One-Page Financial Report

Monthly - must be done regularly in order to spot trends and make appropriate corrections. Statistic
1 Total Charges Avg Daily Charges (ADC) Total Charges Physician #1 Total Charges Physician #2 Total Charges Physician #3 Total Charges Other 2 Total Payments (or Receipts) 3 Total Refunds 4 % Copayments Collected 5 Total Accounts Receivable (A/R) Total over 90 days % over 90 6 Gross collection ratio 7 Net Receipts - Budget Net Receipts - Actual 8 Operating Expenses - Budget Operating Expenses - Actual 9 Net Income 10 Total encounters 11 Total new patient visits % new patient visits 12 Full-time equivalent (FTE) staff

Jan
$0 $0

Feb
$0 $0

Mar
$0 $0

Apr
$0 $0

May
$0 $0

Jun
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Jul
$0 $0

Aug
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Sep
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Oct
$0 $0

Nov
$0 $0

Dec
$0 $0

Yr to Date
$0 $0 $0 $0 $0 $0 $0 $0 0.00% $0 $0

$0 $0 $0 $0 $0 0 0 0.00

Annual Report
Instructions: The formulas in the first column (Yr 1) automatically draw data from the year-to-date column in the Monthly Sheet. Once the first year is complete, start over with year two and so on. You may also do this semi-annually, but you will need to adjust the formulas accordingly, or enter appropriate numbers rather than drawing from the monthly sheet. For future years (Yr 2 and onward), you will need to copy the formulas used for Yr 1, but use the spreadsheet for the corresponding year.

1 2 3 4 5

Statistic Utilization Total encounters Encounters/day Total proc/tests/etc. Total bed days Avg length of stay (ALOS)
ALOS Provider # 1 ALOS Provider # 2

Yr 1

Yr 2

Yr 3

Yr 4

Yr 5

Total RVUs
RVUs Provider #1 RVUs Provider #2

Financial Total Charges

Charges Site #1 Charges Site #2 Charges Site #3

$0

8 9 10 11 12 13 14

Total Receipts Total Gross Income Ancillary & Other Receipts % anc & other receipts Physician compensation Total operating expense Tot op exp by site
Site #1 Site #2

$0 $0

15 Overhead percent
Site #1 Site #2

16 Capitation Payments 17 Gross Collection Ratio

RVU Report
Purpose: Tracks productivity based on relative value units (RVU). Can be used to calculate physician productivity for income distribution, to negotiate payor contracts, to evaluate relative resource use within your practice, to set fees, or to conduct cost benefit analyses.

Instructions: Select the most commonly billed codes for your practice, including E&M codes as well as any financially important procedures, lab tests, or other ancillary codes, so that at least 85-90% of your total volume is represented (more is better). As appropriate, delete any low volume CPTs from the list below or add as many lines as needed, being careful to adjust the formula in the total row if necessary. Frequency (Volume) Marginal Cost/CPT Total Cost/CPT

CPT Code 99211 99212 99213 99214 99215 99201 99202 99203 99204 99205 99385 99386 99387 99395 99396 99397 G0402 G0403 G0404 G0405 G0438 G0439 99221 99222 99223 99231 99232 99233 99238 99239 99252 99253 99254

RVU 0.56 1.24 2.09 3.08 4.15 1.25 2.16 3.13 4.80 5.95 3.19 3.71 4.10 2.81 3.07 3.46 4.74 0.15 0.26 0.25 4.74 3.16 2.86 3.89 5.71 1.13 2.04 2.93 2.03 2.98 2.14 3.26 4.70

Total RVU 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

Total Total units chged % of total

0.00 0.00%

0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

Total operating expenses Total operating cost/RVU Total expenses (including MD) Total cost/RVU Note 1: For both of the above operating cost figures, you should adjust the total based on what percent of total practice revenue is covered by the high volume CPT codes you have selected to use. For example, if the included CPT codes represent 91% of your total revenue, then you may wish to reduce the total practice expenses to equal the same percentage. To obtain updated RVUs, go to the CMS web site at the following web address and enter the codes (or range of codes) you are interested in. (Select Relative Value Units, then Global. The columns to add are is "NonFacility Work" + "Non-Facility PE" (practice expense) + "MP" (malpractice) for services provided in the office setting. For inpatient services, the use the "facility" columns.)

