Author Topic: Profit Margin  (Read 3402 times)

sagemb

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Profit Margin
« on: November 17, 2014, 09:46:46 PM »
Hello Everyone,

So my only doctor client has finally joined a group practice a couple of months ago. I helped him get started just a month before he even opened his clinic. So goes to say that for the last 7yrs he was very happy with the billing. Now the client was in Chicago and I being in Houston, the likely candidates for the software seem to be cloud based at the time. I went with AdvancedMD. I did pay quite a bit for it but it got the job got done so good. Anyways, we had him switch over to Kareo about 3 years ago. The pricing was better, a pro. But making any adjustment to a bill already sent isn't very intuitive, a con. I did figure it out but it's a list of things that one has to do each time. But what I really like about Kareo is that I can pull up all the charges and rebill a bunch in very few clicks, BIG PRO. Anyways, I'm going off track...

Get ready...here comes math...

Now, all this while for 7years...I'd been charging him 6% on collections like most of us. I did "everything". It was getting me around an average of $2k/mo. Around $350 goes to Kareo, another $200 in stationary and postage. And as you all know, billing takes a LOT of time out of your life. So I'm on average left with around $1400/mo. And may have averaged around 52hrs a week times 4 ...equals 208 hrs of work. Divide that with 1400 dollars and I'm looking at around $6 and change an hour.

Are you guys in the same boat as myself? Am I doing something very wrong or is this normal money for billers? Notice, I haven't even taken out provisions for internet, phone, electric, tax, etc.

I also realized that I'm coming up with self analysis only now that I'm looking for new client. Also, how do billers work on multiple doctors simultaneously? It takes me what I stated above.
"Those who preach about making lemonade when life throws lemons your way are the same folks that end up drinking all your lemonade." - Adam Fisher

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Michele

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Re: Profit Margin
« Reply #1 on: November 18, 2014, 03:03:37 PM »
When you say you did "everything" do you also mean patient billing as well?  The reason I ask is because when you are charging percentage on insurance only that can be a problem.  (% billing in itself can be a problem not only because it is considered fee splitting in many states but I'm not addressing that right now since that is not the question)  Copays and deductibles are higher than ever and for the billing services that are still charging a percentage and only do insurance billing this is killing them.

The basic answer to your question is no, that is not normal money for billers.  This is not a get rich quick business but it's not a lose your shirt business either.  For an account that brings in about $2k per month I think that 52 hours a week is very high.  Our employees can handle about 3-4 x's that in a regular 40 hour week.  That includes working aging reports.  I would take a look at what part is taking so much of your time.  Billing?  Posting EOBs?  Working on denials/appeals?  Working Aging?  Try to break it down by task to see if something is out of order.
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PMRNC

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Re: Profit Margin
« Reply #2 on: November 18, 2014, 05:49:45 PM »
Your scenario was why I changed my business model a few years ago.. first I got tired of building my software costs into my fees, second, I just wanted to be paid for my time, everything else didn't matter to me, Third I was tired of the hassles if they wanted out of the contract. All of those headaches were eliminated when I decided to access or utilize their PM system. Their PM system is THEIR's.. lock, stock and barrel, I have my own HIPAA compliant login and that's that. problem solved. ALL of the costs were due to time and supplies. I'm just sorry I didn't think of this 15 years ago. All the bizops and associations were tooting all kinds of "preferred software" when really it didn't matter. The practice SHOULD have final say on their PM software. No headaches, no surprises, no technical support issues, no conversion issues.. :) I've increased my profit margin with my billing clients significantly this way not to mention reduced the headaches!!
« Last Edit: November 18, 2014, 05:52:12 PM by PMRNC »
Linda Walker
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kristin

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Re: Profit Margin
« Reply #3 on: November 18, 2014, 08:01:49 PM »
Percentage billing is not in your favor. Especially when you are dealing with low amounts each month. If my math is right based on what you have posted, the one doctor you billed for averaged around $33,000-34,000 in receivables each month? Thus netting you $2000 each month? Now imagine if you were charging a flat fee or hourly rate all that time, ESPECIALLY because you weren't just doing the billing, you said you were doing "everything". By "everything", I take that to mean demo entry, insurance verification, billing of claims, follow-up on claims, and patient statements...correct me if I am wrong on this.

And I definitely agree with what Linda said...the provider provides the software, and pays for it, and you just log-in and do your thing. You shouldn't have to have that cost on your end.

