Modern Bookkeeping: Part 1

Accounts Payable for Private Practices

It’s 4:30 PM on Wednesday it’s time to spend your weekly 15 minutes on completing all the bookkeeping for the practice. The checks have already been signed and sent even though the signer is on a boat in the Atlantic. Invoices are entered into your system despite never opening the relevant envelopes. You are reviewing your cash forecast for the rest of the month. You’ve paid your vendors at the last possible second on purpose. Wait!!! Does this accounts payable process sound too good to be true?Let me guess your Accounts Payable process:

  1. Invoice is received by snail mail and added to a giant pile of paper on your desk
  2. You open the invoice and confirm the charges
  3. The invoice details are entered into bookkeeping software (extra points if you scan the invoice and attach it to the bill)
  4. The invoice is placed in a folder for all the outstanding bills sorted by due date
  5. Periodically you look at that folder to see which ones need to be paid in the next week or month
  6. When a bill is unpaid, you find the stack of blank printable checks and feed it into your printer
  7. In your bookkeeping software, you see the bill, print the check, and enter the check number
  8. The check is paper clipped to the invoice
  9. A pile of checks is added to a collection of work on the Physician/Owners desk
  10. When the signer can get around to it, they sign all the checks and ask questions about the invoices they don’t recognize
  11. The checks and invoices are returned to you
  12. You take each check, remove the bottom stub, and staple it to the invoice before filing it away in some convoluted storage system
  13. The check is placed in an envelope, sealed, stamped, and ready to be sent

Countless obstacles are implicit in this system, such as:

  • The Check Signer was out of town and therefore couldn’t sign the checks
  • Storage and management of these invoices wastes space and time
  • Embezzlement is too easy and there isn’t an audit trail

If this process is similar or the same as yours, you’re not alone. When I was an Office Manager this was my process as well. As a Consultant, every practice except one has had a process very similar to this. The good news is that with a few changes you can adopt a modern bookkeeping platform that takes all of this off your shoulders.There are programs that help with this subject that have so many features that it would be impossible to cover them completely and if I did, they would probably have more features by the time I finished. Even if you didn’t find a program that you liked, you could train a Virtual Assistant to do these mundane and robotic tasks on your behalf (I did). Let’s skip to the finish line and outline a bill payment process after you use one of the platforms as mentioned above:

  1. Invoice is sent to a specific email address or fax number that coincides with your practice
  2. That invoice is automatically entered into your system (vendor, invoice number, due date, amount, account, memo, etc….)
  3. You review and approve the details
  4. While waiting for their coffee to finish brewing or while they’re in a Taxi on their way to the airport, the Check Signer loads an app on their cell phone, and just swipes left to approve the bill. If they want to investigate, they just click on the invoice to see the invoice, past bills from that vendor, vendor notes, when it was received, ect….
  5. The approved bill will then be paid at just the write time by sending a check or ePayment on your behalf

Each party involved, the Bookkeeper and the Physician, have spent a completely negligible amount of time doing a process that is superior in every fashion. There are detailed audit trails and complex bill payment arrangements to ensure embezzlement is nearly impossible. The system integrates directly with your bookkeeping software so that you aren’t entering bills or marking them as paid anymore. The system allows the Bookkeeper and Check Signer to operate anywhere in the world as long as they have a connection to the internet.What’s the cost? Again, negligible. From a sample size of 42 clients that have adopted one of these platforms, we found that all clients saved a huge amount of time and benefited immensely from the added features. Most of these platforms charge a monthly fee per user, a fee per bill, and another fee for automatically populating the invoices. Here is are some common client comparisons for the proposed Accounts Payable process:

  • The cost is approximately 19% of the original. Our clients had an associated cost that was between 15% and 23% their original.
  • Time associated was about 6% the original. Our clients had an associated cost that was between 5% and 9% their original.

In conclusion, taking a step toward modernizing your bookkeeping will save you and your practice time and money. The benefits you gain from these accounts payable programs are endless, but most notably, they allow you to manage your accounts payable from anywhere in the world, and they render your filing cabinets of receipts, check stubs, and invoices obsolete. If you think you have an excuse as to why an accounts payable program like this won’t work for you – please check them out anyway. One practice tried to stump us by stating that their process required three Physicians to sign a check, they received invoices from twelve offices, and they used a ‘class’ system that categorized the bills in complicated ways; the accounts payable platform didn’t even break a sweat in such a convoluted process.

