Written by Matthew Marconcini, CPA
Selling your company can be an exciting time, filled with potential opportunities for growth and new horizons. Whether your company is accrual based, following GAAP, or it reports on a cash basis, proper preparation for the sale of your company is extremely important. This journey often involves a complex web of financial transactions and negotiations, with numerous parties at the table. Among the critical elements in this process are financial due diligence and performing a quality of earnings (QOE) analysis. The QOE process is a critical aspect of financial reporting and analysis that helps stakeholders, like investors and creditors, assess the reliability and sustainability of a company’s reported earnings.
The QOE analysis can play a pivotal role in shaping the outcome of the sale and can significantly impact the perceived value of your business. Therefore, as management, it is essential to be well-prepared and proactive in assessing and evaluating the quality of your business’ earnings, as it influences the selling price and builds trust and confidence among potential investors and other stakeholders. We have outlined eight steps management can take to best prepare for the QOE process.
Management should have a clear understanding of what QOE means. It assesses the underlying economic substance of reported earnings, ensuring they are not distorted by accounting manipulations or one-time events.
Accurate financial record-keeping is fundamental to high-quality earnings. Management must ensure that financial statements are free from material misstatements and that all transactions are properly recorded.
Transparency is crucial. Ensure all material transactions, both positive and negative, are adequately disclosed in the financial statements and related footnotes.
Maintain consistency in financial reporting practices. Frequent changes in accounting policies can raise questions about the QOE. If policies do change, explain the rationale behind it and the financial impact of the change.
Recognize revenue in accordance with accounting standards only when it’s earned and realizable. Avoid prematurely recognizing revenue or engaging in overly aggressive practices. If your company reports on a cash basis, pulling together the proper data that will show revenue based on date of service rather than the collection date will be key.
Clearly distinguish between one-time or non-recurring events and ongoing operations in financial reporting. Disclose the nature and impact of such events to prevent misinterpretation.
Be prepared to provide a comprehensive and honest analysis of the company’s financial results. Explain the drivers of earnings, changes in accounting policies, and potential future risks and uncertainties. The more support you can provide related to both historical performance and future growth initiatives, the more accurate and comprehensive your analysis.
Take the time to review the various systems used to operate the business and start pulling data together. If certain systems are maintained by third parties, informing them of the situation and discussing what they need to do will create a smoother process. If certain reports don’t have the necessary inputs or data, be prepared to discuss that and what alternative information would be useful.
By considering these guidelines and implementing the underlying thought processes, management can best prepare for the QOE process, demonstrating a commitment to transparency, accuracy, and integrity in financial reporting. This, in turn, builds trust and credibility with investors and other stakeholders, creating a smooth transaction process for management.
Written by Christa Shephard and Maureen Regan, President Elect, NYSSPA
Physician assistants (PAs), soon to known as physician associates and advanced practice registered nurses (APRNs), like nurse practitioners (NPs), midwives, CRNAs, and clinical nurse specialists, have been around for decades. The first class of PAs graduated from Duke University in 1967, and in 1965, the first training program for NPs began at the University of Colorado. Since then, for many reasons, both professions have become integral to the quality delivery of healthcare. Although they have different education, training, and scope (PAs trained in medicine and APRNs in an advanced theory of nursing practice model) integrating these professionals into a practice can elevate the patient experience, as their access to the healthcare services they need will increase, and there could be an increase to the bottom-line financials of a practice as a result. Physicians experience greater job satisfaction, as PA and APRN integration helps to alleviate overburdened work schedules, including on-call obligations. Through these benefits, interprofessional integration leads to better patient retention, patient referrals, physician satisfaction, and stronger financial health for practices and health systems.
The Centers for Medicare & Medicaid Services (CMS) certainly plays a role in the practice and reimbursement environment of PAs and APRNs; however, most of the legislative and regulatory environment for practice is determined at the state level. Due to the evolution of each profession and the historical and ongoing shortage of physicians, it’s important for health systems and practices to stay abreast of primary source legislative and regulatory guidance changes regarding scope, documentation, and billing compliance. These factors are also important to ensure an employer is capturing maximum reimbursement for clinical work done by both professions while minimizing their risk of an audit and resulting penalties. Systems and practices must uphold an ongoing, longitudinal review of Medical Staff Bylaws, delineation of privileges, policies, and processes.
