FQHC Financial Pitfalls: Getting Bogged Down in Processes
Managing a financially efficient healthcare organization is a massive task, and that task gets even more complicated when you enter the realm of FQHCs. Financial health is crucial for sustaining operations, growing vital programs and services, reinvesting in your staff, and delivering quality care to underserved communities.
The term “financial health” encompasses the entire finance picture of your organization, from assets and operating efficiency to custom reports like your balance sheet and income statement. Getting a clear picture of where your healthcare center is currently, as well as implementing changes that help you achieve financial health and stability takes time and hard work. However, amidst the complexity of managing healthcare finances, organizations can easily get bogged down in unnecessary processes that detract from their bottom line.
FQHCs in particular can fall victim to this, with staff that often wear multiple hats, Board Members that may not understand the intricacies of FQHC finances, and leadership that feels the pressure of managing every detail financially.
In this post, we’re exploring a couple key metrics that help paint the picture of your financial health, plus a couple metrics that can drain your time and resources without telling you very much. Now, each FQHC is unique (that’s why we’re so invested in collaborating and customizing services for our clients) so this is by no means an exhaustive list, but more of a starting point. The goal is to help you and your team take a critical look at what you’re spending time tracking and explore the metrics that really make an impact on your organization.
Key Metrics for Assessing Financial Health
When evaluating the financial health of your FQHC, there are two pivotal metrics that are truly essential benchmarks for gauging overall performance. These metrics provide valuable insights into your organization’s fiscal standing and operational efficiency – how much money is coming in, and how efficiently your healthcare center is running. Keeping an eye on these key metrics will give you a clear picture of your current financial situation and help you make informed decisions to drive sustainable growth and success.
- Net Revenue per Visit: One of the most telling metrics for assessing financial health is net revenue per visit. This metric measures how much revenue is generated per patient visit, providing insight into your organization’s revenue-generating efficiency. By tracking net revenue per visit over time, you can plan for the future, identifying trends and gathering data that helps your team make informed decisions to optimize revenue streams based on solid numbers.
- Days in Accounts Receivable (AR): Another critical metric is the number of days it takes to collect payment for services rendered. This metric reflects your organization’s effectiveness in managing cash flow and can help identify major pain points in your revenue cycle. A lower number of days in AR indicates prompt payment collection and efficient revenue cycle management, contributing to overall financial stability. Seeing your days in AR creeping up steadily? You’re not alone! Effective AR management is one of the biggest challenges facing FQHCs, which is what makes this particular metric so important to track. Monitoring this metric regularly will help you and your team maximize your revenue, see what revenue is being left on the table, and determine where your staff needs to focus the most. Check out our AR Cleanup guide for some tips to master your own AR.
Pitfalls of Focusing on Unnecessary Details
In the pursuit of financial health, it’s important for FQHCs to maintain a balance between tracking important numbers and not getting lost in the weeds of processes and unnecessary tasks. While key metrics provide valuable insight into your overall performance, getting too focused on minor details can divert resources and attention away from more critical tasks and make the big picture fuzzy. FQHC leaders need to take a critical eye to their current reporting and financial processes to figure out the difference between essential tasks that help you make informed, forward-thinking decisions, and those that just create an inefficient system. By putting your staff time and energy into what counts and making your processes more efficient, your team can optimize their resources and ensure sustainable growth. These are two of the processes we see repeatedly that end up costing more than they contribute.
- Excessive Documentation Requirements: FQHCs often face stringent documentation requirements imposed by regulatory bodies and payers. While documentation is necessary for compliance and billing purposes, excessive demands can overwhelm staff and detract from patient care. Fulfilling all of the documentation required to remain compliant is essential, and to save time and staff bandwidth, try to eliminate as much extra internal-only paperwork as possible. Think about ways you can reuse the forms required for compliance to aid in internal processes instead of creating new forms for internal use and duplicating work. Spending excessive time on documentation may not significantly impact financial health, but it can lead to burnout and inefficiency.
- Micro-Managing Small Expenses: To control costs, some FQHCs may fall into the trap of micro-managing small expenses. While it’s important to be prudent with spending, obsessing over minor expenses can lead to wasted time and resources. Instead of scrutinizing every penny, try to prioritize your attention and address larger financial issues that have a more substantial impact on the bottom line.
The Importance of Streamlining Processes
Operational efficiency is the name of the game, and the smoother your workflows, the more time you have to focus on your mission. There is definitely a place for detailed financials, but when it comes to day-to-day decision making, focusing on a few key metrics that paint the big picture saves time and still gives you the flexibility and freedom to make informed decisions for your programs, services and staff. By implementing efficient workflows and leveraging technology solutions, you can reduce administrative burdens and free up valuable resources to focus on delivering high-quality care to your patients.
- Automate Routine Tasks: Identify routine administrative tasks, such as data entry, invoice processing, and billing, that can be automated using software solutions. Save your monthly reports as templates so they can be run with one click and consider automating appointment reminders and patient communication to improve efficiency and reduce no-show rates. Most EHRs have some billing functionalities that can streamline billing processes and reduce manual errors. Familiarize yourself with your EHR abilities and start using the features that will benefit your team.
- Outsource Revenue Cycle Management or AR Cleanup: If you find that your team is overwhelmed and unable to focus on your mission, it might be time to consider outsourcing. You can outsource your full revenue cycle management, which allows you to redistribute valuable staff to departments that focus on programs and services, or you can outsource just your AR cleanup. Outsourcing gets you access to an expert team that understands your unique billing requirements, and advanced technology solutions for efficient claims processing and denial management. Outsourcing RCM or AR cleanup can alleviate the administrative burden on internal staff, accelerate revenue collection, and reduce the time and resources spent on resolving billing issues. Additionally, outsourcing allows you to benefit from the latest industry best practices and technology innovations without the need for significant upfront investments. Not sure if this solution is right for your organization? Take a look at our free guide “Are you ready for RCM?” to explore your options!
- Implement Electronic Payment Systems: Transitioning to electronic payment systems can expedite payment processing and reduce the administrative burden associated with manual payment collection and reconciliation. Offer patients multiple payment options, including online portals, mobile payment apps, and automated recurring payments, to enhance convenience and encourage timely payments. This will not only improve your patient satisfaction and make their payments easier, but it will also streamline your revenue cycle management and improve cash flow forecasting.
In the dynamic world of healthcare finance, it’s crucial for FQHCs to stay proactive in managing their finances. By keeping an eye on important metrics like net revenue per visit and days in AR, while steering clear of unnecessary paperwork, tedious and inefficient processes and procedures, and excessive penny-pinching, you can set your team up for success in the long run. Streamlining processes and focusing on efficiency will not only boost your financial health, but also elevate the quality of care you provide to your community.
