipend terms.
Today’s practices are always struggling to meet the staffing requirements of the facilities they serve, which can be challenging when the facilities add lines of business that are not profitable. This is especially critical when the practice expands to new venues. It is especially important to track the profitability of each new service line or facility.
With regard to staffing, it is useful to monitor comings and goings. As the tables below indicate, some providers are always in transition, which is inevitable; but, as the tables below indicate, the impact of attrition is not material. What is most significant is the impact of new providers, which tends to peak in the third quarter since new graduates finish in July.
It can be useful to track provider productivity. As a practice adds anesthetizing locations and providers, the average number of billed units per clinical day will inevitably decline. Tracking provider productivity can be a critical aspect of subsidy calculations. Because of its complexity and the analytical options, this will be a subject of a future e-blast.
The good news for most practices is that they are collecting a little more per unit than they did in 2023. The problem is that such increases may be offset by declining productivity. As practices expand by taking on new outpatient venues, it is essential that each new venue contributes to the overall practice profitability.