John Leahey SmallJohn J. Leahey, CPA
March 21, 2016

Not long ago a medical practice approached WebsterRogers to help with their practice management and tax reporting needs.  The physician had grave concerns about his net income.  Knowing the specialty, I intuitively knew his professional receipts seemed low considering his busy practice.  I could also see that his expenses seemed excessive in many areas.  Having benchmarking data for this particular specialty available, we drilled down to determine what the reasonable income and expenses should be.  When we dug deeper into the variances, we discovered the practice was the victim of financial fraud on many different levels.

This was an extreme case, but it points out the value of comparing one’s practice to their peers in the same specialized area of medicine.  Of course, there are many expense categories where your results would be different than the national or regional averages due to the uniqueness of your practice.  These factors may include having multiple office locations or choosing to outsource certain services. Overhead data is available as a percentage of total practice receipts, or stated as a dollar value per provider.  The exercise of benchmarking raises concern levels and awareness that often leads to developing solutions that lead to greater profitability.

Benchmarking includes far more information than professional receipts and practice overhead.  We use benchmarking to compare a practice’s net collection rates, aging of Accounts Receivable and average days in Accounts Receivable.  These measures help evaluate the effectiveness of your revenue cycle operations.  Analyzing this type of information can lead to uncovering problems with insurance denials and adequate follow-up on collections.  Other information that can be benchmarked includes staffing levels – comparing the number of clinical and clerical FTEs per provider.

Compensation for physicians and mid-level providers can also be compared to regional averages. Data is even available for physicians broken down by gender and years of experience.  You can determine where your compensation fits into the range of salaries earned by your peers.  Statistics are available on total compensation and also on compensation per wRVU.  This information proves invaluable when negotiating contracts or fee schedules with insurance companies.

Medical practices have experienced declines in reimbursements from Medicare and private insurance and more of the burden of payment has become the patient’s responsibility.  As a result, practices need to address all areas of inefficiency and trim any waste from their expenditures.  This cannot be done at the expense of delivering quality medical care, but strategic reductions in expenses are often possible without disruptions in patient flow or the level of service delivered.  Comparing the results of your operations to your peers using the statistical measures above provides valuable insight into the areas of your practice that may need greater attention.

The Healthcare Services Group specializes in providing accounting, tax, payroll & employee benefits, practice management, consulting, compliance and other services to physicians, clinics, hospitals and healthcare systems, ambulatory surgery centers, dentists, orthodontists and other healthcare providers.

If you wonder how the information in these articles might affect you or your healthcare practice, please contact me at (843) 665-5900 ext. 1282 or

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