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Small Practice Rights Ship

February 1, 2008
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When the two-doc practice slipped into the red, IT helped Smithville Medical Associates get back to black.

by Ramchand Thadhani, M.D.

Because we are a small, two-physician practice, Smithville Medical Associates (Galloway, N.J.) operates on a tight margin. My partner and I keep a close eye on cash flow to ensure the practice not only survives, but thrives.

In 2005, we began to notice warning signs that all was not well. Outflow was overtaking income, and soon we were operating in the red. When we looked more closely at the factors contributing to this shortfall, we found that Smithville’s private billing service was not filing claims correctly. Claims were not being submitted in a timely manner and, when they eventually were filed, they often contained errors or triggered problems. As a result, we experienced serious delays in payment — in some cases, claims languished for a year.

This prompted us to begin the search for a more effective approach to claims processing, as well as better management of other revenue cycle activities. The first step was to conduct research on the Internet, to see what technology was available. Once we had a list of possibilities, we contacted the American Academy of Family Physicians for input and recommendations.

After evaluating various systems, soliciting input from colleagues and discussing our priorities with possible vendors, we determined that Horsham, Pa.-based NextGen Healthcare’s Practice Solutions provided the functionality we sought. It offers a range of revenue cycle management (RCM) services — including electronic patient eligibility checking, charge capture, claims scrubbing and submission, payment postings, and A/R follow-up.

Once the technology decision was made, our first step was to hold meetings with the staff to explain our strategy and outline our implementation plan. A number of staff members were cautious about relying upon another electronic billing system. As we walked through the functions that would be available to them, however, they recognized these would improve the bottom line and decrease the level of stress we all were working under.

To ease the transition, implementation and training occurred in phases. The billing components were covered first, for instance, followed by appointment scheduling to ensure staff was comfortable with each activity. Vendor representatives, including certified medical billers, provided on-site training. In addition, trouble-shooting and problem-solving assistance was available by phone throughout the process.

Implementation proceeded smoothly, and we began to reap benefits quickly. Most notably, billing was done on time and staff was able to monitor claims processing online, 24 hours a day. If problems arose, they could rework and resubmit claims within a few hours. They likewise could file secondary claims electronically — something they been unable to do with the previous billing company.

Within months, claims were being filed 35 percent sooner and rejections had dropped 50 percent. In addition, staff was notified about problems and able to refile claims 50 percent faster than before.

Additionally, our staff took advantage of the business intelligence we could extract from the system. We accessed standard reports to monitor claims status, payment rates and rejections, for instance. Plus, we developed customized reports to answer specific questions and help us determine future directions.

We can analyze income generated from patients seen in the office, compared with charges resulting from services provided to patients in the hospital or the local skilled nursing facility. Similarly, we can generate reports on payers to investigate whether each is providing reimbursement in a timely manner and complying with their contracted rates for specific services. This information is valuable when we renegotiate contracts.

Our financial situation has stabilized, and we are confident that we will continue to grow and provide high quality care to patients in our community well into the future.

Ramchand Thadhani, M.D., is a founding partner of Galloway, N.J.-based Smithville Medical Associates, which specializes in family practice and internal medicine, and sees 30 patients a day.