CMS recognizes qualified billing providers to render services independently and establishes billing and coding rules for PAs and APRNs to ensure accurate reimbursement and quality care delivery within the Medicare program. These rules outline the scope of practice and reimbursement guidelines for nurse practitioners, physician assistants, certified nurse-midwives, clinical nurse specialists, and certified registered nurse anesthetists who must adhere to specific documentation requirements, including maintaining accurate patient records and submitting claims using appropriate evaluation and management (E/M) codes, like physicians. Additionally, CMS provides guidance on incident-to billing, which allows certain services provided by PAs and APRNs to be billed under a supervising physician’s National Provider Identifier (NPI). Understanding and following CMS billing and coding rules are essential to navigate the complexities of reimbursement and ensure compliance with Medicare regulations.
Because CMS recognizes PAs and APRNs as qualified billing providers but not as physicians, they fall into a separate reimbursement category. When billing under their own NPI, the reimbursement level is less than what it would be if the physician were to bill for the same services. This reimbursement differential does not adversely impact a practice’s bottom line, as remuneration for a PA or APRN is less than a physician and malpractice cost is less.
Physicians may bill for a service that was rendered by a PA or APRN with incident-to services and with split/shared E/M services. VMG Health Managing Director and coding and compliance expert Pam D’Apuzzo says, “There’s two rules, which is where everybody gets themselves into trouble… Those two rules have specific guidelines, both from a documentation and a billing standpoint. The patient type, the service type—everything needs to be adhered to.”
To bill for incident-to and split/shared E/M services, practices must meet specific criteria outlined by Medicare. For incident-to services, the criteria include:
For split/shared E/M services, the criteria include:
These criteria ensure that incident-to and split/shared services are billed appropriately and in compliance with Medicare guidelines. Medicare also dictates that the “substantive portion” of a split or shared visit is more than half of the time a physician or non-physician practitioner spends performing the visit or a “substantive part” of the medical decision making. Practices must continually educate and train all medical staff so that they can successfully adhere to these criteria to avoid billing errors and potential audits. Additionally, practices must continuously monitor to ensure all documentation, billing, and coding processes are followed correctly.
There are tools and services that allow for easier monitoring. “We utilize a tool called Compliance Risk Analyzer, which provides us with statistical insight on coding practices,” D’Apuzzo says. “So, we can data mine ourselves and see what’s happening just based on our views. And this is what the payers, specifically, and the government does as well: They can see the [relative value units] RVUs are for a physician or off the chart, or that a physician has submitted claims for two distinct services at two different locations on the same day.”
This is more common than you might think.
“What’s normally happening in those interactions is that [a physician with two locations] realizes he can’t keep up with all of that patient flow in two places, so they hire a PA and put them at location number two,” D’Apuzzo says. “But now all that billing goes under the physician, so it flags for Medicare.”
With VMG Health’s Compliance Risk Analyzer (CRA), practices can see the same data mining and areas of risk, as the program would flag the RVUs as a potential audit risk. This gives practices the opportunity to self-audit and refine their processes to ensure they are billing and coding appropriately.
VMG Health offers multiple comprehensive services that help health systems and practices implement and follow new procedures and new provider utilization without issue, from honoring existing care models to ensuring provider compensation is fair, compliant, and reasonable.
Cordell Mack, VMG Health Managing Director, says, “We’ve spent a lot of time trying to make sure we get that right, both in terms of the underlying, practice-level agreements as well as the ways in which the compensation model works for both the physicians and the PAs and APRNs.”
In many practices, physicians struggle to handle their case load, which means their busy schedules can prevent them from seeing existing patients and from taking on new patients. Bringing PAs and APRNs into the fold allows physicians to create capacity in their schedules so that they can see new patients.
