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{Straight talk for clients.}
IN THIS ISSUE: We’re talking about Urgent Care
Two of the most important things you can focus on in a new business? Realistic decision-making and financial modeling.
Each quarter, Flash editors work with our in-house experts and trusted industry affiliates to share some thoughts on the current buzz in Employee Health, Occupational Medicine, and Urgent Care.
In this edition, Jim Lobel, Founder and CEO of Florida-based Intergold Medical Centers, and Agility Advisory Board member, draws on his many years of experience in the Urgent Care business to guide new owners through some of the early challenges.
Jim manages several urgent care centers operating with a blended model in southeast Florida and is a regular speaker at the Urgent Care Association of America Educational Conferences.
Practical Guidance for the New Urgent Care Operator
Each year over the past several years, the urgent care clinic population has grown by 800 – 900 units. Most of these new clinics are owned by physicians or mid-level medical practitioners with little to no business experience. A very small percentage are owned by larger investors or urgent care groups with three or more clinics, while roughly 20% are owned by non-practitioner entrepreneurs new to the urgent care field.
Most important to the new operator is answering the question, what does an urgent care clinic do – what are the lines of business? In most cases, the answer is episodic non-emergent care along with Occupational Medicine. Although some operators consider offering primary care and imaging services (other than x-ray), the vast majority do not.
For purposes of definition, Occupational Medicine includes workers comp (workplace injuries), drug screens, vaccinations, and physicals of many different types. The most distinctive characteristic of Occupational Medicine programs are that they are a business to business service. This is an important distinction from urgent care which is a retail service. It is critical to keep that in mind if contemplating a blended clinic serving both populations.
Understanding how a clinic receives its compensation is a key element in a venture’s success. There are a number of reimbursable service types:
- Fee for Service – in which each and every procedure is charged for;
- Case Rate – where each patient case has a flat charge from initial visit through maximum medical improvement;
- Global Reimbursement – which consists of a flat fee for all services rendered in a single visit; and of course,
- Cash Services – which are paid in full at the time of the visit.
In the case of a blended Urgent Care/Occupational Medicine clinic, all of these will come into play. This is one key reason a facility offering both lines of service requires a specialized EMR that can effectively manage these documentation and reimbursement process differences.
Interestingly enough, although many carriers recognize urgent care as a category of medical practice, some do not – Medicare, Medicaid/CHPS and in many areas, United Healthcare, are examples. Because of the variations in type of billing, the complexities of contracting and subsequent billing and collections play into one of the most important decisions a new operator can make – determining how to maximize revenue while being fully compliant with all regulations. Since each carrier may have a different reimbursement plan, experience in billing and collections is of the highest priority. You’ll need to make several critical decisions to assure financial success.
Should billing be in-house or contracted with a 3rd party billing service?
A third party billing service is often an easy choice for new operators because a service will only charge when collections are received and do so in proportion to those revenues. Doing it in house has fixed costs that can drive up overhead when it is least affordable. Consider other in-house issues include hiring the right people, quality of staff, and absenteeism. Negatives aside, the ability to control your own finances and prioritize your needs are among the biggest benefits of taking this task in-house.
The best EMR companies provide both the Practice Management and billing software and the billing services on a collections percentage basis. This relieves the burden of heavy out of pocket costs to get set up and allows for the in-house staff to see the exact same information as the billing company does because the platform is the same.
Whether you choose to use in house or 3rd-party billing, make sure that the software package you select can handle all your needs. Among other more broad criteria to consider, if you plan to offer Occupational Medicine services specifically investigate if the software allows for multiple client profiles – a key ingredient in the ability to properly service and bill clients.
Next up is staffing and hours of operation.
One extra hour a day, or one more practitioner, can drive your costs up to the point that making a profit is difficult. Consider mid-level practitioners for at least part of the time and be realistic in the number of hours you are open; 1 extra hour a day can cost as much as $75,000 a year.
Making the right calculations and decisions can mean the difference between success and failure.
Financial Modeling
Having adequate capital is a must. Mature, profitable centers generate sufficient revenues to fund the business. Start-ups need other funding until break-even is reached. Underestimating working capital is the #1 reason centers fail.
Food For Thought:
- When you are planning your expense structure, particularly payroll, think short-term
- When you are planning for revenue, be conservative
- When you are planning for your financial needs, think mid to long-term
Create a realistic financial model to avoid running out of cash prematurely.
When you prepare your financial projections you’ll want to understand the following:
- Two-year profit and loss (P&L)
- Cash flow statement
- Capital costs (how much money you need to have for build-out and initial costs associated with the space)
- Equipment costs
- Initial medical and office supply inventory
- Initial injectibles and dispensed medicines inventory
- Working capital (including initial cash and enough extra cash to cover losses for three quarters or more)
You’ll want to keep a close eye on these key metrics: Facility operating costs, hours of operation, a staffing model, patient load, fixed monthly expenses and variable expenses.
Pay particular attention to major fixed costs such as rent but remember that payroll is by far the largest cost associated with this business.
Take Aways
- Plan ahead and make the important decisions
- Be realistic in your thinking
- Put it all down in spreadsheets
- Change inputs to see how the results change
- Be certain you have the resources to cover expected costs
- Keep up with your progress regularly
- Execute the plan and make necessary adjustments along the way as necessary
Agility Software Highlights
In addition to mastering your split billing and HIPAA sensitive documentation needs between Employer services and Private Practice visits, Agility offers seamless integration with the Net Health RCM solution. If you’re considering reducing fixed costs, consider that our solution is exclusively utilized by Certified Professional Coders (CPCs) with expertise in Urgent Care and Occupational Medicine billing. The Net Health RCM solution has improved our client’s financial performance:
- 50% reduction in claim denials
- 70% success rate on appeals
- 18% increase in collections per chart
- 16% increase in total collections
This information comes from our eBook, Your Path to Healthy Revenue in Urgent Care and Occupational Medicine, see the full book here for more helpful tips.
Want to hear RCM tips and tricks from another expert? Visit the on-demand playback of our 30-minute webinar, Win-win Charting & Reimbursement Strategies in Occupational Medicine. Access it here or pass along to the whomever might appreciate it at your organization.
For specific information on the Net Health RCM Solution, drop a note to your Account Executive. Use this form and they’ll be in touch soon.
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