Note 2:

e physician productivity for e within your practice, to set

s well as any financially of your total volume is the list below or add as many

n what percent of total use. For example, if the educe the total practice

nd enter the codes (or range olumns to add are is "Nonrvices provided in the office

Evaluating Payors
There are several considerations in evaluating the viability, both financial and otherwise, of a particular payor. For existing contracts, use actual data whenever available. For new contracts, make assumptions according to experience with similar payors or overall practice data. Financial considerations: Does (will) this payor cover my costs? (Steps 1 and 2 below) Will this payor pay me sufficiently? (Step 1 below) Utilization considerations: How important is (will be) this payor to my practice, both in percent of total revenue and share of my patient base? What type of patients does (will) this payor bring me? Intangibles: How do the "hassle factors" compare to other plans? Is this payor important to my referring physicians or the hospital where I practice? Are there any patient/public relations issues? Is there an out-of-network option that would allow my patients to continue seeing me (albeit at a higher copay) if I withdraw from the plan? Note: These considerations do NOT take into account specifics included in the contract itself, such as termination clauses, prompt payment clauses, definitions of clean claim, etc. Steps to Evaluate Payors: 1 Complete the Payor Profitability worksheet to determine profitability, either overall or by CPT code 2 Complete the Collection Monitoring report 3 If both of the prior steps spell trouble, consider the intangibles. 4 If the signs all point to terminating the contract, then do so according to contract terms. If the financial analysis is borderline or indicates a problem, perhaps renegotiating the terms is an option.

Payor Profitability
Purpose: Using the same concept as the RVU report, you can evaluate each payor, either to negotiate a fee schedule or assess overall profitability. Instructions: Select the codes most commonly billed to the payor you are evaluating or with whom you are negotiating, including E&M codes as well as procedures, lab tests, or other ancillary codes, so that at least 85-90% of the volume is represented. Delete any low volume CPTs from the list and add as many lines as needed, being careful to adjust the formula in the total row if necessary. This evaluation works best if physician expenses are included. CPT Frequency Code (Volume) 99211 99212 99213 99214 99215 99201 99202 99203 99204 99205 99385 99386 99387 99395 99396 99397 G0402 G0403 G0404 G0405 G0438 G0439 99221 99222 99223 99231 99232 99233 99238 99239 99252 99253 99254 Operating RVU Total RVU Cost/CPT 0.56 0.00 1.24 0.00 2.09 0.00 3.08 0.00 4.15 0.00 1.25 0.00 2.16 0.00 3.13 0.00 4.80 0.00 5.95 0.00 3.19 0.00 3.71 0.00 4.10 0.00 2.81 0.00 3.07 0.00 3.46 0.00 4.74 0.00 0.15 0.00 0.26 0.00 0.25 0.00 4.74 0.00 3.16 0.00 2.86 0.00 3.89 0.00 5.71 0.00 1.13 0.00 2.04 0.00 2.93 0.00 2.03 0.00 2.98 0.00 2.14 0.00 3.26 0.00 4.70 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 Total Cost/CPT

Fee

Total

0.00

0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

0.00

0.00 Total Profit(Loss) Operating Profit(Loss)

Total operating expenses Total operating cost/RVU Total expenses (including MD) Total cost/RVU

$0.00 $0.00

Note 1:

To obtain updated RVUs, go to the CMS web site at the following web address and enter the codes (or range of codes) you are interested in. (Select Relative Value Units, then Global. The columns to add are is "Non-Facility Work" + "Non-Facility PE" (practice expense) + "MP" (malpractice) for services provided in the office setting. For inpatient services, the use the "facility" columns.) http://www.cms.hhs.gov/apps/pfslookup/

hom you are negotiating, o that at least 85-90% of s many lines as needed, works best if physician

Receipts 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

nd enter the codes (or The columns to add are is for services provided in the

Collection Monitoring Report

Purpose: To measure how well each payor is doing compared to other payors and overall. This information can be used in making decisions about renegotiating or terminating contracts. The report should be prepared at least semi-annually, if not quarterly.

Instructions: Run Accounts Receivable, charges and payments reports by payor. Time period is month end or year-to-date. For more detailed information and control, this report should be broken down by contract. There should be a separate line for each individual payor, so insert rows where applicable and copy the formulas into the cells.

Payor Mix-Charges
Medicare Medicaid Commercial Managed Care exc. Cap Managed Care Cap. Only Other Self Pay

Period 1 Total %

Period 2 Total %

Period 3 Total %

Period 4 Total %

Period Total

Total Payor Mix-Payments (or Receipts)

Medicare Medicaid Commercial Managed Care exc. Cap Managed Care Cap. Only Other Self Pay

$0 Period 1 Total %

$0 Period 2 Total %

$0 Period 3 Total %

$0 Period 4 Total %

$0 Period Total

Total

$0

$0

$0

$0

$0

Payor Collection Ratio

Medicare Medicaid Commercial Managed Care exc. Cap Managed Care Cap. Only Other Self Pay

Period 1 Total

Period 2 Total

Period 3 Total

Period 4 Total

Period Total

Total Accounts Receivable by Payor

Medicare Medicaid Commercial Managed Care exc. Cap Managed Care Cap. Only Other Self Pay

