Plug Revenue Leaks to Improve Practice Profits

You’ve probably heard the expression “like a leaky faucet.” Picture your medical practice’s revenue being lost due to a leaky faucet instead of being captured because you have a water-tight pipe. At the very least, you’d put something under that leaky faucet to catch that otherwise lost revenue, right?

To plug leaks and boost the bottom line for your medical practice, you have to focus on profitability as well as patient care. You need solid policies, procedures and training — along with regular reinforcement — to motivate virtually every staff member to help you capture and collect most of the revenue generated by your practice. You do not need a leaky faucet. Likely there are more revenue leakage sources than you’d care to read about today. So let’s look at three of the most valuable holes to plug.

Unfilled Appointments

While not always preventable, unfilled appointments can be a huge waste of precious practice dollars. Although your schedule for tomorrow looks full, end-of-week or month-end patient volume reports can tell a very different story. When a patient cancels at the last minute or simply doesn’t show up, you’re left with operations costs — including staff time and utilities — rather than revenue from that time slot.

The key to limiting these vacancies is managing your practice’s schedule proactively. In addition to trying to fill every appointment slot for the next week, you also need a reminder process (a standard feature of PracticeAdmin’s Billing Manager). Some ideas to consider:

Unnecessary Write-offs

Failing to capture all patient care related charges can cause your practice to lose as much as one percent of net revenue a year according to industry financial experts. Plugging this revenue leak requires team education and effort.

It means ensuring all clinicians and staff understand practice charging policies and apply them consistently. It means submitting complete and correct documentation with claims so they meet payer guidelines — and submitting them on time. It means using up-to-date clinical and billing systems, something our IT solutions can help you ensure, and reviewing documentation of both against daily or weekly patient schedules and supply inventories.

It requires continuous focus, but it is well worth the effort. Another major source of unnecessary write-offs is failing to appeal payer denials — a process that can be automated with applications like PracticeAdmin’s Receivables Manager.

Insurers routinely deny more than 20 percent of medical claims with denials among some payers running as high as 40 percent according to industry sources. Yet medical billing experts say that between 50 and 65 percent of insurer denials aren’t appealed. This revenue leak alone typically costs medical practices approximately three percent of net revenue each year.

Of course, the best way to plug this revenue leak is to prevent it from happening in the first place — and most denials can be prevented. For example, coding errors cause Medicare and Medicaid to deny complex claims more than any other reason. With the right tools and dedicated staff focus, your practice can limit the number of denials you have to appeal.


MGMA estimates that insurers underpay medical practices by an average seven to 11 percent. Further, medical billing experts report that underpayment or missed payments approved claims can run as high as 35 percent lower than the contracted fee.

Before you challenge an underpayment, make sure you have the most current and accurate rates by getting them directly from the insurer. Most importantly, make sure you understand the insurer’s fee schedule for the procedure codes you use most often including the most common modifiers. You can reduce or eliminate underpayments by loading the correct fee schedules into your practice management system and keeping them up-to-date. Most of today’s medical billing applications can handle this for you.


McKinsey & Company research indicates that 15 cents of every US healthcare dollar goes toward revenue leakage. For a practice grossing half a million a year, that’s $75,000 out of your pocket.

Like it or not, providing health care is a business as well as a critical service. Little leaks can become a steady flow of dollars out of your practice. Engage your team to plug the holes in your revenue cycle to improve practice profits.

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