Appointment Efficiency

The preliminary test of the health of your practice

The most important metric, in my opinion, to determine the health of your practice is appointment efficiency. It’s a direct and straightforward test that can indicate the performance of your scheduling staff, the need to recruit more Providers, and it can even indicate how you manage your visits overall. Unfortunately, this metric is hard to generate in most EMR’s, and thus it’s been forgotten. In fact, I’ve yet to work with a practice that is already using this test, but it soon becomes gospel. The metric goes by many names, and some would argue that the title alludes to other parameters – regardless, this one seems to indicate the core of them all.

Here’s the equation: Provider Units Consumed / Provider Units AvailableA unit can be any amount of time in the context of an appointment. Most Providers use 15 minutes to define a unit because they believe they should spend no less than 15 minutes with a patient. If you specify a unit to be 15 minutes, then make sure your EMR is displaying at 15-minute intervals. A sick visit may only take 15 minutes. Therefore, it’s value is one unit; whereas an annual appointment may take 30 minutes, thus, it’s value is two units. Once you define your unit value, you must remain consistent thereafter.Provider Units Available (PUA) are how much time the Provider has allocated for patient care that day. It does not include non-billable time such as completing the charts at the end of the day or working with administrative staff. Office the schedule template allocation within your EMR is the same. A Provider may be willing to work from 9:00 am to 5:00 pm (32 units) with a 1-hour lunch break (4 units) for a total of 28 units.Provider Units Consumed (PUC) are how many appointments or 15-minute units are consumed during the time they allocated to the practice. If a Provides spends two units on a 1 unit appointment, you still count it as 1 unit as it was scheduled. Staying consistent with the examples above, let’s assume the Provider has 28 PUA’s, and on their schedule today they’re going to see five annual visits (10 units) and nine sick visits (9 units); the total PUC would be 19. Therefore their Appointment Efficiency was 19 divided by 28 or 67.8%.Now that you can calculate the Appointment Efficiency for the practice you’ll need to start analyzing the data. One of the first conclusions you need to compile your data are benchmarks for the practice as a whole and the Providers. You can use this information to identify ‘bright spots’ in your practice and hold everyone accountable to the same standard which founded on their ability. Take the following example:

  • Provider A Appointment Efficiency = 210%
  • Provider B Appointment Efficiency = 130%
  • Provider C Appointment Efficiency = 80%
  • Thus, the average practice Appointment Efficiency = 140%

Here’s how you may use this example data to manage the practice:

  • Provider A has been with the practice for a long-time and has many patients of his/her own. Are the patient satisfaction scores indicating that this patient throughput is acceptable? Is this Provider too busy and should give some of their appointments to Provider’s B & C? Does Provider A need to allocate more time to the practice given the high demand for appointments?
  • Provider B has been with the practice for a year but reschedules appointments frequently and refuses to see a few visit types. Should this Provider work one less day per week until the Appointment Efficiency increased? Does this Provider work a schedule that overlaps with Provider A? Does this Provider run late because the time allocated to each appointment type is beyond their capability? Since Provider B is a shareholder, it might be just as advantageous to give that Provider a percentage of your daily volume to increase your quality of life without giving up income.
  • Provider C is a Nurse Practitioner and has recently joined the practice. Practices may expect mid-level Providers to have a lower expected Appointment Efficiency due to the different rate of time and overhead. 80% in this context might mean Provider C should be measured independently of Provider A & B who’s average would be 170% otherwise.

You can use Appointment Efficiency to determine the health of many aspects of your practice. For instance:

