Publication: APSMA NewsLetter
Author: Jeff Peters
Date: Fall 2005

Revenue Cycle Survey Highlights Weaknesses

Revenue Cycle Survey Highlights Weaknesses—and Opportunities Measuring the Performance of Pediatric Surgery Practices

Until recently, little benchmark data has been available for measuring the performance of pediatric surgery practices and comparing it to the performance of general surgery groups. I had the pleasure of talking about this topic with many of you last May at the APSMA Conference in New Orleans. There, I shared the results of the Health Directions 2005 Survey of Pediatric Surgery Practices, which examined performance for both private and academic hospital-based groups. The table below summarizes our findings and compares them to performance data for general surgery practices.

* Source—Health Directions 2005 Survey of Pediatric Surgery Practices
† Source—MGMA Cost Survey: 2004 Report Based on 2003 Data

Overall, these numbers show that pediatric surgery practices do not perform as well as general surgery practices, especially in productivity and collections.  The net collections ratio— actual cash collections as a percentage of expected collections— falls short by 8 points.  A related issue for many pediatric practices is poor payer mix, which is a factor in low collection rates, can contribute to lower productivity and further erodes physician income.  Of course, the flip side of every weakness is an opportunity. Here, the opportunity is threefold: By focusing on collections, productivity and  payer mix, many pediatric surgery groups can significantly enhance revenue cycle performance.

Consider these strategies:

Collections: Analyze current back-end systems. Put processes in place to verify insurance prior to service, initiate time-of-service collection and scrub claims at prior to first submission. Monitor charge lag and take full advantage of denial trend reports and payer fee schedules. The numbers suggest some practices should consider augmenting support staff. In addition, taking an aggressive approach to contract negotiations can have a big impact on net collection ratio.

Productivity: To build a referral base, group physicians need to communicate one-on-one with pediatricians and family practitioners. Pay particular attention to splitters— physicians who send some but not all of their referrals to your practice.  Consider providing CME and other educational opportunities. In addition, strengthen "customer service" to both referring physicians and patients. 

Payer Mix: Payer mix has a significant impact on funds available for physician compensation. Develop relationships with pediatricians and family practice physicians with attractive payer mixes. Consider opening one or more a satellite offices in attractive markets, in proximity to potential referral sources. This strategy has proven highly effective for many academic surgeons.If you would like to know more about the Health Directions 2005 Survey of Pediatric Surgery Practices or the strategies outlined above, feel free to contact me at jpeters@healthdirections.com.

Jeff Peters, president of Health Directions, LLC, is a frequent national speaker and author on practice management issues.

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