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Need help in understanding our private practice finances

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  • Need help in understanding our private practice finances

    Hello--I joined a private practice group with 5 physicians in a suburban practice. We receive a summary spread sheet showing our number of cases, monies brought, etc. I guess I need to understand basic accounting. For each doc, it shows the number of cases seen for the month, a dollar amount for "services", a dollar amount for "payments" and  a dollar amount for "adjustments". Does anybody have a website explaining these fundamental concepts? I have an idea but I would like a detailed explanation if someone can provide some help. We are also given our "projected totals" for the year.

    Thanks in advance...I'm just starting

  • #2
    Do you have a practice accountant? If so, it may be easier to sit down with them for an hour or so and have them go over everything.

    Comment


    • #3
      Hi and welcome to the forum!

      Do you work closely with a CPA? If not, highly recommended as your primary resource to discuss this information on a regular basis with you. The purpose is not only for education (to understand basic accounting) but also to help you relate to how your (monthly?) summary spreadsheet info impacts you personally. This is critical to help you plan for your income tax liabilities and also benchmark results for the future.

      A blog post on the topic may also be helpful but, I am sorry to say, I do not currently have a link to one. Perhaps someone else will be able to help.
      Our passion is protecting clients and others from predatory and ignorant advisors. Fox & Co CPAs, Fox & Co Wealth Mgmt. 270-247-6087

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      • #4
        I agree - you need to simply ask the practice administrator or accountant. Services could be that which was billed that month based on your master charge list or could be based on negotiated rates. Payments is probably the most straightforward in that it’s probably what you actually received back for the month. The adjustments could be adjustments to account for negotiated rates or adjustments for bad debt or both. Hard to tell from what you describe.

        You should seek to know your A/R and track this aggressively - break it down by payer and also by patient responsibility. This can allow you to find out where to attack for optimizing your billing cycle. Taking the patient’s credit card info on the front end and charging them at the end of the visit will fix your patient A/R real quick.

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        • #5
          Thank you ENT Doc. I don't know what "adjustments" mean. Without disclosing too much, this is an example (hypothetical figures, rounded off for last month):

          June 2019: Number of Cases = 270

          Services = $65,000

          Payments = $35,500

          Adjustments  = $42,500

          i have my figures per month, showing totals and projected totals for the year.

          So, to put it simply, I saw 270 patients in June. I billed $65K and got paid $35K. With the adjustments, we got paid $42.5K. Is that the gist??

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          • #6
            Good for you for taking the interest. Who prepares the worksheet? That person should be able to explain definitively.

            We follow similar numbers. Understand that it is likely that the figures apply to the month in question. But obviously payments and adjustments don’t necessarily correlate with the cases and charges for the same month. Simply payments that came in during the month, and adjustments entered during the month, likely from cases months ago.

            We track each month, running totals, and have prior year figures. Also A/R and cash balance in the practice account.

            We also track RVUs for each doc for the month and YTD, percent collections, average payment per procedure. With comparison figures from prior year.

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            • #7
              Dear Jacoavlu,

              Thanks for your explanation. The worksheet is prepared by our practice administrator and is emailed to all the docs once a month. I am given the year to date figures for the entire practice and figures for every doc (not just mine) . Our monthly and yearly figures are shown for the last 6 years or so for comparison.

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              • #8
                I wouldn’t say you got paid 42.5k - that’s the adjustment.

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                • #9
                  Your 'services' is more typically referred to as 'charges'. It's a blue sky number that you can set at whatever you want.

                  'Adjustments' are what gets knocked off your blue sky charges number by insurance contracts, Medicare, etc.

                  Your 'payments' is what you actually collected.

                  Comment


                  • #10


                    June 2019: Number of Cases = 270 Services = $65,000 Payments = $35,500 Adjustments  = $42,500 i have my figures per month, showing totals and projected totals for the year. So, to put it simply, I saw 270 patients in June. I billed $65K and got paid $35K. With the adjustments, we got paid $42.5K. Is that the gist??

                    The $35.5k and $42.5k don't really relate to the 270 and $65k. Much of the $35k and $42.5k would be from cases (and charges) from prior months. At least that would be my assumption.

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                    • #11
                      What zzz said. Also talk with your cfo or group accountant.

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                      • #12
                        Yes, payments are what you actually received, services are what you charged.   Looking at services charged or rvus is just helpful in comparing you to other group members to see if you are doing more work but just collecting less due to your payer mix.  Also, not sure if you can look at June yet, there can be a several month delay between services charged and payment for some payers, prob more useful to look at 6 month to a year ago to see what was actually collected on your services charged.

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                        • #13
                          Thank you nephron. I looked over my last year's figures. Again, I am being hypothetical here and rounding off:

                           

                          For 2018:

                          Services: $855,000

                          Payments: $355,000

                          Adjustments: $545,500

                          Number of Cases : 2850

                          I realize that the adjustments and payments may have also been carried over from latter months in 2017. But for the sake of discussion and simplicity, if I billed 855K in 2018 and only received 355K, that's pretty low! Correct? is 50-60% payment for services billed the actual average for docs? I hear that a lot...

                          What do the adjustments of 545K really tell me?

                           

                           

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                          • #14
                            They don’t tell you anything unless you understand where the service charges are coming from and how much is from bad debt write offs. If your service charges are based on your practice’s rate but not a more nuanced negotiated rate then you’re going to see a big drop off. But the more important thing to know is, of the allowable charges, how much is still outstanding (understand your A/R). Also, pretend you’re in the last year of your practice and retired. You’d be not working for months but collecting income. It’s just the A/R lag you’re dealing with. The goal should be to shorten that as much as possible.

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                            • #15
                              thats typical.  my group submits bills for $700/month to see dialysis pts, no one pays 700 a month, medicare reimburses 220 per month, the 700 figure was arbitrary and came from my employers head.   I think the idea is just to bill more then everyone is willing to pay so that you get the maximum amount they are willing to pay?   Medical billing is nonsense.

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