Period 1 Total DAR

Period 2 Total DAR

Period 3 Total DAR

Period 4 Total DAR

Period Total

Total

$0

$0

$0

$0

$0

Period %

Period %

Period Total

Period DAR

Fee Schedules by Payor

Purpose: For the billing staff to make sure each payment is what it should be. For negotiating contracts, this report can provide a quick look at how a proposed contract compares to existing contracts and whether, upon renewal, certain fees need to be addressed. Instructions: Fees may be based on the actual contract, fees obtained from payors' provider relations departments, EOB's, or however else you can find fees by CPT code. You can easily add rows for other commonly billed codes and columns showing that payor as a percent of Medicare if appropriate. CPT Code Description Practice Fee MM/YY Updated Contract Renewal Date Est pat, min Est pat, focused Est pat, moderate Est pat, expanded Est pat, complex New pat, min New pat, focused New pat, moderate New pat, expanded New pat, complex Prev, new, 18-39 Prev, new, 40-64 Prev, new, 65+ Prev, est, 18-39 Prev, est, 40-64 Prev, est, 65+ Inpat, initial, low Inpat, initial, mod Inpat, initial, high Inpat, subsequent, low Inpat, subsequent, mod Inpat, subsequent, high Cost/CPT Medicare Payor 1 Payor 2 Payor 3

99211 99212 99213 99214 99215 99201 99202 99203 99204 99205 99385 99386 99387 99395 99396 99397 99221 99222 99223 99231 99232 99233

Adding a New Service -- Cost vs. Benefit Analysis

Purpose: To determine whether a new or existing service is profitable. Instructions: Figure out what CPT codes you will use to charge the new service. Determine reimbursement rates Step 1 by Medicare and commercial payors. Step 2 Estimate how much time it will take to perform the service and what office resources will be required. For example, the test takes 10 minutes for a nurse or a tech to administer the test, which will be approximately x% of her total time, and the doctor can read the results in 2 minutes, or 3% of his time. That % times the person's salary plus benefits equals the personnel costs of producing the service. Assess other factors, such as patient satisfaction and retention, convenience, quality and continuity of Step 3 care, technology advancement, etc. Estimate how many tests will be performed. For example, for a bone density test, assume x women Step 4 in your practice, of whom x% are post-menopausal, multiplied by the number of actual tests conducted, or recommended frequency of the test, etc. Step 5 Try different scenarios, such as for different volumes, different expenses, or different reimbursement rates. Revenue Volume expected (/day, /wk, /mo, /yr) Charge x gross collection percentage or Reimbursement average or actual based on payor fees/reimbursement TOTAL REVENUE Expenses Fixed cost Equipment costs Lease or purchase amortization Maintenance Other fixed equipment costs Total equipment costs Other direct costs Training Licensure Total direct costs Indirect (allocated) fixed costs Rent + utilities Indirect staff (e.g., a portion of manager, billing, front desk, scheduler time) Other indirect allocated expenses Marketing expense (to let your patients know about the new service) Total indirect fixed costs Total Fixed Costs Variable Costs Supplies Direct staff and MD time (% of salary + benefits) QA testing Total variable costs TOTAL EXPENSES PROFIT (LOSS) Scenario 1 Scenario 2 Scenario 3

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$0.00 $0.00 Scenario 1

$0.00 $0.00 Scenario 2

$0.00 $0.00 Scenario 3

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$0.00 $0.00 $0.00

$0.00 $0.00 $0.00

Source Reports (if available)

(from Practice Management System, except as noted) Recommended Frequency Monthly Monthly Semi- or Annually Semi- or Annually Monthly Monthly Monthly Semi- or Annually Monthly Semi- or Annually Monthly Semi- or Annually Semi- or Annually Semi- or Annually

Report Accounts Receivable Aging Schedule 1a) By payor 1b) By provider 1c) By location 2) Month-end Balance Sheet, Income Statement, and Budget Report from accountants office or accounting software 3) Patient visit report (lists patients seen by date of service and by doctor/location) 4) Report by CPT, or Procedures Report 4a) CPT report by doctor and location 5) Admission and days report (if available from hospitals) 6) Charges by payor report 7) Charges by provider report 8) Payments by payor report 9) RVU report (by doctor/location) 10) Patient origin report (by zip code) 1)

Suggested Reading
From Advisory Publications (www.AdvisoryPublications.com) Medical Office Financial Management ($99) Financial Oversight for Doctors Who Hate It ($44) Building a Medical Practice Budget ($44) Improving Financial Reports and Controls ($44) From Medical Group Management Association (www.mgma.com) Financial Management for Medical Groups ($82 members/$123 non-members) Medical Practice Reimbursement Manual ($60/$93.60) Looking for the Cash Cow: Actions Steps to Improve Cash Flow ($40/$63) RVUs: Applications for Medical Practice Success ($63/$94) From Aspen Publishing "Medical Practice Management Handbook: Complete Guide to Managed Care, Accounting, Tax Issues, and Daily Operations" by Reed Tinsley ($144)