What concerns me though, that you asked about, is the 52 hours a week it took you to work the one account. That is way high, in my opinion. For example, I am the office manager for a specialist practice. I do everything related to patient billing from initial demo entry through to patient statements, in addition to being the receptionist for the practice, and helping in the back end. Our monthly receivables are at least twice what the doctor you billed for were. And I spend MAYBE 2-3 hours a day on the billing end of things, when it is all added up each day. Granted, I have almost no follow-up to do on claims...if I have one or two a month that deny, that is a lot. Then I do remote demo entry/billing/follow-up from home for two other doctors(and use Kareo for one of them). I average five hours a week for one doctor, and four hours a week for the other doctor. Both doctors have receivables in line with what my primary doctor has, but they have more follow-up issues, due to various problems beyond my control. If I did have control, my hours for these doctors would be even less.

So...I guess my question to you would be why it took 52 hours a week for the account? It doesn't seem to be a claim volume issue, based on the numbers you gave. I know Kareo has instant eligibility available, so that shouldn't be a problem time-wise, and you know where you stand with an insurance before you bill a claim. You did mention re-billing charges, which leads me to believe there were denials to be dealt with...so if that is the case, is follow-up on denied claims something that accounted for a lot of the 52 hours a week? And if it is, why where there denials? I would love to be able to offer suggestions for how to streamline your process, etc, but think I need more info at this point.

sagemb

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Re: Profit Margin
« Reply #4 on: November 18, 2014, 10:41:44 PM »
When you say you did "everything" do you also mean patient billing as well?
I knew you'll catch me cutting corners on typing the full services lol
By everything here, I meant:
  • Demo Entry
  • Elig. Verification
  • Insurance and Patient Billing
  • Payment Posting for insurance as well as patients including copays
  • EOB/Denials Handling
  • Pending Claims Follow Up / Aging Reports
  • 2nd and 3rd carrier billing if it goes to that
  • Patient statements
  • Pending Patient Payment follow up
  • As well as take any calls from Insurance (hardly any) and patients (a lot of calls) when they have questions about the balance.
"Those who preach about making lemonade when life throws lemons your way are the same folks that end up drinking all your lemonade." - Adam Fisher

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sagemb

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Re: Profit Margin
« Reply #5 on: November 18, 2014, 10:47:01 PM »
Their PM system is THEIR's.. lock, stock and barrel, I have my own HIPAA compliant login and that's that. problem solved.

I'm glad to hear that because I've been considering the same. And I find it motivating to hear from Michele's reply also that billers aren't expected to loose their shirts over the course of business.
"Those who preach about making lemonade when life throws lemons your way are the same folks that end up drinking all your lemonade." - Adam Fisher

http://www.sagemb.com

sagemb

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Re: Profit Margin
« Reply #6 on: November 18, 2014, 10:59:32 PM »
What concerns me though, that you asked about, is the 52 hours a week it took you to work the one account.

I think you hit the nail on the head. Major bulk of the work goes into denial handling and follow up. A lot of bad data comes from the doctors office. I basically get all the superbills for clinic patients and facesheets from his hospital runs. And the staff basically just writes the missing info including the carrier name, member id, group id, etc. Sometimes its printed, sometimes not.

Once, I get all this info, I get cracking on the demo entry and eligibility check. Now the problem with Kareo Elig Verification is that it'll do it for most of the major carriers but not the small ones, in this case, these are the 2nd major bulk. Medicare and Medicaid being the primary bulk. So almost half the bills aren't going through that process. And I find out when a load of them get mailed back for numerous incorrect data, from wrong carrier to wrong id, to wrong names.

I have had talks with the doctor about these because I can only work with the data given to me. And he understood...but just too busy to do anything about it. Now...fast forward...if I find myself in this situation over and over, I'm the type to bust my behind to double the work and go through painful elig verification in other ways, which in itself is such a time-staking work.
"Those who preach about making lemonade when life throws lemons your way are the same folks that end up drinking all your lemonade." - Adam Fisher

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Michele

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Re: Profit Margin
« Reply #7 on: November 19, 2014, 10:42:43 AM »
Basically the problem is that the people in the doctors office are not doing their jobs, or at least not doing it well and you are paying for it. 
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DMK

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Re: Profit Margin
« Reply #8 on: November 19, 2014, 01:41:05 PM »
Basically the problem is that the people in the doctors office are not doing their jobs, or at least not doing it well and you are paying for it.

