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    Jimmie Richmond
    Jimmie Richmond, MPH, CHFP, CMPE, CPC

    You have prepared the monthly financial reports and set up your presentation slides when a sinking feeling comes over you. Your organization is in the red, month over month. You search the MGMA Community boards for advice. So many suggestions, so many different ways to address a common problem: underperforming net revenue.  

    It seems now, more than ever, the topic of provider production and the impact on net revenue top the to-do list of both leaders and providers. Creating efficient workflows to capture revenue must be timely and comprehensive. Measuring progress against budget, benchmarks or forecast projections can be an exercise in finance gymnastics. Sometimes it feels like we soar and at other times it may feel like we tumble. At the heart of the matter is the need for clean, concise and open communication. Engaging providers is necessary and approaching discussions in the spirit of partnership and collaboration is one way to achieve favorable outcomes. Talk about revenue contribution, include education on how we arrive at “net revenue” and provide monthly progress reports with easy-to-digest illustrations. 

    Claim credit for your hard work

    It is often useful to describe revenue as an income mechanism that has two moving parts:

    1. Price
    2. Quantity.

    Providers rarely have influence on price which is negotiated on their behalf by the organization. However, quantity can be directly affected by the provider through the quality of the clinical documentation to support the level of service, E/M codes, as well as supporting code selections for procedures. Encourage providers by sharing their individual coding averages for E/M services, compare to their peers, and use MGMA’s specialty-specific benchmarks to validate and set goals based on better performers.

    It is always worth noting to make clear the task is not to “upcode” — the documentation must support the level of service. Procedure notes must make clear what is being performed. Being clear and compliant to the coders is useful and can be a point of education to both provider and coder. Be timely with requests for clarification (both ways) and make follow-up a part of weekly operations meeting agendas. High provider productivity is good for the provider and the organization.

    Simple lesson on net revenue

    Clinicians are highly educated team members who are focused on touching lives. A necessary part of the business of healthcare is to understand the impact a provider has on the financial health of the practice. Make your message simple so that it supports the amazing work of your providers rather than distract.

    Think of revenue as income, or “incoming dollars.” Contract allowances are negotiated reductions. Bring the two together — revenue minus contract allowances — and we arrive at net revenue. Then we move our focus to net income, which is calculated as revenue minus expenses. If the difference between the two is more than zero, we have a positive result. But wait! Many practices operate with net income less than zero, which in hospital-owned medical groups might be called “investment”. The territory of less than zero might be acceptable “if” this result meets or beats the spending plan, budget or forecast. 

    For a provider who comes from private practice, seeing financial reports with negative net income can be alarming. All providers should be aware of what your organization considers to be favorable performance, especially if operating below break-even (represented as zero net income). Don’t allow misconceptions to burn like scattered embers. Be the myth buster and define expectations that are easy to understand.

    Make it clear and easy to understand your position

    Figure 1 (Example of unfavorable result comparing actual to budget) and Figure 2 (Example of favorable result comparing actual to budget)

    One way to communicate favorable or unfavorable financial results is to use a number line. This graphic is impactful and easy to understand at a glance. Distribute the graphics in email blasts with your brief, executive-summary-style comments. This is an opportune time to acknowledge great performance and encourage improvement in struggling areas (via greater provider production and/or spending limitations). Don’t forget: Saying “thank you” goes a long way.

    Additionally, consider sharing this graphic as part of monthly meetings and posting in break rooms or central communication bulletin boards. Depending on your sensitivity to sharing financial information, all stakeholders should know that their contributions — seeing an extra patient each day, purchasing a value-priced office supply, or controlling overtime — all impact the ability of the practice to keep the doors open and welcome patients into your center of care. Consider this action to be a step toward greater transparency and shared responsibility. “We are better when we pull together.”

    Creating your number line graphic can include month-to-date (MtD) and year-to-date (YtD) results plotted on a number line with zero at the center: Positive numbers land right of zero, and negative numbers to the left. Remind your team that zero represents “break even” where we spend as much as we bring in. When presenting this simple analytical tool, ask, “Are we moving closer to zero on the continuum, or are we moving further away?”  Adding your budget/forecast to the measure helps to illustrate exactly how the group is performing compared to the plan.

    The following examples consider two net income scenarios with “investment” less than zero:

    1. Actual net income is unfavorable to budget
    • Result is further away from zero and further away from budget
    • Actual performance = ($63,400)
    • Budget = ($24,500)
    1. Actual net income is favorable to budget
    • Result is closer to zero and better than budget
    • Actual performance = ($24,500)
    • Budget = ($63,400)

    Be open to talk about it!

    Create a feedback loop and take the time to welcome more detailed questions about the specific details behind the number line. Why is this important? Maximizing revenue and controlling expenses is how we fund capital projects, buy new equipment, add service lines, support raises and provide a sustainable health center for patients to access and for employees to contribute their time and talents. It can be a source of pride and comfort to demystify financial performance.  

    Taking it a step further, identify obstacles and form a plan to deal with them in the context that makes sense for your environment. MGMA DataDive provides a Better Performers data set that can stimulate your organization’s think tank and support decisions with meaningful data. Along the way, you should:

    • Maximize schedule templates that balance demand and quality and keep provider satisfaction in the dialogue. 
    • Measure utilization rates. 
    • Maximize revenue capture by ensuring providers are communicating with coding/billing (and vice versa).
    • Control expenses where it makes sense for your organization. 

    From time to time, it is necessary to have deeper one-on-one conversations, which require preparation, privacy and, in some circumstances, might best be delivered physician to physician. Consider bringing in a compassionate, knowledgeable peer who adds a calm and reasoning voice to the session.

    These are simply some of the methods to approaching the sometimes delicate conversations of how providers impact the financial success of a group. Education about finance terms, at-a-glance visual aids and a good-natured conversation about a tough topic can help to concentrate efforts toward better performance. These tools can also be used to acknowledge and congratulate groups that exceed expectations. I have enjoyed much success with these ideas and encourage you to adapt them to your environment. 

    This exercise of show-and-tell creates open communication within your organization, to eventually establish greater transparency and, in time, trust. The opportunities to understand what influences better performance start here. As you work through productivity and revenue strategies, above all else, talk about it. 

    Jimmie Richmond

    Written By

    Jimmie Richmond, MPH, CHFP, CMPE, CPC

    Jimmie Richmond, MPH, CHFP, CMPE, CPC, Financial Analysis Consultant, Banner University Medical Center, Phoenix, Ariz., can be reached at

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