Importance of Running Financial Reports for Your Practice

When was the last time you reviewed financial reports for your practice?

If you can’t remember, then now is the right time to start because handling the business end of healthcare is equally important. If you don’t have a good understanding of financial reports, then you will be missing out on key metrics that are required for making good business decisions.

In-depth understanding of reports will help you identify potential financial problems and shed light on areas that need your focus. All this will help you grow your practice. Here are a few basic financial reports that healthcare providers must review on a regular basis:

Profit and Loss Statement (P&L) is a report that helps providers track revenues and expenses. It shows the profitability of the practice and aids in tracking key indicators like, number of procedures, total encounters, total collections and charges. If the report shows a sudden drop in collections then consider it a red flag. However, it is better to look for an explanation behind the warning signs before you decide a course of action.

It is necessary to go through balance sheets to know what your practice owns as well as owes. This sheet will have items that might not show up in a Profit and Loss Statement.

Another important financial report that you should review periodically is the accounts receivable ageing report. Through this report, you will get to know the amounts owned by patients along with the length of time the money has been unpaid. If it takes more than 45 days for the claim to be paid, then it will become necessary for you to see if the claim has been denied or rejected. For claims not paid for 90 days, urgent attention will be required.

Fourth report on the list is the provider productivity report which is a measure of what each physician is contributing to the practice. By going through this report, it becomes easy for practice managers to spot areas of weakness and strength. It also helps them increase the revenue producing activities.

It is important to study the Explanation of Benefits (EOB) report in order to determine the reason why claims are getting denied for your practice. This repot is very important because denied claims lead to cash flow problems. Spotting trends early will help you make a difference.