Giving away a fortune?

Giving away a Fortune Yes, it's easy to miss a charge here and there. But those $10 blood collections and $21 fecal exams add up. And over time that total could be costing your practice team a coveted piece of equipment or the extra hands needed to smooth a crazy day. That's what was happening at Starkville Veterinary Hospital, a two-doctor practice in Starkville, Miss.

"We were missing charges because we weren't writing them down at the time of treatment," says owner Dr. Larry Anthony. "On busy days, it's challenging to remember all the details, and often we were rushing to complete the bill because the client was waiting."

After making some changes, Dr. Anthony and his team turned their fortune around. First, they reviewed missed charges to find out what was happening and then clarified the teams' expectations about charging for all services rendered. "Now I think we're more thorough and don't rely so much on memory," he says.

Dr. Anthony's far from alone in missing charges. I often see $10 to $15 of missed charges on 10 percent to 20 percent of outpatient cases. Often-missed services include fecal exams, skin scraping, and blood collection.

On hospital cases, $40 to $60 of missed charges on 25 percent to 30 percent of cases is common. Items often missed include in-patient exams, injection fees when multiple injections are provided, and the use of fluid pumps.

When you look at missed charges objectively, it seems some doctors go out of their way to provide care without billing the client. Yet charging for the care you provide is critical. A healthy financial picture gives you the resources you need to continue to elevate patient care, invest in new medical technology, and give doctors and staff members raises. The first step to taking control: Get everyone on the same page-including you.

"You will find something you've missed"

To correct the problem, you need to know how many charges you're actually missing and the reasons why. The first step: Pull a random sample of 10 hospitalized cases and 10 outpatient visits completed by each doctor. Then compare the medical records to the client's invoice.

Make a copy of the invoice, and at the bottom of it, list the services provided free of charge (either intentionally or unintentionally), along with the usual service fee. Tally the results. For example, in 20 outpatient cases, you might see missed charges on five (25 percent) with an average missed charge of $10. Discuss the results in your next staff meeting, and try to find out why you're missing charges.

Crediting doctor production

Also compare the invoice to the original treatment plan estimate. Was it within the estimated cost range? If the total exceeded the estimate, did you discount the care provided? If so, by how much?

Talk about the results in your next staff meeting. How accurate are your treatment plan estimates? Can you develop a bank of standard treatment plan estimates so you're not re-creating the estimate each time?

Dr. Anthony and his staff members completed this exercise and found they missed very little on outpatient cases, but they were shocked by the frequency and amount of missed charges on hospital cases. They missed an average of $50 per case on 85 percent of those sampled.

"This was a big eye opener for all of us," says Dr. Anthony. "We identified glitches in our approach to processing invoices and developed an improvement plan," he says. "We also created an in-hospital treatment sheet that the treatment team completes each day."

One person on Dr. Anthony's team takes responsibility for entering hospital charges twice a day, after the morning treatments and again after the afternoon treatments. She compares the medical record to the treatment sheet to make sure they match, and highlights the item on the treatment sheet so everyone knows it was entered. And the receptionists do a final crosscheck when clients pay their bill.

"We've been doing this for about two years now," says Dr. Anthony, "and we're missing very few charges at this point. The bottom line has improved-and so has our patient care."

"You have a knack for building consensus"

You want everyone on the hospital team to share the belief that your time, knowledge, training, and experience have value. Of course, you bill for what you do because of this value. But if doctors and team members don't really believe in the value of the practice's services, clients never will.

Sometimes associates don't charge for services and products because they don't understand what's expected. So owners, you need to communicate your expectations up-front. Left without direction (or faced with a poor example), each associate interprets the practice owners' expectations and, by necessity, begins to establish his or her own ideas about charging for patient care. Differences in philosophy quickly lead to disagreements and an unhappy associate-owner relationship.

Use the following guidelines to set the tone and communicate your practice philosophy about charging for services.

• Incorporate your philosophy about charging into your employment agreement. Include a clause that says the associate is responsible for charging for all services and products provided, per the established hospital fee schedule. This will communicate your expectations up-front. If the associate gives services away, he or she is violating the contract, which gives you a concrete issue to discuss.
• Address charges in your position descriptions. For example, here are some highlights from the Doctor of Veterinary Medicine Position Description, published in The 2004 Well-Managed Practice Associate Management Guide:

- Adhere to all hospital directives and protocols; and maintain the highest ethical, moral, and professional standards.

- Generate accurate treatment plans for hospitalized patients. Discuss the plan and estimated costs with the client.

- Use the SOAP format to develop a treatment plan for hospitalized patients and communicate the plan to technicians and assistants verbally and with written hospital-treatment sheets.

- Discharge patients personally and/or use support staff to communicate clear, written instructions for home care, follow-up doctor care, medication, potential health concerns, and fees.

Treatment plans lead to better estimates

- Understand the practice fee schedule and the importance of appropriate documentation for accurate billing.

• Explain your fee schedule. Ask your patient care coordinator to review your fee schedule with all new associates, so they understand how you bill for services and products. Also review the travel sheet to make sure the associate completes it effectively and accurately and captures all charges. Schedule time periodically to discuss these issues with all doctors in the practice, to make sure you're still on the same page.
• Explain your credit protocol. Ask your client care coordinator to review the hospital's policy regarding client payment with your associates, and explain which clients are eligible for credit privileges, the credit terms, and the use of treatment plan estimates. Also explain how the practice's ability to collect payment from clients ultimately impacts doctor and staff compensation.
• Share your practice philosophy regarding patient care. Periodically conduct case reviews to determine whether the doctors have similar medical philosophies regarding patient care and charging for patient care. Do a check by selecting three hospital cases and two outpatient cases per doctor and trading them. Answer these questions: Would you have worked the case up any differently? Would you have provided additional recommendations? Was the client billed for all the care provided? If not, why? Discuss the results with your associate.
• Teach associates to develop treatment plan estimates. Estimates are an important client education and communication tool. So show your associates how to create a treatment plan that itemizes all of the components of care and clearly explains what the client can expect in terms of patient care and cost. (See "Treatment Plans Lead to Better Estimates" for more.) Remember, informed clients make informed choices.
• Lead by example. Actions speak louder than words, so be sure to send a consistent message. If you expect your associate to charge for the services and products he or she provides, you must do the same-always.

Pulling together on patient care makes for a healthier practice

"Choose your path with awareness"

Some practices

choose

to discount or give services away. Although I don't generally suggest this approach, if you decide to go this route, make sure you still enter the charge and then credit or discount the amount. This way, you'll know exactly how much you're giving away. Practice teams that don't track gratis services are frequently surprised by how much they're giving away once they start tracking it. Again, the key is to make a conscious decision to provide free services; don't slide into discounts and giveaways.

Associates want owners to take the lead

Awareness of the issue reduces missed charges, intentional and unintentional. And enforcing this awareness is just another part of a positive practice philosophy about charging for services-one that emphasizes great patient care and reinvestment in the practice and its staff members. If you develop such a perspective, I see prosperity in your future.

The bottom line

If you aren't tracking how much-and how often-you're missing charges, you might be surprised. It's common for a team to miss $10 to $15 in charges on 10 percent to 20 percent of outpatient cases. That's $6,000 to $13,000 for a 2,200-client practice per year.

Denise L. Tumblin, CPADenise L. Tumblin, CPA, is owner of Wutchiett Tumblin and Associates in Columbus, Ohio. Send questions or comments to ve@advanstar.com.