BSM Consulting (a division of VMG Health) Senior Consultant and subject matter expert Elizabeth Monroe provides an excellent example: “Let’s say we have an orthopedic surgeon who really wants to spend most of their time in surgery. We would want to have that physician in surgery because that’s what their skill set, and licensure permits. With a nurse practitioner or physician assistant providing follow-up, post-operative care, that oftentimes is a much better model. It allows the physician to do the surgical cases only they can do, but it also eases patient access to care.”
This realignment of a physician’s schedule creates an opportunity to provide more patient services, which easily translates to improved patient satisfaction when, without this, they would likely be unable to see their provider when they felt they needed to be seen. While PA and APRN–rendered Medicare services are reimbursed at 85% instead of 100%, our experts say that the 15% differential shouldn’t dissuade practices and health systems from leveraging the integration.
“It’s a very short-sighted approach to just think about, ‘But we could be making 100% instead of 85% if we bill under the doctor,’ because ultimately, we are never able to do that 100% of the time, and it’s a higher risk than it is reward,” says D’Apuzzo.
Additionally, physicians with packed schedules and no other scheduling options may inadvertently rush through appointments to see each patient scheduled for that day. Patients who feel rushed may leave an appointment feeling unheard and like their problem is unresolved. Additionally, when a patient calls and asks for services but can’t be seen for multiple weeks or months, they may never make an appointment and instead turn to another provider for help.
All of this culminates in poor patient retention, which equals a loss of revenue for the practice. Dissatisfied patients will seek treatment elsewhere. However, when practices and health systems embrace an interprofessional team, patients are more likely to be able to schedule appointments when they feel they need to be seen, feel heard in an appointment and even spend less time in the office overall as they are not impacted by OR cases running late, and so on.
“Practices are better able to meet patient demand, and they’re able to really allow physician assistants, nurses… to add a tremendous value for the patients, offering them outstanding care,” Monroe says.
With both patient demand and physician scarcity placing the U.S. health system in crisis, many practices and health systems know they need to integrate PAs and APRNs into their workflows, but they don’t know how. VMG Health offers strategic advisory services that can guide this implementation to ensure practices are educated, compliant, and working within the care model they prefer.
“Our team would want to spend time really trying to identify the underlying care model that practices are trying to, you know, work inside of,” says Mack.
One approach is to assess patient needs and practice capabilities to determine the most effective roles for PAs and APRNS, such as providing primary care, specialty care, or supporting services like telemedicine. Implementing policies and workflows can ensure efficient PA and APRN utilization while maintaining quality and safety standards.
Finally, ongoing training, quality monitoring are essential to ensure their interprofessional integration into the practice or health system effectively meets patient needs, and care provided by PAs and NPs should be included into physician quality and compliance review processes.
“It starts with getting your appropriate documentation in place… [with] supervisory responsibilities and collaborating physician agreements,” says Mack. “It migrates to, ‘What’s the operational agreement among the team?’ and how cases are presented, or how the physician is consulted. So, it’s getting an underlying clinical service agreement among those professionals.”
Optimal PA and APRN utilization shows up in the numbers. When practices increase patient access to care without overburdening physicians, they can accommodate more patients, leading to increased revenue generation. Moreover, because PAs and APRNs often bill at a lower rate than physicians, integrating them efficiently can improve cost-effectiveness, thereby enhancing the overall financial performance of the practice.
“It should realize an ROI, and that ROI should be something more in terms of duties and tasks that other teammates can’t do,” says Mack. “Meaning, it would be unfortunate if a qualified healthcare professional is working at such a capacity whereby duties some of the day-to-day responsibilities should probably be done by teammates working at a higher level of their own individual license.”
Changing existing workflows can be difficult, but the rewards heavily outweigh the risks. Physicians must support interprofessional integration to successfully navigate the transition. Physicians are typically the leaders and decision-makers within medical practices, and their support is essential for implementing any significant changes in workflow or care delivery models, which includes having front office staff, medical assistants, nursing and administrative staff rely and respect the roles of PAs and APRNs. Without physician buy-in, resistance to change may arise, hindering smooth integration and retention.
Physicians play a vital role in collaborating and ensuring a seamless care model is implemented and sustained. By endorsing and supporting the integration of PAs and APRNS, physicians can foster a culture of teamwork and mutual respect within the practice. This collaborative approach promotes a cohesive care team to provide high-quality patient care.
