There is a lot of talk about “the business of O&P” but usually those talks are focused on single issues, like how to read a balance sheet. Little has been done to take a holistic view of the business of O&P the way we take a holistic view of our patients to create a plan of care for the business. We really didn’t even know where to start! To further my patient analogy, you don’t learn how to provide good patient care by learning how to read a goniometer.
So when we talk about the business of O&P, we need to look at the big picture. And the single most important thing you can do is to make sure your revenues meet or exceed your expenses, ideally on a monthly basis.
I want to introduce you to the concept of revenue cycle management (RCM). The question I hear most often when I talk about this is, “If I am going to get paid, why does it matter if I am paid today or in two months? The money is still coming in.”
It’s important to know that RCM is more than just cash flow management; but the time value of money is an important aspect. RCM can be defined as “the process of handling claims, processing payment, and generating revenue in the healthcare industry.” RCM links administrative processes and data with clinical processes and data to understand what is impacting the timeliness and efficacy of care. In addition, it is deeply connected with the process of collecting reimbursement for services provided during that administrative and clinical cycle. RCM starts when a patient first books an appointment and continues until the patient’s account balance is zero.
Today’s healthcare environment is a blend of complex regulations, payment models, reimbursement rates, and collection tactics. Your practice’s survival requires you to get it right. As getting paid appropriately for the work you have done gets more complex, the need to build strong processes around getting paid is more and more critical. Mistakes anywhere along the path, from patient check-in to bill submission, can have a significant negative impact on your company’s financial well-being. It is critically important that you understand each step in the process to maximize the probability of your practice’s success.
Getting the data right the first time is essential for timely claims submission, so make sure you have the processes and tools in place to allow your staff to take corrective action before that critical “send to bill” decision is made.
Many people I know are working harder than they have in years; some are concerned about the volume of work they have to perform. The changes are significant—just think back even ten years and you’ll realize how different your practice is. An RCM strategy can help tame that workload by making your processes more efficient.
If you have adapted without really taking the time to put some strategy behind your changes, you are more than likely doing extra work. There are better ways to do what needs to be done.
Circling back to the question about getting the money today versus next month, it really does matter. There are three key things to keep in mind: We have inflation, which says the buying power of a dollar today is greater than the buying power of a dollar tomorrow; we have interest rates, which means a dollar invested today will start earning money today, so it is worth more to you in a month than it is today; and we have risk premium, which is the concept that the certainty of collecting your money diminishes over time, so you should get it now.
OPIE Software offers opportunities for its users to attend educational events where we work through these business concepts and help you apply them to your practice.