Am I getting screwed?

[TheHandGuy]

Sorry for the the long intro. I’m trying to figure out if I’m getting screwed at my current practice. I work in a private practice setting, large group mostly hand surgeons scattered across multiple offices. I’m on a 50-50 contract where half of all monthly collections goes to me and the other 50% is retained by the practice and is used to cover any and all expenses (malpractice, rent, salaries for MAs and office staff, health insurance, billing, etc).

We have our own billing department in house, but I personally feel they are incompetent and/or lazy. The reason I say this is I have personally caught several mistakes where things were blatantly billed out incorrectly and when confronted about it I get blank stares. The same has happened to multiple other guys in the group that I have discussed it with. We also get no feedback regarding our billing. Now this is why I question if I’m somehow getting screwed. My monthly revenue is about 100,000 on average. I see about 400-450 patients per month and about 20-25% of them are new patients. I do about 45-50 surgeries per month. Maybe I have an unrealistic expectation, but I feel like these numbers should be bringing in much more. For reference, pretty much all new patients get xrays, about 20-25% of patients get injections, about 20-25% get some type of splint or cast, so it’s not just office visits.

Any feedback is appreciated. Am I crazy? Are these numbers realistic or am I being screwed by a bad billing department?

I did recently request monthtly reports about what surgeries and codes were billed out for the month prior in an effort to track what’s going on.

[Lithium]

If they were taking 50% of my overhead they better be washing my car and dry cleaning my clothes every week. Of course you’re getting screwed.

[CordMcNally]

I will just preface this with I have no inner knowledge of a hand surgery practice...but...50% seems pretty high for overhead. Who is/are the owner/owners?

[youngDoc]

Your billing might be incompetent, but you might be more screwed by the 50% overhead. It depends on how overhead is distributed among everyone else. This fixed percentage rewards lazy people and punishes anyone who works hard if you consider that the majority of overhead is fixed.

[ENT Doc]

I think you’re getting screwed by one fact alone: a fixed overhead allocation of 50%. That’s silly. Your overhead will fluctuate and will never be exactly 50% of your collections. What did they do in peak COVID shut down when volumes were down? Still only collected 50%? That ignores the fact that most practice expenses are fixed and not variable.

The other concerning thing is the blank stares and billing problems you’ve noted.

You are correct to audit them. Who ok’d this 50% allocation?

[EntrepreneurMD]

If they were taking 50% of my overhead they better be washing my car and dry cleaning my clothes every week. Of course you’re getting screwed.

50% of professional collections is not bad, probably around average. There are groups that take more than 50% to cover overhead. MGMA has benchmarks.

OP I would not necessarily take issue with that split percentage, unless others in the group are getting a higher percentage. However, if the billing is incorrect it doesn't matter what the percentage is, it needs to be fixed. Perhaps when you perform a service you can transmit to your billing department details about the service rendered, or if you're savvy enough the actual correct CPT codes. Make sure any biller you work with is also a certified coder; perhaps more coding education is necessary. I assure you your employer wants to accurately bill, not under-code. If something was billed inaccurately, it needs to be rebilled as a corrected claim within the contract time frame. As a practice owner, I see how expensive overhead is and the group needs to cover this of course.

So with professional collections of $100K/month, your income should be around $600K/year at 50%. That's respectable, but I believe orthopedists on average generate more (again this looks like an issue with your billing process and/or payer mix, nothing to do with your volume). Is your practice still growing or are you at capacity? If you're at capacity, perhaps a mid-level for office follow-ups will allow you time to perform more procedures. What is your payer mix? Commercial generally pays best for procedures, then Medicare then Medicaid. Often a provider at capacity can start limiting lower paying insurers for better reimbursement for the same effort - problem is groups often keep individual providers in the dark regarding reimbursements. Do you even know your rates with the different insurance plans? If those contracts weren't negotiated well, the group may be getting reimbursed less than they should.

Working for an employer, you get a lot done for you so you can focus on practicing. The trade-off is you lose some autonomy as you're experiencing here. Work with the group, there is always room to improve processes if there is an issue with billing/coding.

[Lithium]

50% of professional collections is not bad, probably around average. There are groups that take more than 50% to cover overhead.