It’s important for physicians to trust and communicate that PAs and NPs are qualified and capable of providing excellent patient care. Allowing them to care for an established patient does not sever the relationship between the physician and the patient; it can actually enhance the patient’s experience and trust in the practice.
“We want patients who have had a long-standing relationship with an MD to be able to see that doctor, and then we want to help the doctor know and understand how to appropriately transfer care over to an APRN within their system or within their practice,” says Monroe. “So, that provider can be still linked to the doctor, and the doctor can still be linked to the patient.”
Furthermore, physician buy-in is essential for maintaining continuity of care and ensuring patients feel confident in receiving treatment from both physicians and PAs and NPs. When physicians actively endorse interprofessional integration and communicate the benefits of team-based care to their patients, it builds trust and acceptance of the practice model. It also fosters billing transparency if a patient gets an EOB with the name of someone other than the physician as the rendering provider.
Physician engagement is critical for the long-term success and sustainability of integration initiatives. When physicians recognize the value that PAs and APRNs bring to the practice, including increased efficiency, expanded access to care, and improved patient outcomes, they are more likely to champion these initiatives and advocate for their continued support and development.
The integration of PAs and APRNs into medical practices and health systems presents a strategic opportunity to optimize patient care delivery and operational efficiency. By expanding access to healthcare services and alleviating the workload of overburdened physicians, integration improves patient and employee satisfaction, and enhances patient retention. However, successful integration requires careful attention to regulatory compliance, billing, and coding practices. VMG Health offers comprehensive billing, coding, and strategy advisory services to support practices in navigating the complexities of integration, ensuring compliance with Medicare regulations, and maximizing reimbursement while minimizing audit risk.
Optimal PA and APRN utilization yields tangible benefits, including increased patient access to care, improved patient satisfaction, and enhanced financial performance. By understanding their education, training, and scope, and by leveraging their unique skill sets, practices can accommodate more patients, reduce wait times, and deliver high-quality care cost effectively. Physician engagement is essential for the successful implementation of integration initiatives, as physicians play a pivotal role in endorsing and supporting interprofessional responsibilities within the care team. Through collaborative leadership and effective communication, physicians can foster a culture of teamwork and mutual respect, driving the long-term success and sustainability of integration efforts.
In summary, strategic integration presents a transformative opportunity for medical practices and health systems to meet evolving patient needs, enhance operational efficiency, and achieve sustainable growth. By partnering with VMG Health for expert guidance and support, practices can navigate the complexities of interprofessional integration with confidence, realizing the full potential of this innovative care delivery model.
Maureen C. Regan, MBA, PA-C, FACHE, DFAAPA, is the President-Elect and Past President of the New York State Society of Physician Assistants (NYSSPA) and a Delegate for the American Academy of Physician Associates (AAPA). She is recognized as a Fellow of the American College of Healthcare Executives (FACHE) and a Distinguished Fellow of the American Academy of Physician Associates (DFAAPA). The views expressed in this article are her opinion and do not represent the opinions of any organization or association she is affiliated with.
