Fam Pract Manag. 2001 Nov-Dec;8(10):51.
Write-offs for FPs
What percentage of gross revenue does the average family practice write off (either in contractual adjustments or uncollectible accounts) to arrive at its net revenue?
Several organizations, such as the Medical Group Management Association, have conducted surveys to determine national averages for write-offs, but such averages will probably not be meaningful in your community. The amount of fees your practice must write off depends on many variables:
Do you participate in an HMO or a PPO contract? Family practices that participate in such contracts typically have to deduct 10 percent to 36 percent of their charges right off the bat.
How many private-pay patients do you have? Write-offs for uncollectible accounts (including contractual write-offs) on private-pay patients can be 5 percent to 15 percent in some affluent communities and 75 percent or more in some poorer communities.
How many Medicaid patients do you have? The typical write-off for Medicaid patients in my community is 74 percent.
How many Medicare patients do you have? The typical write-off for Medicare patients in my area is 36 percent, but again, it depends on the community.
How much competition is in your area? In general, family practices in rural communities where managed care plans do not have such a strong foothold tend to have fewer write-offs.
My solo practice averages 35 to 40 patient visits per day and provides mostly well-patient care to patients eligible for carve-out, entitlement programs. I have two FTE (full-time equivalent) staff members. My receptionist is responsible for answering the phone, helping patients complete lengthy eligibility forms and handling some management tasks. My medical assistant (MA) is responsible for chaperoning visits, taking vitals, administering vaccines and other injections, drawing blood, completing forms and performing breathing treatments, hearing- and visual-acuity testing and other clinical duties. How can I determine whether my staffing levels are appropriate?
The median staffing ratio for a solo family practice is about 3 to 3.5 FTE staff per doctor, presuming there is an average of 25 to 30 patient visits per day and no need for dedicated lab and X-ray staff. The budget for this level of staffing is typically 20 percent to 22 percent of gross collections. However, these numbers can vary by practice for a variety of reasons, including the number of geriatric and pediatric patients in the practice, the patient gender mix, the level of patients’ acuity, demographic behaviors, unusual payer paperwork burdens, local wage levels and staff skill levels.
Although your practice seems to have low acuity and little emergent-need scheduling, it does have the burden of a high number of patient visits, extra paperwork and expansive use of the MA. If your staff also performs billing operations on-site, this could impact your staffing requirements. Given this mix of factors, I would expect your practice to have a higher-than-median need for staffing, meaning higher-than-average labor costs. This could be a real dilemma for your practice given its emphasis on low-acuity visits, which tend to be less profitable.
To assess whether your practice might have a staffing imbalance, ask yourself these questions: Are your labor costs surprisingly low? Do your staff members regularly have to work overtime? Are they frequently behind in their duties or complaining about overwork? Are you and your staff satisfied at the end of the day, or are you exhausted and frustrated?
If you detect a staffing imbalance, the best solution might simply be to schedule a series of three or four meetings with your staff to catalog all concerns and prioritize issues, and then experiment with solutions until it feels right.
Closed to new Medicaid patients
I’m starting a new practice and would like to keep my existing Medicaid patients. However, I don’t want to accept new Medicaid patients. Can I do that?
Yes, you can choose not to accept new Medicaid patients at any time, even if you intend to keep your existing Medicaid patients. The federal Medicaid statute indicates that a physician or other provider’s participation in the Medicaid program is voluntary and that even those providers who do participate need not accept all such patients. Of course, you may still need to accept an occasional Medicaid patient, for example, in the case of medical emergencies.
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Copyright © 2001 by the American Academy of Family Physicians.
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