There is a scene in the Steve Martin movie “The Jerk” where he runs around yelling excitedly, “The new phone books are here. The new phone books are here.” I felt like that the other day when the new RBMA A/R 2010 Accounts Receivable Survey arrived in the mail. In my nerdy excitement, I couldn’t wait to see what was inside though I suppressed the urge to scream to the world it was here.
For those of you unfamiliar with the RBMA’s Accounts Receivable survey, it is a compilation of surveys of financial data of radiology groups in the US. It is an extremely valuable for benchmarking your own practice with that of other groups.
Most of us track our own metrics from month to month, but those metrics take on a whole new meaning when we get to compare them to our peers and see the trending in the market as a whole.
The survey is copyrighted and rightly so. It has a great value. So I’d like to make a few observations without infringing on the RBMA’s copyright. I’d encourage you to acquire one of the surveys from the RBMA if you don’t have one already.
As you would expect, Adjusted Collection Percentage is trending downward. This metric tells us the percentage of the money that we are collecting versus what is possible to collect. This makes sense. We have a rising percentage of patient responsibility for payment. We have rising deductibles (converting many “insured” patients into de facto self pay patients). We have rising immigration and unemployment. From this, we intuitively understand that it is going to be harder to collect on that money even though it is money that is possible to collect.
The best thing about the new RMBA Accounts Receivable is the addition of patient mix. This key metric was omitted in previous surveys; therefore we don’t have any way to measure the change in patient mix. However, this should be very interesting to watch in the next few years.
Days in AR is trending downward meaning that people are collecting their money faster than in past years. I wouldn’t put too much stock in this although I would tell you this metric is the darling of some billing entities. I’m not a big fan of this metric except internal to your organization as it is simply too easy to be manipulated. I’ve seen operations where Days in AR looks fabulous, except when you dig under the numbers the billing entity is just writing things off at some arbitrary age. I am of the school that things should be written off after they have been properly and thoroughly worked regardless of the age. If we are taking too long to work it, fix it. Don’t play to the metric; use the metric to improve your business practices. Sloppiness in this area can be discovered with unusually high Total Write-offs as a Percentage of Gross Charges, below average Adjusted Collection Percentage and a high Bad Debt Recovery as a Percentage of Collection Agency Write-offs. I would add, though, that this number could be falling because of the advances in billing technology by such companies as IMAGINEradiology and computer-assisted coding.
Billing/Collection Expense Percentage is the amount that it costs you to run your billing operation. The Billing/Collection Expense Percentage is rising for some and falling for others so that a trend is not readily discernable. The RBMA breaks it out for in-house and outsourcing. Of the two, I would tend to trust the outsourcing figure better. Outsourcing tends to be a fee which is easily accounted for while in-house billing can have a lot of variables in shared costs. For example, you might have an administrator who handles more than just billing. How does their cost get allocated?
The RBMA AR Report doesn’t report the most vital financial number of all for radiology groups and that is money in the bank. Most radiologists aren’t that familiar with how efficiently their money is being collected, but most know if they are making more or less money. In this day of declining reimbursements and worsening patient mixes, the day may be coming soon when things like Adjusted Collection Percentage and the RBMA AR Survey will hit the radar of the average radiologist. They will want to know just how efficiently and how effectively their billing company or in-house staff is. Until then, it will be up to geeks like me to getting excited about these things.
If you want to know more about what these exciting terms mean to you and your practice, I would suggest my white paper entitled What Every Radiologist Should Know about Medical Billing. It will tell you how to make sense of your RBMA Accounts Receivable report. It is available for free at www.dexioscorp.com.