OP I would not necessarily take issue with that split percentage, unless others in the group are getting a higher percentage. However, if the billing is incorrect it doesn't matter what the percentage is, it needs to be fixed. Perhaps when you perform a service you can transmit to your billing department details about the service rendered, or if you're savvy enough the actual correct CPT codes. Make sure any biller you work with is also a certified coder; perhaps more coding education is necessary. I assure you your employer wants to accurately bill, not under-code. If something was billed inaccurately, it needs to be rebilled as a corrected claim within the contract time frame. As a practice owner, I see how expensive overhead is and the group needs to cover this of course.

So with professional collections of $100K/month, your income should be around $600K/year at 50%. That's respectable, but I believe orthopedists on average generate more (again this looks like an issue with your billing process and/or payer mix, nothing to do with your volume). Is your practice still growing or are you at capacity? If you're at capacity, perhaps a mid-level for office follow-ups will allow you time to perform more procedures. What is your payer mix? Commercial generally pays best for procedures, then Medicare then Medicaid. Often a provider at capacity can start limiting lower paying insurers for better reimbursement for the same effort - problem is groups often keep individual providers in the dark regarding reimbursements. Do you even know your rates with the different insurance plans? If those contracts weren't negotiated well, the group may be getting reimbursed less than they should.

Working for an employer, you get a lot done for you so you can focus on practicing. The trade-off is you lose some autonomy as you're experiencing here. Work with the group, there is always room to improve processes if there is an issue with billing/coding.

My reply was deliberately flippant. If you want to address the crux of the problem, you could reply to ENTDoc or YoungDoc above - specifically, address why it makes sense to charge a continuous split of collections for overhead when most overhead costs are fixed (which punishes productivity).

Also, it’s ironic that you talk about prioritizing reimbursements and contracts in the same sentence you refer to “providers” as performing the services. The whole point of that term is to dehumanize us and devalue us as medical professionals.

[jacoavlu]

Are you solely an employee? Or also an owner?

[White.Beard.Doc]

There are too many unknowns to answer your question with any certainty. I know of a practice in Manhattan where the employee expenses and rent make the overhead very high, and the docs in that practice pay well over 50% of collections for overhead. If all of the docs in your practice are equally productive, then a fixed amount of collections to overhead could make sense. Or perhaps there should be a higher percentage of collections going to overhead for the first x dollars earned per month, and then that percentage should go down with additional dollars brought in, creating a nice productivity incentive? And finally, billing well for medical practices is complex. Some billers do a fantastic job at maximizing revenue, and some are abysmal. High quality billing for the same services could potentially double your income, it is that variable. Expertise in billing does not come easily. It takes attention to detail and excellent follow through. The insurance companies aim to pay you as little as they can, they aim to deny payment as much as you will let them get away with, and if you don't put enough effort into fighting back, you will lose out.

[EastBayHand]

I am a hand surgeon in a small private practice, I look at my numbers monthly, and know exactly how many patients I see each month, surgeries I perform, how much I bill, and how much I collect.

In short, to answer your question, you should likely be collecting more than you are based on your post. If I had the numbers that you stated, I would probably be collecting well over $150,000 a month. That is just a guess, because I’m not nearly as busy as you are. However, there are a lot of missing pieces.

Ideally you should know how much you are billing. That will tell you if the issue is because they are coding and billing poorly, or if the issue is that collections are low for some other reason. That could be a result of the billing department doing a bad job of including necessary documentation or chasing after dollars that get denied. But it could also be a factor of your practice demographic, payer mix, etc. Do you see a lot of Medicaid that pays almost nothing?

Sounds like you probably need to start asking more probing questions and find out what’s happening. If possible, try to audit some of your patients from a few months ago and see how much was paid for routine things like office visits, trigger injections, and carpal tunnel releases.

As for the overhead of 50%, that’s not terrible. Certainly small private practices like my own can keep it between 30 and 35%. But I also know of large practices that have an overhead greater than 80%. That part doesn’t bother me too much if you feel like the practice is run well. Whether or not collections can be improved will depend a lot on the answers to some of the questions I posted above.

As an aside, I talk to a lot of colleagues, residents and fellows around the country specifically about hand practices and their finances. I’d be happy to take this discussion offline and have a phone conversation and offer you some more specific advice if you’re interested.

