Intro
According to Saul Levin, CEO and Medical Director of the American Psychiatric Association, behavioral health is facing financial challenges, with psychiatrists being paid 30% less than other physicians. This disparity highlights the need for better financial management in behavioral healthcare practices.
While no single solution exists, implementing specialized accounting software and outsourcing financial tasks can provide significant support. Proper financial management is crucial for reducing losses and improving profitability.
By investing in user-friendly, cloud-based systems and adopting these eight best practices, your practice can navigate these financial hurdles and thrive.
1. Accurate Documentation & Coding
Accounting software is smart. It picks up errors that human brains overlook. But, it’s easier if you feed it accurate data from the get-go. So, when you’re adding new data, double-check the ICD-10 and CPT codes for mental health.
Keep your staff up-to-date with proper documentation procedures and coding changes to minimize claim denials. This minimizes errors, but it doesn’t spare you the burden of regular audits.
They’re the best way to ensure accurate coding and documentation. Don’t skimp. Be Nike. Just do it.
2. Efficient Revenue Cycle Management
Revenue cycles don’t always get the attention they deserve, even though they’re important for healthy cash flow. Automation software, like Sage Intacct manages many of the steps in revenue cycle management, including tracking payments and following up on outstanding invoices.
Schedule review days for denied claims. Correct the errors and resubmit them. You don’t want to lose a cent to a silly mistake, like submitting claims too late. Implement systems so that doesn’t happen.
You can also schedule regular financial reports to monitor cash flow. This is important because, as Matt Lescault, CEO Lescault & Walderman says, “Cash flow becomes an issue if revenue cycles aren’t standardized, leading to delays in collections and operational strain.”
3. Payroll & Employee Classification
Employees; can’t afford them, can’t live without them. Not really, but you need a system that manages employee costs. Classify workers as employees or contractors and use payroll systems that monitor relevant overtime, benefits, and shift differentials.
Benefits must be competitive otherwise you’ll never hold onto, let alone attract skilled staff. Saying that, track recruitment costs, including training, so can budget for future hires.
Honestly, the best thing is outsourcing payroll to professional behavioral healthcare accountants. It’ll save a ton of money and let you focus on core tasks.
4. Expense Management
Two very important words for every business. You must be thorough. Include office space, utilities, equipment, and all maintenance. Cut costs where you can by using energy-efficient systems and just being plain sensible. Lights off when no one is in a room, water-saving toilets, that kind of thing.
It can be smart to create a separate budget for large expenses. MRI equipment does not come cheap. Set up a contingency fund for unexpected expenses.
Again, outsourcing can help keep expenses under control.
5. Compliance with Healthcare Regulations
This is a biggie. Non-compliance equals no business. It’s crucial to stay updated on HIPAA and state-specific regulations. This includes keeping staff updated because one mistake can be catastrophic.
Do yourself a favor and invest in robust data security systems to protect patient information. Document all treatments and services to ensure regulatory compliance, but also to cover yourself in case of nasty allegations.
Compliance extends to telehealth services, so ensure records are accurate.
Perform periodic audits so you can rest assured that you are compliant with evolving laws.
6. Technology Integration for Financial Management
What would we do without technology to make accounting easier? Financial records would (probably) be peppered with errors, for a start.
Luckily it’s not an issue because EHR systems streamline documents and coding. Systems with AI tools are even better because they improve accuracy and eliminate frustrating manual errors.
According to Matt, “For accounts receivable, AI-driven analytics are a game-changer, identifying trends and bottlenecks in your revenue cycle before they become problems.”
Choose cloud-based accounting systems with financial reporting features to access data easily and ensure data integrity and security.
Software providers should update systems in line with industry standards, but it doesn’t hurt to check-in periodically to make certain.
Up-to-date systems are essential, as Matt Lescault says, “Scalability is key to future growth, and it starts with investing in the right systems. We always recommend cloud-based accounting platforms that can grow with your practice.”
7. Outsourcing Accounting & Payroll Services
Your employees will be ever so grateful if you’d outsource payroll services to healthcare accounting specialists. It’s the best way to ensure accurate employee classification and tax compliance while reducing errors and avoiding penalties.
As Matt says, “Outsourcing can significantly improve the integration of your billing and accounting systems… This not only reduces the time spent on manual reconciliations but also improves data accuracy.”
In fact, spare yourself tax nightmares by taking advantage of advice from experts. You might be surprised at the deductions available.
Use the time saved to enhance patient care and spend the money saved to upgrade your equipment.
8. Denial Management Strategies
Denied claims don’t exactly put a shine on your day and they’re terrible for cash flow. Thank goodness healthcare-specific accounting systems ensure that documentation is correct. Choose systems with claim-tracking features and automation with scheduled follow-up features.
It’s worth investing in denial management software that is designed specifically to track denied claims and resolve issues.
Prevention is better than cure. Staff training is essential to ensure billing and claims processes are managed correctly. This avoids rejections in the first place and that is the best denial management strategy.
Closing
You’ve got enough on your plate when you run your own behavioral healthcare practice. You don’t want to worry about the proper management of your finances too. Outsourcing is the perfect solution because you benefit from financial expertise without the expense of a full-time accountant.
If it makes sense, why do anything else?
