As the healthcare industry has changed, so has the relationship between a physician and their practice advisor. Practice advisors should be providing more than annual tax returns and tax planning services. There is certainly value in minimizing your tax and at the same time maintaining compliance. However, if your practice advisor services are limited to tax and bookkeeping, you may be missing out on a lot more. Here are three areas that we have found to provide additional value to practices.
Real time financial statements with explanations on where your business is going
Our firm recently met with a physician who was receiving monthly financial statements. When we asked what he does with them each month, the response was, “Nothing, I just put them in this file.” Upon further discussions it became clear that the physician was not using them because there were no comparisons or explanations on what was happening financially and operationally. Having regular meetings with your practice advisor to go over your financial statements can go a long way. Your practice advisor should be helping identify trends and point to areas of improvement along the way. They can also help explain what the numbers actually mean, and set budgets and goals for how to arrive at the results you want.
In addition to reviewing the financial statements regularly, using a cloud based accounting system can provide an opportunity to have real-time financial statements that both you and your advisor can access regularly. Whether you have an internal bookkeeper to post entries and maintain records or you outsource it completely, having this remote access can provide an opportunity for everyone to stay on the same page and provide real-time advice and monitoring. These systems also store your accounting data securely on off-site servers, which reduces the risk of data loss.
Implementing internal controls
Establishing effective internal controls in the bill paying process can be difficult for many reasons. The most common problem we encounter is that there is not adequate staffing to segregate the duties. Physicians may not have the time to pay the bills themselves and instead delegate this work to the office staff to prepare and record. If not set up properly, the accounts payable process can turn into an opportunity for employees to take advantage of the practice. We have seen too many instances where employees were put into situations without adequate controls that eventually led to fraud. Your practice advisor should be able to help identify areas of concern or improvement that would help mitigate the possibilities that fraud would happen and go undetected. This advice could also span beyond accounts payable processes.
In addition, some practice advisors may be able to offer more services, such as a bill pay service for your practice. In this scenario, practice advisors have the ability to record and process accounts payable with high efficiency while maintaining strong controls. Some electronic bill pay systems will allow the owner to simply login to a secure site and approve and pay their accounts payable. This site should also have the ability to display any invoices at any time and document the persons that approved and paid the invoice. After all of the preliminary work of scanning, approving the invoices, and recording the transactions are done, it often takes just a few minutes for a management physician to pay an entire month of bills.
Helping to establish and monitor key performance indicators (KPI)
Your practice advisor should know healthcare in order to understand your operational processes. Having this knowledge, your practice advisor will be able to help develop key performance indicators specific to your practice. Implementing a metrics board that aligns with your goals is important too. Understanding your financial statements and what areas to focus on will be important in setting those goals. Your advisor should be starting those discussions and monitoring your progress.
To ensure that you are meeting your goals, you need to manage by monitoring several key performance indicators. Examples of key performance indicators in the revenue cycle that we think help facilitate accountability and progress are:
Days in receivable outstanding
Aged Accounts Receivables by payer
Time between date of service and date billed
Percentage of claims denied
Denials by payer
Your practice advisor should be working hard to ensure you have the tools to effectively manage your practice and monitor your results. Value extends beyond good tax planning and compliant tax returns. It’s a partnership that offers value through improving processes, developing strong internal controls, tracking key performance indicators, benchmarking, providing operational assessments, financing analysis, and many more areas. Your patients expect more out of you, shouldn’t you expect more out of your practice advisor?
L. Porter Roberts Jr, CPA, is with the Medical services Group of Barr, Anderson & Roberts, PSC, in Lexington, KY. If you would like more information, they can be reached via email at email@example.com and via telephone at 859-268-1040.