The 3 Biggest Revenue Cycle Challenges for Small Practices
If you are the owner of a small, private practice, congratulations, you have at your disposal several advantages. For starters, you most likely benefit and enjoy working alone or with just a couple of other physicians as opposed to a multitude of providers in a hospital setting.
You also have the opportunity to get to know your patients on a more personal level, which often leads to better care management and outcomes. And finally, you are someone who knows their community’s healthcare needs and can make a positive impact with your expertise.
Having said that, running a small practice often results in unique revenue cycle management challenges. Unlike providers employed by hospitals or health systems, physicians in medical practices often have limited staff, which means they have their hands in everything from patient access, medical billing, and claims management.
And, because budgets tend to be stretched tightly, smaller practices may not have access to tech resources that are available to larger healthcare organization. As a result, small practices are often forced to merge with larger healthcare organizations to lift some of these financial and clinical burdens.
Those practice owners who wish to remain independent while alleviating revenue challenges should address the following revenue cycle management challenges.
1. Technologically-Challenged
As mentioned earlier, small practices tend to delay adopting technology or avoid it all together because of implementation and upkeep costs. A 2016 Medical Group Management Association (MGMA) study revealed that EHRs cost physician practices up to $32,500 per physician in 2015. The expenses included IT equipment, staff, and maintenance.
And it’s not just EHR technology that doctors shy away from, the survey found that small practice owners viewed other automated solutions in a similar light. As a result, many healthcare revenue cycle processes remain manual.
One way physicians can overcome these tech challenges and keep costs low is to outsource billing, claims management and revenue cycle management needs.
2. Limited Capital Does Not Allow for Practice Transformation
Just as it’s hard to leverage the power of technology with limited capital, it’s also hard to implement practice transformations to improve revenue cycle management. For instance, the recent update to the new ICD-10 codes. The transition to this new coding system came with its fair share of challenges (read: headaches).
A delayed response to this particular transition can result in delayed payments, up to 30% of overall revenue. While hospitals and larger organizations might be able to wait a few months to be reimbursed, this wait can cause a small practice’s revenue to hemorrhage.
Small practice owners can mitigate the impact of delayed transitions by taking a phased approach rather than implement a project wholesale. Spreading out an implementation project over time will help with onboarding and education.
3. Value-Based Purchasing
Value-based purchasing is changing the way providers of all sizes are paid. The transition to this payment model is driving a restructuring of revenue cycle management to include new tools and capabilities such as data analytics, quality and cost performance monitoring, and care standardization.
But many smaller, independent practices are having trouble keeping up with value-based purchasing implementation. This lack of readiness often leads to closures or increased healthcare merger activity. And the attempt by the federal government to accelerate things through MACRA is pushing more practices to merge with larger organizations.
CMS has acknowledged the challenges small practices face with value-based purchasing adoption in its recent MACRA implementation rules and relaxed the NACRA implementation timelines. In addition, CMS set aside $100 million in February 2017 to train and educate Medicare physicians working in small practices on MACRA implementation.
There is no denying that small independent practices face unique revenue cycle management challenges. However, if practice owners take an incremental approach to project implementation, as well as take advantage of government assistance, they should be able to stay independent and afloat.