American Academy of Physician Associates. (n.d.). History of AAPA. Retrieved from https://www.aapa.org/about/history/
American Medical Association. (2022). AMA president sounds alarm on national physician shortage. Retrieved from https://www.ama-assn.org/press-center/press-releases/ama-president-sounds-alarm-national-physician-shortage
Centers for Medicare & Medicaid Services. (2023). Advanced practice nonphysician practitioners. Medicare Physician Fee Schedule. https://www.cms.gov/medicare/payment/fee-schedules/physician-fee-schedule/advanced-practice-nonphysician-practitioners
Centers for Medicare & Medicaid Services. (2023). Advanced Practice Registered Nurses (APRNs) and Physician Assistants (PAs) in the Medicare Program. Retrieved from https://www.cms.gov/medicare/payment/fee-schedules/physician-fee-schedule/advanced-practice-nonphysician-practitioners
Centers for Medicare & Medicaid Services. (2023). Incident-to billing. Medicare. https://www.cms.gov/medicare/payment/fee-schedules/physician-fee-schedule/advanced-practice-nonphysician-practitioners
Centers for Medicare & Medicaid Services. (2023). Medicare Physician Fee Schedule final rule summary for calendar year 2024. https://www.cms.gov/files/document/mm13452-medicare-physician-fee-schedule-final-rule-summary-cy-2024.pdf
Mujica-Mota, M. A., Nguyen, L. H., & Stanley, K. (2017). The use of advance care planning in terminal cancer: A systematic review. Palliative & Supportive Care, 15(4), 495-513. https://www.ncbi.nlm.nih.gov/pmc/articles/PMC5594520/
Written by Frank Cohen
In today’s rapidly evolving healthcare landscape, medical practices face significant challenges in managing the complexities of billing and coding. The increasing scrutiny from regulatory bodies has made the risk of audits a constant concern. However, the emergence of advanced analytics, including predictive analytics, artificial intelligence (AI), and machine learning, is revolutionizing how healthcare providers can anticipate and prepare for these audits. These technologies are critical in both enhancing the accuracy and efficiency of predicting billing and coding audits and their specific targets, and in empowering healthcare providers to take control of their financial processes.
Billing and coding are pivotal in healthcare management, ensuring practices are duly compensated for the services they render to their patient populations. However, the sheer number of codes and the frequent updates to coding standards and regulations can make the process seem daunting. For physician services alone, there are currently over 10,000 CPT codes and 5,000 HCPCS level II codes. For institutional providers, the numbers are even more staggering, with some 767 MS-DRGs and 78,000 ICD-10-PCS codes. Add to that more than 72,000 ICD-10 diagnosis codes, and the potential for errors seems infinite. As any seasoned compliance executive knows, such errors can lead to revenue loss and escalate the risk of compliance issues, which can trigger costly audits. Traditionally, practices have relied on manual checks and basic software tools to handle these tasks, but these methods often fall short of detecting potential errors before they escalate. This is precisely the problem that this new advanced technology aims to address.
Predictive analytics is a game changer in healthcare billing and coding. It involves using data, statistical algorithms, and machine learning techniques to forecast outcomes based on historical data. Predictive analytics can sift through vast amounts of billing data to spot patterns and anomalies that may indicate potential audit triggers. For instance, if a specific type of claim frequently leads to audits, predictive analytics can raise a red flag on similar future claims for further review before submission. This proactive approach not only enables practices to nip issues in the bud, significantly reducing the risk of audits, but also has the potential to boost revenue and financial stability, instilling in healthcare providers a sense of confidence about the future of their practices.
AI and machine learning enhance advanced analytics by identifying patterns and learning from them to improve future predictions. Machine learning algorithms can continuously analyze new data as it comes in, refining their models for better accuracy over time. This capability is particularly valuable in the healthcare industry, where regulations and standards are constantly changing.
Additionally, AI can help automate the coding process, reducing the likelihood of human error. AI systems can be trained to understand clinical documentation and assign the appropriate codes, ensuring claims are accurate from the beginning. Moreover, AI can handle the repetitive and time-consuming tasks of data entry and preliminary data analysis, freeing human resources to focus on more complex billing and coding management aspects.
Many healthcare organizations have found that adopting advanced technologies has brought them significant benefits. For example, a large hospital network used a machine learning model to predict which claims might be flagged for audits using historical data. This system reduced audit rates by 25%, resulting in substantial cost savings. In another case, a large healthcare system employed predictive models to identify which providers and services were most likely to be targeted, allowing them to conduct prior audits, thus mitigating potential financial damage from overpayment demands.
Although the benefits are evident, implementing such technologies can seem daunting at first. However, properly developed applications are designed to minimize the costs normally associated with onboarding new technologies. In many cases, these applications will provide financial analyses in addition to just coding and billing risk, helping the organization offset any costs associated with acquisition and implementation. More importantly, moving in this direction requires a cultural shift toward data-driven decision making. Training is also crucial, as staff must understand how to use and interpret new tools’ results and trust the insights they provide.
