Navigating Small Healthcare Practice Challenges: Essential Business Questions for Long-Term Success

Small healthcare practices are the backbone of the healthcare industry, providing personalized care to millions of patients. However, they face numerous challenges that can impact their ability to deliver quality care. For owners of small and growing healthcare practices, it’s crucial to ask yourself certain questions and work closely with your CFO to address these challenges.

Here are some of the major challenges they face today, along with key questions that should be explored:

1. Low Payer Reimbursements

One of the most significant challenges is low payer reimbursements. Insurance companies often negotiate lower rates with healthcare providers, which can significantly impact the revenue of small practices.

Questions to Explore and Their Importance:

1. What is the current payer mix?

   •  If your practice is heavily skewed toward one payer, you’re at the mercy of that payer and their decisions on reimbursements.

2. How can we negotiate better rates with insurance companies?

   • Understanding how to negotiate better rates can significantly improve your financial health.

3. Are there alternative revenue streams we can explore?

   •  Diversifying revenue streams allows the company to be flexible in offering and allows for growth.

2. Insufficient Cash On Hand/ Lack of Cash Flow Forecast

Managing cash flows is another major challenge. Small practices often have to wait for insurance reimbursements, which can create cash flow issues.

Questions to Explore and Their Importance:

1. Are we prepared for cash flow disruptions, and how many months of cash do we have on hand?

   • Being prepared for cash flow disruptions and having a good cash reserve can help maintain operations during tough times.

2. How can we improve our billing processes to receive payments faster?

   • Improving billing processes can reduce the time between service delivery and payment, improving cash flow.

3. Can we leverage technology to streamline our financial operations?

   •  Leveraging technology can automate and streamline financial operations, reducing errors and improving efficiency.
     

3. Scheduling Issues / Unfilled Cancellations

Cost optimization and efficient scheduling are crucial for the smooth operation of small practices. This includes managing staff schedules, patient appointments, and operational costs.

Questions to Explore and Their Importance:

1. What is the financial impact of each unfilled cancellation?

   • Understanding this can help develop strategies to reduce cancellations and improve revenue.

2. How can we improve our scheduling processes to maximize efficiency?

   • Efficient scheduling can improve patient satisfaction and optimize staff time.

3. Are there areas where we can reduce operational costs without impacting patient care?

   • Identifying such areas can help improve the financial health of the practice.

4. Revenue Cycle Management (RCM) Complexities

Small healthcare practices often struggle with RCM due to the complexity of healthcare billing, which includes dealing with insurance companies, Medicare, and Medicaid, as well as self-pay patients. Whether this service is outsourced or done in-house, it is crucial that this is managed effectively.

Questions to Explore and Their Importance:

1. How can we improve our revenue cycle management processes?

   • Efficient and effective RCM can significantly impact a practice’s bottom line.  It’s also important to regularly review key metrics and trends, such as average days in AR, % of AR over 90 days, Denial Rate, and Cost to Collect.

2. Can we use technology or outsource to improve our RCM?

   •  Leveraging technology or outsourcing can help streamline RCM processes, reduce errors, and increase revenue.

3. How can we reduce the time between service delivery and payment?

   •  Reducing this time can improve cash flow and financial stability.

4. How can we ensure accurate coding and billing to prevent claim denials?

   • Accurate coding and billing are crucial to prevent costly claim denials and delays in payment.
     

5. Technology Adoption

The adoption of new technologies can improve efficiency and patient care. However, it can also be costly and require significant training.

Questions to Explore and Their Importance:

1. What technologies could benefit our practice?

   • Identifying beneficial technologies can help improve efficiency and patient care.

2. How can we train our staff to use these technologies effectively?

   • Effective training can ensure that staff can use new technologies effectively, maximizing their benefits.

In conclusion, while small healthcare practices face numerous challenges, careful planning and management can help them overcome these obstacles and continue to provide excellent patient care. It’s crucial for business owners to ask themselves the right questions and work closely with their CFOs to address these challenges head-on. By doing so, they can ensure the sustainability and success of their practice in the long run.

If you are a practice owner looking for an experienced CFO with healthcare industry expertise to help tackle these challenges, please reach out to us for a complementary Discovery Call. Our fractional (part-time) services are a cost-effective way to get the full benefits of strategic financial expertise provided by a CFO, without having to hire one full-time.