Practice Makes Perfect: How to minimize cash-flow fluctuations this holiday season

In June, the MGMA released the results of a questionnaire that ranked members' most pressing practice-management challenges. In this edition of “Practice Makes Perfect,” we'll tackle No. 3 on that list: Managing finances with the uncertainty of Medicare reimbursement rates.

It's déjà vu for healthcare executives anticipating potential payment delays based on the past performance of Congress and the CMS. With this continued uncertainty, medical practices have tightened their belts and worked diligently to combat rising operating costs. It's also the time of year when patients might delay paying their bills so they have more money available for holiday purchases and other seasonal expenses.

The season also brings high patient visits for the flu and colds, and combined with staff holiday vacations, the impact of payment uncertainty for medical practices can create budget woes this time of year, but prudent healthcare executives typically budget and plan cash reserves to cover the anticipated shortfalls. They might even delay major purchases until cash flow can be ensured to cover routine expenses and payroll.

Knowing how to respond to these annual patterns is key to mitigating the effects of these fluctuations. To help minimize the problem this holiday season, consider:

• Adapting schedules to better accommodate patient access.
• Using part-time employees and job-sharing staff to fill full-time openings.
• Giving patients more flexibility for appointments, which can reduce no-show rates.
• Using part-time staff, which can save on benefits and holiday pay.

Long-term strategies also help practices alleviate budgetary woes. They include employing nonphysician practitioners and using clinical and support staff to the full extent of their training and licensure; both can improve patient care and allow physicians more time for complex duties. Many practices and hospitals have also added elective, ancillary services if there is demand from their patients. Organizations are implementing new service lines for aesthetics and complementary medicine. Providers are also considering telemedicine as well as direct, on-site care in patients' homes and workplaces to serve patients more effectively.

More-efficient patient flow and improved use of technology can reduce the long-term expenses of care delivery. Practices have an opportunity to review work flow, which might yield some immediate payback if there are opportunities to improve time of service collections or improve charge capture. Reviewing payment denials and resolving outstanding appeals can also bring in cash when budgeting for a large purchase. Process reviews might reveal training issues associated with inaccurate registration demographics and data-entry errors.

Regardless of the methods used to increase revenue and reduce expenses, most of these efforts will have a positive impact on cash flow. The steps taken will mitigate some of the inevitable fluctuations in payments that occur when fee schedules change, new coding requirements are implemented or payers announce delays in reimbursement.

Laura Palmer is a senior industry analyst at the MGMA, Englewood, Colo.