As technology continues to advance, the potential applications of AI, machine learning, and predictive analytics in healthcare will expand. Future developments might include more sophisticated models that can predict the likelihood of audits and suggest optimal coding practices or identify areas where billing processes can be improved for better efficiency and compliance. The use of generative AI techniques will help organizations produce interpretation and presentation wizards, improving communication between administrative and clinical departments.
Advanced analytics are significantly changing how healthcare practices handle billing and coding. By adopting these technologies, practices can reduce the risk of audits and enhance the efficiency and accuracy of their billing operations. As these technologies continue to advance, they will undoubtedly become a crucial part of healthcare management, providing practices with a competitive advantage in a challenging industry. Healthcare leaders need to embrace these innovations, viewing them not as optional add-ons but as indispensable tools for survival and success in today’s healthcare landscape.
Written by Katrina Whitehair, Elizabeth Monroe
Imagine this: You’ve just completed your extensive training to become a plastic surgeon and are about to embark on your journey in medicine. This blog is your ultimate guide to launching a career in plastic surgery, packed with valuable insights and considerations for every path you might take. We’ll explore different models to help you make an informed decision about your career path.
Based on your life and training experience, you may have a strong grasp on your vision and goals as a plastic surgeon. This is a great starting point. Ask yourself: If I waved my magic wand and could have anything I wanted, what would be my ideal work environment? What are the goals and milestones I want to achieve in my career? Write them down to start your journey.
If you are entrepreneurially inclined and desire to be a business owner, operator, and provider, this challenge may be right for you. You have the freedom to create your own vision by controlling and implementing your custom brand, marketing, and operations to align with the patient experience you want to see.
The challenges of starting your own practice can be exciting for some and overwhelming for others. When starting a practice, there are many decisions to make, such as clinic location, equipment, software, staffing needs, start-up funding, and proper legal and financial counsel. What you may lack in work-life balance, you could gain in the fruits of your labor when executed well. This selection represents greater risk and a potentially greater reward.
If starting your own practice does not feel like a good fit, joining an established private practice can be a great place to start your career. All the decision making and practice responsibilities do not weigh on the employed physician but instead roll up to the owners. As an employee, you support the existing brand’s growth, and can focus primarily on patient care and experience—not managing the practice itself. Associate physicians also benefit from stable income, more work-life balance, and regular benefits. After a while, private practice owners may offer partnership in the group.
After a physician has spent two to five years employed and in good standing, a private practice may extend an offer to buy in and become part of the practice’s ownership and decision-making team. There is a level of prestige in being a part-owner of a business. In addition, the physician has an opportunity to receive future profit share for their continued efforts in providing patient care as a part-owner. Practices may own a physician clinic, medical spa, or surgery center and offer some or all buy-in opportunities.
Partnership terms can vary widely. Some practices may offer shares and a set percentage of ownership, while others may have a long-term plan for full ownership if the founder is seeking to retire in time. Some determining factors in assessing the terms may include the organizational and legal structure, assessment of the practice value and practice entities, and the physician’s revenue productivity contributions.
Some retiring physicians will sell their practice to an interested physician rather than permanently closing their doors. Although patient records cannot be sold and require patient consent to transfer care, physicians may opt to create a transition of care plan for an existing patient database. Patients can transfer care or receive records, so it’s important to plan carefully. This may be an attractive option for a physician because there is already an established practice and patient base to start their career.
Graduating plastic surgeons are most familiar with hospital-based care because of their extensive training. Being employed by a hospital has many benefits. Access to hospital resources and their vast, built-in referral network will ensure you are productive in seeing patients immediately. Hospital employment guarantees income, benefits, and a predictable schedule. Taking hospital call can be financially advantageous and quickly enhance your surgical skills by exposing you to a wide variety of cases. Depending on the position’s setup, you may focus more on reconstructive plastic surgery cases and work extensively with medical insurance. Sometimes, you may not be able to build a cosmetic practice. In addition, there is little to no autonomy or decision-making authority as a hospital-employed physician, which may or may not be your preference.
Working for an academic institution and training program can offer its own set of benefits. Research and clinical trials are abundant and can be very fulfilling for physicians who desire a research and education focus. Study and participation in clinical trials are not exclusive to academia; however, they are most prevalent in these institutions. Like hospital employment, there is very little autonomy and decision-making power for an employee, which can benefit or deter physicians.
