VISION WEST MEMBER GUEST COLUMN
P12
STRENGTHENING YOUR PRACTICE by Michael Graves, Senior Consultant for ExecTech
One of your most important skills as a practice owner is your ability to identify and handle barriers in your practice which hinder your ability to care for your patients and which lower your profitability. Here is a way to perform a simple evaluation, using four practice statistics, which will help you measure the effectiveness of some of the important aspects of your practice. You will need the following statistics: a. Total collections for the past twelve months b. Total exams for the past twelve months c. Total new patient exams for the past twelve months d. Total number of active patients (This is the total number of patients – as opposed to total number of patient visits – who have been into your practice in the past three years. For example, if Bob Johnson has been into your practice three times in the past three years, he is counted as a single patient, not as three patient visits.)
Here are the formulas and how to use them: 1. Average collections per exam: Total collections, divided by total exams will tell you the average amount that you can expect to collect per exam, based on recent practice performance. Example: $636,000 collections divided by 1696 total exams is $375 per exam. Average collections per exam is useful in projecting your increase in collections, based on a projected increase in total exams. This comes in handy whether this increase in exams results from: a) An increase in the number of new patient exams. b) Improving the effectiveness of your system for getting your patients to show up for their yearly re-exam. c) Improving the effectiveness of your system of reactivating patients.
d) Setting a target for the number of exams that your practice needs to see, in order to achieve a certain collections target. Example: If average collections per exam is $375 and you are projecting an increase of 50 exams per week as a result of an improvement to your recall and/or reactivation systems, then your projected collections increase is [$375 x 50] $18,750 per week, or $975,000 per year. 2. P otential collections per month: Number of active patients, times average collections per exam, divided by twelve months, will give you a good estimate as to how much your practice could potentially collect per month if all of your systems are in place and functioning well. Example: If average collections per exam is $375 and you have an active patient base of 3,000 patients, then you would expect to generate collections of around $1,125,000 per year, or around [($375 x 3000)/12] $93,750 per month.
3. Number of potential re-exams per week: Number of active patients, divided by the number of weeks per year that your practice is open (usually 52). This formula assumes a re-exam once a year. If your criteria for re-exams is once every 18 months, then divide by either 78 weeks, or by the number of weeks that your practice is open in 18 months Example: If you have 3,200 active patients, [3,200/52] would give you a potential 61 reexams per week, if all of the systems in your practice were operating correctly. This is useful for identifying how well your recall system is working. Target a minimum of 85 percent recall effectiveness. 4. Number of patients who are missing their yearly re-exam visit: Take the total number of exams for the past 12 months, minus total number of new patient exams for the past 12 months. This equals “X”. “X” is the number of re-exams that took place in the past 12 months.