Guest blog by Ellen Hudgins, OTD, OTR/L, ITOT, Doctor of Occupational Therapy – Administration & Practice Management Elective Track Director.
Opening a private practice is complicated – and seeing patients is only part of the process! Effectively managing your front-office and back-office operations will allow you focus time on quality patient care, rather than in the minutiae of administrative processes. A successful private practice is guided by informed financial leadership, consistent practices, and a well-designed billing and payment structures.
Designing Billing & Payment Structures
Leading a healthcare organization of any size requires establishment of billing and payment structures that support the goals of the organization. In a private practice environment, the setting and demographics often dictate how a private practitioner will be paid. For example, if the provider is working in a long-term care setting or a school system, the payment structure is often centered around a federal program. Federal programs include:
- Medicare
- Medicaid
- Veterans Affairs
In addition to federal programs, private and self-pay funding may be available for services rendered. However, as an experienced business owner for the past 26 years, the most common payment structure includes health insurance. Insured clients seeking rehabilitative services generally prefer to bill insurance companies (commercial carriers) for the provision of occupational therapy services. Workers compensation is another source of funding for consideration within the payment structure.
When billing for workers compensation, the business owner may negotiate contracts with the payer, resulting in improved reimbursement for the clinic. For most other insurance companies, the rate of reimbursement is dictated by the payer and is often adjusted based on the geographic region of the healthcare facility.
Revenue Cycle Management
Revenue Cycle Management is the financial process (utilizing medical billing software) that healthcare facilities use to track patient care episodes from registration and appointment scheduling to the final payment of a balance. This system (and the maintenance thereof) is a critical piece when managing payment for services. Metrics for a sustainable practice may include the following:
- Accounts Receivable (AR): # Days AR is Under 34 Days
- First Pass Payment Resolution: 80 % (Claims Going Cleanly on the First Pass)
- Copay Collection Rate: 90%
- Cancelation Rate: Under 14%
- Net Promoter Score: Increased Promoters (Satisfied, Loyal Customers) May Yield Increased Compliance with Therapy
- Vacancy Rates
- Referrals
- Charges Versus Contractual Write-Offs
Although the healthcare field is altruistic in nature, being reimbursed for services is critical for the sustainability of the practice, including the field of occupationaltherapy. For more information regarding this topic, refer to my chapter on Designing a Payment Structure in the forthcoming publication – The Occupational Therapy Manager, 6th edition (available the summer 2019). You may also contact me through email at ellen.hudgins@rm.edu.
For more information on related programming at RMUoHP, visit the links below:
- Doctor of Occupational Therapy (Post-Professional) – https://rm.edu/academics/doctor-of-occupational-therapy/
- Occupational Therapy Certificate in Leadership – https://rm.edu/academics/post-professional-occupational-therapy-certificates/#ffs-tabbed-13
Healthcare Leadership & Administration Certificate – https://rm.edu/academics/healthcare-leadership-administration-certificate/