Regardless of your chosen direction, the industry also offers many opportunities for surgeons to consult and train others entering the field. Consulting for a pharmaceutical company, lecturing at a national meeting, or coaching other surgeons on the latest techniques can produce additional income and bring the reward of giving back.
One model is not exclusive to the other, and a combination of transitions from one model to another may be in the physician’s best interest. Your personal preference, finances, and desired strategy and goals as a physician will influence your decisions.
If you’re feeling overwhelmed or need assistance in planning your career, remember that you’re not alone. At BSM Consulting, we’re here to provide the guidance and support you need to navigate the complexities of the plastic surgery job market. Don’t hesitate to reach out to us—we’re ready to help you succeed!
Written by Christa Shephard
In April, Progressive Surgical Solutions, a division of VMG Health, hosted its fourth annual Ambulatory Surgery Center (ASC) Nurse Leadership Conference. This conference aims to empower nurses to transform ASC culture through leadership development, education, inspiration, community, and networking. ASC nurse managers and administrators are not just clinical staff; they are essential business managers who ensure the efficiency and profitability of the center.
Clinical staff, particularly registered nurses, are indispensable in ASCs. Regulations require a registered nurse clinical director for Medicare-certified ASCs. Beyond regulatory requirements, nurses play a vital role in patient advocacy, ensuring patient safety and compliance with health standards during surgical procedures. Their presence allows surgeons to focus on their specialized tasks, knowing that patient care is in expert hands.
The nurse leader’s responsibilities extend beyond clinical duties, as they often manage the operating schedule, optimize collections, and control inventory costs. These tasks directly impact the ASC’s bottom line. By understanding and efficiently managing these areas, nurse leaders maximize revenue and reduce expenses, driving the ASC’s financial success.
It is crucial for ASC owners and physician owners to recognize the extensive responsibilities that nurse leaders carry. These leaders are the backbone of the ASC, playing a pivotal role in every aspect of its operations. Their duties span from clinical management, ensuring the highest standards of patient care and safety, to financial oversight, where they optimize costs and enhance revenue streams. Nurse leaders are deeply involved in human resources, managing staff schedules, training, and addressing personnel issues. Recognizing the breadth of their responsibility and viewing nurse leaders as strategic partners fosters a more supportive and effective working environment.
When nurse leaders are treated as partners within the ASC, operational efficiency and staff morale and retention improve, ultimately leading to better patient outcomes and a more profitable practice. By investing in the development and empowerment of nurse leaders, ASC owners can ensure their facilities run smoothly and effectively, positioning themselves for long-term success in a competitive healthcare landscape.
At the conference, there was a significant focus on empowering nurse leaders to understand and influence their ASCs’ financial health. Recognizing the pivotal role nurse leaders play in the financial success of ASCs, sessions were tailored to equip them with essential financial literacy and management skills. Nurses learned to build basic financial dashboards and interpret key performance indicators and metrics, enabling them to make data-driven decisions that positively impact the ASC’s bottom line.
Beyond that, attendees learned to develop compensation and bonus plans intricately tied to specific financial metrics, such as revenue growth, expense reduction, and operational efficiency. Empowering nurse leaders with financial acumen enables ASC owners and physician leaders to foster a culture of financial accountability and transparency, driving operational excellence and sustainable growth.
Nurse burnout is a significant issue in the healthcare industry, and ASCs are no exception. Despite more favorable working conditions compared to traditional hospital settings, ASC nurses still face stress and burnout. The demands of providing high-quality patient care in a fast-paced environment, coupled with administrative responsibilities and the constant pressure to optimize efficiency, can take a toll on their well-being.
Adding to the stress of these demands is the crisis-level nursing shortage across the industry at large. Leaders are exhausted by constant staff turnover. Often, there simply aren’t enough people within the ASC to meet its needs, forcing nurses to juggle the workloads of multiple team members. This critical nursing shortage drives individual burnout and overall staffing churn, perpetuating the cycle. In fact, it is the No. 1 reason nurse leaders who want to attend the conference do not: They can’t leave their ASC because they don’t have enough staff.
