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Why Your Revenue Cycle Affects Your Long-Term Net Worth More Than Your Financial Adviser

Why Your Revenue Cycle Affects Your Long-Term Net Worth More Than Your Financial Adviser

Achieve Long-Term Growth with Revenue Cycle Management

With no intended slight to the fine financial advisers who help physicians and others manage their investment portfolios, Ambulatory Surgery Center physician owners concerned with long-term wealth creation often need to look no further than their own facilities to improve their net worth.

Improving each component of a facility’s revenue cycle can increase the value of an ASC by potentially millions of dollars. In comparison, the stock market today, at best, promises low, single-digit annual growth. Which return would you prefer?

Here’s a revenue cycle cheat sheet on how to prevent costly leakage that can really affect your long-term net worth.


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“4 Vital Changes That Can Increase Your Net Worth”


Managed Care Contracts

Even if all other aspects of an ASC’s revenue cycle are executed perfectly, if its managed care contracts were poorly negotiated, the facility’s best-case scenario will be to achieve 100 percent of that poorly negotiated number.

A common misconception is that there is no room for negotiation in crafting these agreements. But providers have considerable leverage, and understanding a facility’s cost structure for every procedure is vital to obtaining the most competitive contract.

Coding and Claims

ASCs frequently leave money on the table by failing to implement the appropriate quality and efficiency controls that can maximize appropriate reimbursements for performed procedures. Similarly, timely claims submissions and appeals, as well as the provision of detailed operative notes and accurate demographic data, all require standardized processes and procedures that analyze each case and set forth the appropriate course of action.

Payment Posting

This critical function creates all of the financial information that allows an ASC to develop financial analytics around its caseload and implement the necessary improvements when weaknesses are identified. If these payments are posted incorrectly, the analytics will not provide the correct insights to make improvements. The payment posting department also should be flagging underpayments and be collaborating with the accounts receivable (A/R) personnel to resolve them.

Patient Accounts

The front desk is the first line of defense for an ASC’s revenue cycle, particularly now that patients are responsible for paying more of their expenses for health care out of pocket. The front desk also has to balance two responsibilities that may sometimes be at odds: 1) make sure patients are paying their bills in full and on time; and 2) create a great patient experience so they become return customers and a referral source.

Your Bottom Line

While it may not seem obvious at first glance, these four revenue cycle functions can deeply affect your long-term net worth—for better or worse. For example, consider an ASC that performs 400 cases per month at an average of $1,000 per case, thus generating $400,000 in revenue per month and $4.8 million per year. If that facility does the same volume of cases but makes a concerted effort to focus on improving its revenue cycle, as set forth below, the ASC’s bottom line will dramatically increase. For example:

  • Renegotiate your managed care contracts by understanding your cost structure and procedure mix; shoot for a 7.5 percent increase in reimbursement.
  • Tighten up your coding and claims submission processes to reduce denials, including those due to untimely filing and appeals; a 5 percent increase in collections is likely achievable.
  • Train the payment posting department to identify any underpayments and send to A/R for follow-up; a 2.5 percent increase in collections is reasonable.
  • Teach your A/R team how best to attack the A/R aging, plus ensure that they are trained on the most current methods for negotiating underpayments and fighting denials, and strengthen your patient collections; these can easily lead to a 10 percent increase in cash collections.

While these efforts do require planning, in-depth knowledge, hard work and strong leadership, the additional steps described above would lead to an additional $1.2 million in annual cash collections, with a zero increase in case volume and nominal expense increases. The ASC’s value would increase approximately $7 million dollars, providing a substantial boost to the owners’ net worth.

Written by Nader Samii, CEO

This post was first published May 15, 2017 and was updated July 29, 2020.

National Medical Billing Services is the premier Surgery Revenue cycle management company.



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