[abds]

I am an orthopeadic surgeon in private practice and can comment directly on your situation (although we need more info for a full dissection of your situation). You are likely getting screwed because of your fixed overhead. With the numbers you provided you are collecting $1.2M a year. I doubt your overhead is $600k a year. So someone is profiting off your fixed overhead. Who are the practice owners/ shareholders/ partners? They're the ones making money off you.

Are you getting screwed by your billing department? Way harder to say. In my practice a non post-op patient makes me an average of $120ish. New/ established/ xrays (professional component)/ splinting/ injections, all comers combined. So seeing 5000 patients a year may make you 600k in collections a year in that rough estimate. Also who is keeping the technical component of your xrays and MRI and DME? You or practice owners (assuming you’re not an owner)? That’s a whole different discussion but can make a big difference in your collections (6 figures annually).

600 cases a year... is that all trigger fingers with one 3-wRVU code or shoulder scopes with multiple well-paying non-bundled codes or spaghetti wrists with 14 codes? Do you do trigger fingers in the office for higher reimbursement or in the ASC for less money? And on top of the question of what type of case you're doing: what is your payor mix? These are the 2 biggest things that determine if $100k a month collections is reasonable (it may be) or not (it may not be).

[EntrepreneurMD]

Medical groups have a tendency to understaff and overwork their departments (sometimes inadvertently when hiring does not keep up with business growth), with poor oversight as all the physicians are busy and often there is no full time qualified CEO. Billing and coding may be the worst department with which to do this. Revenues are the life blood of a business. So assess the qualifications of the employees but also realize follow-thru on denied claims (which WBD eluded to) will be poor if the biller has time only for the low hanging fruit, regardless of education and skills. Not only do I say this as an owner of a growing practice with growing pains, but as a former board member of a 300 employee group.

I'd be careful not to get into a back and forth with the partners over who has higher fixed/variable/overall costs and who has lower. It often ends with status quo and division. That's a whole other beast for your board of directors to address any perceived biases. It's touchy. People are bringing it up here but it wasn't really what you were asking about and unlikely to be your issue. You chose a group practice, so in essence you chose on average a higher overhead compared to a solo or small practice. For that though, you SHOULD have the resources of a good billing department, better insurance contract rates, better purchasing/subcontractor rates, mid-level support if desired to grow your practice within a group practice, etc.

Work with the leadership to improve all processes if that's an interest. A rising tide lifts all boats and you will be seen as a leader with vested interest in the groups success.

[abds]

Medical groups have a tendency to understaff and overwork their departments (sometimes inadvertently when hiring does not keep up with business growth), with poor oversight as all the physicians are busy and often there is no full time qualified CEO. Billing and coding may be the worst department with which to do this. Revenues are the life blood of a business. So assess the qualifications of the employees but also realize follow-thru on denied claims (which WBD eluded to) will be poor if the biller has time only for the low hanging fruit, regardless of education and skills. Not only do I say this as an owner of a growing practice with growing pains, but as a former board member of a 300 employee group.

I'd be careful not to get into a back and forth with the partners over who has higher fixed/variable/overall costs and who has lower. It often ends with status quo and division. That's a whole other beast for your board of directors to address any perceived biases. It's touchy. People are bringing it up here but it wasn't really what you were asking about and unlikely to be your issue. You chose a group practice, so in essence you chose on average a higher overhead compared to a solo or small practice. For that though, you SHOULD have the resources of a good billing department, better insurance contract rates, better purchasing/subcontractor rates, mid-level support if desired to grow your practice within a group practice, etc.

Work with the leadership to improve all processes if that's an interest. A rising tide lifts all boats and you will be seen as a leader with vested interest in the groups success.

I agree with much of what you said in your first post on this thread but you somewhat lost me here. OP is in a private practice. I’m not saying that 50% overhead is inherently a bad deal. That’s around average for ortho. The issue is the fact that the OP’s overhead is fixed. And without knowing more about the practice and ownership situation, it’s impossible to say if that is fair. My overhead is essentially fixed as well. Except it’s a fixed number. Meaning the more I produce, the lower the percentage is. If the OP is paying 50% overhead no matter what, someone else is making money, and therefore in my opinion he/she is getting screwed.

I agree through that the OP’s original question was more about the billing department and more info is needed about whether $100k a month collections is fair or not.