  1. When should you recruit another Provider to your practice? Perhaps when you’ve maintained an appointment efficiency with all Providers above 200% per day for two weeks is a good sign that it’s time.
  2. Combine this information with your average reimbursement per visit to determine the profit associated with each Providers Appointment Efficiency. Let them know that they need to maintain an Appointment Efficiency of at least 120% before they qualify for a Productivity bonus.
  3. Use this information to adjust your schedules. Is Provider B at 400% appointment volume on Tuesdays because Provider A is in Surgery and Provider C has the day off? Is there an opportunity to extend office hours on Monday and Friday to reduce congestion?
  4. Consider if the operational workflow of your clinic staff is supportive of an improved Appointment Efficiency. Often there’s a bottleneck which inhibits the pace of the Provider indirectly.
  5. Is your scheduling staff restricted by poor schedule template design in the EMR or by poor placement of appointments? Should you reconsider the blocks in your schedule for emergency or sick visits? Should you stagger lunchtimes, so the demand is mitigated? Reward scheduling staff for crafting an agenda with the Scheduled Units / Available Units achieving 100% for the practice per day.
  6. Maybe you’re interested in opening a second location; this information can help you determine the potential of spreading your present Appointment Efficiency to another location/Provider. You might be able to increase your Appointment Efficiency by letting your Billing Staff work from home and converting their office into an exam room instead.
  7. So your Appointment Efficiency is at a number you’d like to see it across the board, now what? I suggest finding ways to make the value generated from each appointment better. Perhaps 1 Physician should off-load their general appointments to 3 Physician Assistants with the hopes of consuming units in the Operating Room primarily.

Everything within the practice correlates to your ability to conduct patient encounters. Your practice doesn’t treat patients by spending an hour in a meeting in the middle of the day, it doesn’t increase your bottom line arguing about website content, and it certainly isn’t helping when you’re focused on bookkeeping. All of those ancillary time consumers are essential, but that’s secondary to maintaining a proper Appointment Efficiency benchmark. Your practice consumes one precious fuel which is Provider time, and everyone employed by the practice is there to make the consumption rate of that fuel more efficient. There is limited fuel on this Earth so be sure you’re consuming it practically. Provider Appointment Efficiency isn’t the burden of the Provider alone; it’s an indication of the health of the entire system.

Managing an Employee List

To most, Human Resources sounds like such a daunting task. Like any other role in the practice, it is a series of workflows that when broken down into their constituent parts are rather simple. These workflows begin and end just as the name suggests, with the resources in your practice that are humans. We encourage all of our clients to manage what we call an ‘Employee Master List’ which is a simple platform that keeps a core duty of Human Resources organized. Here’s how to use one:

  1. Create the spreadsheet. Preferably use a platform like GSuite Sheets; otherwise, software like Microsoft Office Excel will suffice.
  1. Rows are for employees and columns pertain to items, documents, or training per employee. Start by setting your spreadsheet up like this:
  2. Add another section for onboarding documents. These columns should include at least the following which should be in the same order as your ‘new hire packet’ (bonus points if you link a digital copy directly to the associated cell):
    1. Signed Employment Agreement
    2. Confidentially Agreement
    3. Employee Handbook Acknowledgment
    4. Employment Application
    5. Fair Competition and Confidentiality Agreement
    6. Copy of Driver’s License
    7. Copy of Social Security Card or Birth Certificate
    8. Void Check or Deposit Slip
    9. Immunization Records
    10. Emergency Contact Form
    11. W-4
    12. I-9
  3. Populate cells. As with all document or task-related cells, you should fill the cell with a date that this is achieved.
  4. On-boarding tasks. The next section of columns is related to tasks that you need to perform for each new hire. These would include items such as a tour of the office, create a timecard account, create a company email address, create an EMR account for the new user, etc….
  5. Training ladder. The last section is what we refer to as a ‘training ladder’ which is a series of training tasks that the employee needs to undergo. This ladder should always expand as you formalize specific workflows and tasks within your practice. These items should come in pairs – one column for sending a guide/workflow and another column for confirming that the employee has demonstrated understanding. An example would be:
    1. Phone Operation Guide
    2. Phone Operation Test
  6. Format. Now that your spreadsheet is set up, you should format it so that it’s easy to follow.
    1. Fill columns with colors based on the section
    2. ‘Freeze’ rows and columns so that they are easier to read when scrolling
    3. Include conditional formatting for empty cells and cells nearing expiration
    4. Add filters which may hide rows if the employee’s current position is ‘terminated’ or to quickly isolate Call Center staff on the list
    5. Auto-sort the list alphabetically or by position
  7. Create a reminder. Lastly, create a recurring reminder to review this document periodically. Until the Employee Master List is predominantly completed, it would be good to check the spreadsheet frequently.

This guide will create an organized approach to managing one of the core duties of Human Resources. If you add columns regularly, this platform will evolve as the practice does. Some of our clients have 30 columns whereas some have 300 or more. You should start using this tool immediately to confirm that you have all the documents you assume you have in your employee’s files. Empty your file cabinets of employee files and migrate to a modern and mobile document management system.