Are Practice Management Consultants Worth Hiring?

In the end, the practices who invest in themselves are, almost always, the top performers. You’ll see among best performing practices, that many have engaged – and continues to engage – consultants on matters that are outside their expertise.

This is a guest post from Chip Hart. Chip is a frequent contributor to PediatricInc and former co-host of the highly revered Pediatric Management Awesomecast. When Chip isn’t protecting independent pediatric practices against evil conglomerates, naysayers, and the League of Shadows, you can find him at PCC doing… something (I’ve never figured out what is it that he does at PCC, exactly). 


I will never forget the scene. I was the lonely consultant in the dark and shag-carpeted basement “conference room” of a large pediatric practice and was giving them a stern lecture about their pricing. The practice hadn’t updated its prices in years and was undoubtedly losing money. Lots of it.

Chip Hart and Brandon Betancourt
Working really, really hard.

After my explanation of RVUs and why 105% of Medicare wouldn’t cut it, the senior partner – well, the loudest one, anyway – looked me in the eye and said, “OK, that sounds smart, let’s just raise our prices.” It was the response I was hoping to get.

The youngest and newest partner jumped in quickly, “What?! How can you listen to this guy?”

Uh oh, I thought. His voice cracked, “…I’ve been telling you this same information for almost two years and he just waltzes in here and says ‘Correct your pricing.’ and you do it just like that?”

I honestly thought he was going to cry in frustration and relief. 10-minutes of back-and-forth among them ensued. I just stayed out of it. At the end of the year, the additional $250,000 they collected erased the discomfort and awkward part of the memory for them.

I didn’t forget, however. I remember sitting there thinking, “This poor practice lost hundreds of thousands of dollars simply because they were unwilling or unable to listen to themselves. They had to hear it from someone else.”

HOW DOES THIS HAPPEN?

The answer is both obvious and convoluted. I have often said that the most important and difficult task for any small business is to find and hire good people. Unquestionably, this challenge extends to the hiring of practice management consultants.

Pediatric practices successfully hire consultants all the time without a tremendous amount of consideration – realtors, attorneys, I/T – but when it comes to getting help on the inner workings of the practice, the majority of pediatric offices too reluctant to ask for help.

And when they do ask for help, it’s often ineffective.

Every practice I visit codes imperfectly, yet some practices lose tens or even hundreds of thousands of dollars a year as a result of their inability to address the problem.

Most practices could use help negotiating with insurance companies, yet remarkably few of them do. Many practices need help with a compensation model or managing a challenging partnership, yet most of them just live with the problems and hope it will go away. And so forth.

Physicians, unfortunately, are uniquely susceptible to mis-using consultants, even if it is simply to not use them enough.

You expect most vendors and consultants to try to take advantage of you – all doctors are rich, right? – while having trouble admitting that you cannot solve all of your own problems.

Combine those aversions with the impecunious nature of most pediatricians, and there is no surprise that I meet practices every week who would rather lose another $15,000 this year due to a poorly designed superbill and bad pricing than pay a consultant half that amount to fix the problems.

HOW AND WHEN DO YOU KNOW YOU NEED A CONSULTANT?

There is no magic formula, but try these parameters on for size:

  • When there is an issue that your partnership cannot resolve, or when a neutral third party can facilitate a necessary change in your practice, consider a consultant.
  • When you are not an expert in the matters that affect your practice or if there is simply another party who might be more effective and efficient at addressing the matters, consider a consultant.
  • When your practice is losing more money on an issue than it would cost you to fix, consider a consultant.
  • When the amount of money you would pay a consultant is less than the amount of money you would generate seeing patients, consider a consultant.

Those last two examples are often conjoined in a death spiral of inaction. Many of you don’t want to pay a consultant $20,000 to renegotiate a contract increase of $50,000 annually because “you can do it yourselves.”

Yet, you don’t do it. Or you start the project and sink 10, 20, 40 hours into the task – often worth more to the practice than what you would pay the consultant – and then never complete the job.

Pediatricians, as business owners, are notoriously bad at examining the return on their potential investments and usually focus far too heavily on only the costs.

Pretending to be 100% self-sufficient serves no one except, perhaps, the insurance companies. Your patients don’t benefit, your lifestyle suffers, and you leave money on the table.

HOW THEN DO YOU HIRE A PRACTICE MANAGEMENT CONSULTANT?

First, hiring a consultant involves a lot of common sense. You want a written contract that spells out the terms of your obligation.

The terms should clearly outline your expectations, identify the fundamental goal, and determine conclusion of the contract. Ultimately, it involves a relationship of trust and confirmation. Some suggestions that go beyond the generic:

1 – Pediatric practices are different, don’t let a potential consultant tell you otherwise.

Most medical practice consultants live in the Medicare world and look for “alternative income sources” that just don’t exist in pediatrics.

More importantly, the attitude and (often unspoken) philosophies of pediatric practices differ from other medical specialties. Find someone who knows pediatrics.

2 – Work with a consultant on one or more smaller projects and build up to a strong relationship.

Before you leap into that full payer-mix and negotiation mission, see how well you work together on something smaller, like simply reviewing the state of your existing contracts. If you are not getting the kind of performance you expected, better to have not committed so heavily.

3 – Don’t be afraid to use different consultants for different needs.