It's more like he's getting a less than minimum wage employee to do the job.  The office staff should be sending you the correct, clean information so you don't have to do all the extra work to chase things down.  You can sell this point by letting them know that the faster you send the correct information, the faster they get paid.

PMRNC

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Re: Profit Margin
« Reply #9 on: November 19, 2014, 02:43:17 PM »
I'm going to play devils advocate here.. It's NOT your problem what their staff is doing or not doing.. however.. since you are billing on a %.. you have MADE that your problem. That's again, why I caution against % based billing. We keep seeing same problems with % billing over and over and there is no easier way to say it than to say.. WHY?? get paid for your time!! Your a professional.. your income should NOT depend on the job they are doing at the offices. I see so many billing companies struggling with this part in their business and I really believe that is why most of them close up. YOUR income should be comprised of the work you do, the time you put in and the experience you have.  You will NOT increase your profit margin as long as your profits are dependent upon the work they do at the office instead of the work YOU put int. I don't know of a nicer way to say that but I hope you get my point. You run the show.. your income should NOT be dependent on how they are doing THEIR jobs. That's not way business works, I think many times we think it does and because "everyone else" is billing a % we think we have to in order to remain competitive.. HOG wash... :)
Linda Walker
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sagemb

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Re: Profit Margin
« Reply #10 on: November 20, 2014, 08:16:56 AM »
Well said everyone. And you're correct Linda. The reason I did percent billing was to just grab the doc. I had low self esteem and even lesser confidence. I'm a very shy person so I'll raise a point but won't hammer it in if I see resistance or if I find myself being ignored. But things are going to change from here on. It'll be a fresh start and loads of know how on what NOT to do. I even got a few of the books from this site and it I can't believe how right down the point you guys explained everything. Anyways, I'm rambling.

BTW...about using the providers own PM software, I wonder if the learning curve is going to go through the roof? How has it worked out for you? I mean, I took at look at eClinicalWorks and couldn't make heads of tails  :D
"Those who preach about making lemonade when life throws lemons your way are the same folks that end up drinking all your lemonade." - Adam Fisher

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kristin

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Re: Profit Margin
« Reply #11 on: November 20, 2014, 10:16:43 AM »
I have had to learn six different PM softwares in the last two years, with basically no training from anyone. Or the training was done via Youtube videos, and wasn't good. It really wasn't that hard, to be honest. You already know Kareo, and that was probably the hardest one I had to learn, because it is glitchy in weird ways. I really wouldn't worry too much about a learning curve.

As for what you said about having to spend so much time on the account because of getting bad info from the staff, etc, that is the one problem I have with remote billing, but it isn't as bad as what you went through. I have really, really gotten down on staff and the doctors to make sure the info is correct, by showing them how it affects their bottom line, and it has helped a lot.

Don't rely on just the PM software to verify benefits and eligibility...make sure you are also using Navinet, Availity, and various insurance websites to do that work also. It really helps.

shanbull

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Re: Profit Margin
« Reply #12 on: November 20, 2014, 12:45:55 PM »
BTW...about using the providers own PM software, I wonder if the learning curve is going to go through the roof? How has it worked out for you? I mean, I took at look at eClinicalWorks and couldn't make heads of tails  :D

I've worked with eClinicalWorks every day for a year and a half and sometimes I'm still confused by it, but that's because it is so huge, and tries to be everything for everybody. I think it's a special beast ;) I haven't spent a ton of time with other EMR's but they all do seem more intuitive than eCW from what I've seen. You are definitely not the first person to run into this, and a lot of the "official" instruction materials produced by eCW are terrible, poorly organized, missing key information, or spread out related information over several separate webinar videos and guides. On the eCW forum I post on, everyone readily admits that the bulk of the learning happens through trial and error. I do not believe this would be considered ordinary for the learning curve of a typical EMR system.

mindy167

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Re: Profit Margin
« Reply #13 on: January 05, 2015, 10:25:31 AM »
Looking for an average range figure in a couple of areas with the expectation that the final figures are based on a variety of factors. The data I've come across has not been specific to the billing industry per se, specifically 3rd party billers --

1. % of expenses to revenue baseline
2. Gross profit margin - for service businesses it seems to range from 20 - 60%
3. Denials as percent of net collections (top number I've seen is 5 - 6%)

Any other insight in response to the first two questions is appreciated.