Published - May 2012
FROM THE ROAD
By Dave Jakielo
Medical Billing is a Numbers Game
Have you noticed that the medical billing industry is facing a few CHALLENGES in today's marketplace? Trying to speculate what the billing environment will look like in a few years is anybody's guess.
However, one thing we do know is that the industry is not going to remain the same. It is important for every owner to realize that what got you here, won't keep you here. Or in other words, you must realize that your past success is not a guarantee of your future success.
I hear people saying we don't have any problems in our industry just opportunities -- blah, blah, blah. This statement is only true if you are analyzing the opportunities, developing a strategy and then taking action. I find in my interactions that many owners are so busy doing "STUFF" in their company that they are unaware of what is going on in the environment around them.
So how do numbers play into a successful future? While there are dozens of numbers we could examine, let's take a look at three that can have a big impact on your future.
First, is what I refer to as the 80 -- 20 formula. Currently, in most billing companies 80 percent of the salary budget is spent on the clerical staff and 20 percent is allotted for management. This is due to the lack of automation that currently plagues our industry. We are still doing some billing tasks manually, just like I did in 1971 when I became a billing clerk at the hospital.
Future success will reside with the companies that can make the transition from 80 -- 20 to 20 -- 80, meaning that the majority of the salary budget, 80 percent, will be utilized for professionals not clerks. Pure medical billing companies will die a slow death while practice management companies with a billing component will flourish.
Secondly, another set of important numbers are $75,000 to $100,000+. These amounts represent what a practice management / billing company revenue per FTE (full time equivalent) should be on an annual basis. The calculation is a follows:
- Total annual revenue you receive from your clients divided by the total number of FTE's working in your firm. Include yourself in your calculation and if you use off-shore labor you must include them in the numbers too.
Currently, if you are not achieving these results it could be due to one of the following factors. Either you are overstaffed or your management fees are too low and you are under charging your clients or it could be a combination of both.
Lastly, but maybe most importantly, is the 30 -- 10 rule. To help you understand the challenges and to have the ability to develop solutions you must come out of your cocoon or cubicle and stimulate your mind so that you will be able to come up with successful strategies. The 30 -- 10 rule is representative of the following:
- Listen to an educational audio program for 30 minutes every day.
- Read 10 pages of a thought provoking book every day.
And if you are wondering where you'll get the time, here are some tips: 1) shut off the TV; 2) use the drive time in your car as learning time or get up 30 minutes earlier every day. Someone once told me they can't get up earlier they need their sleep and I reminded them that they really won't miss it because someday they will sleep a really, really long time and will catch up.
It's important to remember that the mind is a muscle and if you don't use it you'll continue to lose it. Charlie "Tremendous" Jones once said that, "You are the same person today as you'll be in five years except for two things: the books you read and the people you meet."
I realize that the revenues are declining and your expenses are rising, not unlike other industries. So you have a choice to make. You can either work on improving yourself and your company or you can continue doing the same thing day in and day out hoping for different results.
Dave Jakielo, CHBME, is an International Speaker, Consultant, Executive Coach, and Author, and is President of Seminars & Consulting. Dave has been helping Companies grow and improve their profitability for over 4 Decades. Sign up for his FREE weekly Success Tips at www.Davespeaks.com. Dave can be reached via email Dave@Davespeaks.com; phone 412-921-0976.