Just as you may not be an expert on RBRVS or pediatric compensation models, your consultant may not know it all, either.

Although some consulting resources pride themselves on their breadth of experience, depth is usually more important. A good consultant might look at your practice and identify work that needs doing. A great consultant can identify work that needs doing, but suggests another resource.

4 – Even after you have chosen a consultant, keep an eye out for conflicts of interest.

Although they are impossible to avoid and sometimes even lead to efficient work (like one consultant recommending another), conflicts are often poorly revealed in the industry.

5 – Use your network of pediatric peers to help vet your consulting needs.

Surely, if your potential consultant expects to work with you, he or she can provide you with pediatric references whom they have helped with similar issues. SOAPM is an excellent place for a sanity check.

In the end, the practices who invest in themselves are, almost always, the top performers. You’ll see among best performing practices, that many have engaged – and continues to engage – consultants on matters that are outside their expertise.

What Is The Best Way To Calculate Insurance A/R Days?

Account receivables turn around time or A/R days (as it is commonly known as well) is the time an insurance claim takes from the moment the practice submits it, to the moment it gets paid. In other words, A/R turn around time is the indicator that measures how fast a health insurance company is paying you.

Recently, the topic of how to calculate this key indicator came up on SOAPM. Chip Hart – my Pediatric Practice Management AwesomeCast co-host – replied with his thoughts on this key metric.

It has been a while since Chip contributed to PediatricInc, so I reached out to him to ask if I could republish his reply to the inquiry made on SOAPM.

Chip answered that his insights are worth thousands of dollars… he also said something about consultants charge for this info, etc., etc. BUT, since he loves the PediatricInc readers so much and is grateful for all the praise and support we’ve given him over the years, he was willing to do an exclusive (*) PediatricInc only 100% discount. 🙂

(*) and by exclusive, I mean everybody that didn’t read the post on SOAPM

Continue reading for Chip’s nuggets of practice management wisdom.

Before I begin, we should remember that calculating “turn around time” or “A/R Days” or any of these similar measures requires making a lot of compromises and assumptions. None of the typically used benchmarks are really accurate, in my humble opinion, at least as far as what people think they actually mean. It can still be enlightening work, however.

OK. Thanks for heads up. So, how does one calculate insurance AR days?

Technically, the only way to truly calculate it is to measure the actual dates of each and every charge/payment pair and find the average.

How or where does one find the actual dates of each and every charge/payment?

Your PM ought to be able to generate that data, but even then there are some questions you should consider.

Like what?
  • Is the starting date the date of service or date of billing?
  • Is the ending date when the entire charge is paid off or just some portion
    of the insurance part? Or all of the insurance part?
  • How do you manage claims that are denied first?
  • How about claims that are partially paid?
  • How should you distinguish the patient portion of your balances?
  • Do you distinguish secondary claims?
  • If a claim isn’t paid off yet, exactly how do you count it?
Those are a lot of questions. Does you have to answer them all to calculate insurance AR Days?

If you want to approximate the time it takes you to collect (or, at least, the VALUE of what is uncollected put in terms of your charge rate), do this:

Screen Shot 2015-04-15 at 10.43.07 AM
What does the formula tell you exactly?

This [formula] would produce the “A/R Days” figure most commonly used by a consultant.

Can you offer an example with numbers?

For example, you might have $20,000 in A/R for BCBS and you routinely do $1,000 worth of charges every day for BCBS -> 20 A/R Days. The divisor is, simply, your total charges for Insco A during a time frame divided by the number of days in that time frame. Also note that for the divisor, you want an “average day” sample of AT LEAST 3 months. I prefer 3-6months.

Why is that?

I’ll spare you the math, but you really want a sample that’s a little larger than your expected value…if
you are in the 30-day range, as many of your readers should be, use a 60-90 day sample. There are inherent dangers to sample sizes that don’t reflect your present volume, so don’t use a year or a month (or less).

Seems straight forward. Anything else?

Having grown wary of this measurement, however, I looked for something similar that was more valuable.

Do share

The number I like to track is the relative A/R in the 60-90 days category.

How do you calculate this number?

This can be tracked in different ways, but if you want to compare payers, you can do it with two measures, in my opinion:

  1. How much of your A/R do your TOTAL 60-90 day balances represent?
  2. How much of your 60-90 A/R balances does Insco A represent?

…for 1, you might get a number like “18% of my A/R is in the 60-90 bucket.” Why is this important? Because anything >90 days is practically uncollectable (it happens, but you’re really looking at 10 cents on those dollars).

Of course we don’t want that number to grow, ever. Right?

If that number grows, you might be looking at a collections issue, a billing problem, etc. It’s a key figure,
in my opinion.

How about #2 (how much of your 60-90 AR balances does ins A represent?)

If BCBS suddenly goes from 25% of your 60-90 day A/R to 40%, something bad is probably happening or you wrote off/collected a lot of other money!

Note that you can’t really look at #2 in isolation. BCBS could maintain a steady chunk of your 60-90 A/R and you’d be fooled into thinking things are OK when the entire section is increasing as a result of your biller not doing the job (for example).


For those that don’t know, Chip also has his own blog. Make sure to visit: Confessions of a Pediatric Practice Management Consultant. Hurry over there before Chip decides to forgo keeping pediatric practices alive and independent for fame and fortune.


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