[TheHandGuy]

I greatly appreciate all of the input. Some more info. My group has 3 tiers. Employee, associate, and partner. Everyone is considered an employee in their first year and gets a set salary regardless of production and all overhead is covered. Starting year two and beyond, you become an associate and you are on the 50-50 track that I am currently on. This continues until you and the partners decide on making you a partner. Now here is where it gets weird and has me wondering if I should break away from my current group. I have been asked to become a partner. I have seen all the financial data for the past 5 years and it seems that as a partner you make LESS than as a 50-50 associate. The setup is kind of strange so I will do my best to explain. You basically get 35-40% guaranteed of monthly collections vs the 50% I currently get as an associate. The 60% retained is used for all the same expenses you had before except now
you also have general practice overhead and overhead from a failing therapy unit (long story). If any money is left after all of this overhead, you get it back every 6 months as a distribution. However, distribution money may not be paid in full if the group doesn’t have enough money in its account to pay it all for every physician in which case you get “some” and whatever is left rolls over to the next distribution. They also charge 50k to buy into partnership, but it’s a buy-sell and you get it back when you leave the group. Obviously though it’s not going to be worth your original 50k investment if you retire in 30 years as it is not adjusted for inflation. I’m having a hard time swallowing this and so I have decided for the time being not to become a partner because it makes no sense to me that I’d make less money than I do now.

As a previous poster stated, at my current gross revenue they should be taking 600k from me annually. I am two and a half years into practice and covid set me back to about 1/3rd of normal collections for about 4 months of 2020. But if things return to normal then yes they should be making a killing on me if I remain 50-50. I think part of the issue is that they offer partnership to pretty much everyone as soon as they complete their second year in practice, instead of “milking” whatever is left after expenses and keeping people as associates. I feel it’s done in effort to split total shared overhead, but it’s a short sighted approach that could likely net more money to partners if they didn’t offer to make every single person a partner after their second year.

As far as payer mix, It’s about an even split between Medicare/Medicaid, private insurance like bcbs or bcn, and work comp/auto.

[abds]

I greatly appreciate all of the input. Some more info. My group has 3 tiers. Employee, associate, and partner. Everyone is considered an employee in their first year and gets a set salary regardless of production and all overhead is covered. Starting year two and beyond, you become an associate and you are on the 50-50 track that I am currently on. This continues until you and the partners decide on making you a partner. Now here is where it gets weird and has me wondering if I should break away from my current group. I have been asked to become a partner. I have seen all the financial data for the past 5 years and it seems that as a partner you make LESS than as a 50-50 associate. The setup is kind of strange so I will do my best to explain. You basically get 35-40% guaranteed of monthly collections vs the 50% I currently get as an associate. The 60% retained is used for all the same expenses you had before except now
you also have general practice overhead and overhead from a failing therapy unit (long story). If any money is left after all of this overhead, you get it back every 6 months as a distribution. However, distribution money may not be paid in full if the group doesn’t have enough money in its account to pay it all for every physician in which case you get “some” and whatever is left rolls over to the next distribution. They also charge 50k to buy into partnership, but it’s a buy-sell and you get it back when you leave the group. Obviously though it’s not going to be worth your original 50k investment if you retire in 30 years as it is not adjusted for inflation. I’m having a hard time swallowing this and so I have decided for the time being not to become a partner because it makes no sense to me that I’d make less money than I do now.

As a previous poster stated, at my current gross revenue they should be taking 600k from me annually. I am two and a half years into practice and covid set me back to about 1/3rd of normal collections for about 4 months of 2020. But if things return to normal then yes they should be making a killing on me if I remain 50-50. I think part of the issue is that they offer partnership to pretty much everyone as soon as they complete their second year in practice, instead of “milking” whatever is left after expenses and keeping people as associates. I feel it’s done in effort to split total shared overhead, but it’s a short sighted approach that could likely net more money to partners if they didn’t offer to make every single person a partner after their second year.

As far as payer mix, It’s about an even split between Medicare/Medicaid, private insurance like bcbs or bcn, and work comp/auto.

I’m thoroughly confused on your partner income.

If your billing is 1/3 mc&md, 1/3 commercial, and 1/3 WC, you should make more than 1.2M in collections doing 600 cases a year. That of course depends on you having a favorable mix of complex vs simple cases and the state you live in (for work comp).

And again, as a hand surgeon, this depends on where you do the cases (in office POS modifier). I keep a close eye on these things and made an extra $112,000 in 2019 doing TFR in my office vs. ASC.