Recognizing the urgent need to address nurse burnout, the ASC Nurse Leadership Conference prioritizes providing ASC nurses with a supportive and nurturing environment. Through a comprehensive program of educational sessions, interactive workshops, and networking opportunities, the conference offers participants a valuable opportunity to recharge, refocus, and reenergize. Through knowledge-sharing and peer-to-peer discussions, nurses can gain fresh insights, strategies, and perspectives for addressing common challenges and enhancing their resilience.
The ASC Nurse Leadership Conference is more than just a gathering of healthcare professionals—it’s a transformative experience designed to support and uplift ASC nurses, equipping them with the tools, resources, and support they need to thrive in their roles. By fostering a culture of well-being and resilience, ASCs can cultivate a workforce that is more engaged and motivated, and better equipped to deliver exceptional patient care in the face of evolving challenges. As these empowered nurse leaders take on greater responsibility and leadership roles within their ASCs, they become catalysts for positive change, driving innovation and driving the ASC industry toward a financially sustainable future.
Interested in attending the annual ASC Nurse Leadership Conference? Explore last year’s pictures, program, and testimonials, and save the date for next year’s conference.
Written by Joel Gomez, ASA
Before you begin the process of selling your medical practice, it is always in your best interest to ensure your practice’s value is accurately represented. Most buyers of medical practices, including healthcare systems and hospitals, begin the transaction process with a fair market value analysis of the business revenues to determine the purchase price. Unfortunately, many practices in the position of selling are in a break-even or negative cash–flow scenario. In these instances, the value of the practice may be most accurately represented by the fair market value of personal property and real property.
Some buyers opt to have personal property valued on a “desktop” scope of work, relying on data in the form of a depreciation schedule or practice inventory as the basis of the fair market value analysis. While acceptable for fair market value purposes, this approach may not capture all owned personal property.
The first approach for identifying personal property through accounting documents is the use of a depreciation schedule or fixed asset listing (FAL). While real property is easily identifiable (the space is either owned or rented), personal property listings are often less maintained, reliant on an accountant’s tracking of capitalized assets, and may not fully reflect what is owned. When preparing a valuation, an appraiser is always subject to the quality of available data. FALs maintained by an accountant only display equipment that meets the predetermined capitalization cost threshold determined by that accountant. Additionally, some capitalized assets are removed from the FAL once it has fully depreciated according to accounting standards. Providing an equipment appraiser, a FAL as the basis of their appraisal could mean valuable practice assets are not captured.
An on-site inspection and asset inventory by an appraiser allows them to capture all assets on a room-by-room basis, regardless of original purchase cost or visibility on the FAL.
Another alternative to an appraiser performing an on-site inspection is to have a practice employee create the inventory. While this may sound like a good approach initially, information captured by someone other than an appraisal expert tends to be inconsistent. Items captured in one room are missed in the next, and inconsistent asset descriptions will lead to follow-up information requests, requiring the selling practice to invest more work hours.
Hiring an appraisal expert to complete an on-site inventory and inspection of the practice’s tangible personal property ensures personal property listings are maintained, fully reflect what is owned, and include consistent asset descriptions from room to room. VMG Health reviewed a sampling of projects over the past 18 months, across several practice specialties, and noted that when completing a site visit as part of our valuation process, the fair market value conclusion of exam rooms was roughly 60%–70% higher on a per-room basis compared to relying on practice data/inventories.
VMG Health’s qualified equipment appraisers have the knowledge and experience to complete a discrete and comprehensive inventory, gathering all necessary data during the visit and minimizing interruptions to the practice operations and patient flow.
VMG Health’s team of equipment appraisers has over 55 years of experience in the equipment appraisal field across all sectors of the healthcare industry and includes three accredited senior appraisers with the American Society of Appraisers. Since 1995, VMG Health has earned the trust of our clients with extensive expertise in navigating the dynamic factors that influence value. If you are in the process of valuing your practice, use VMG Health’s equipment appraisers to complete an on-site inspection, inventory, and valuation of your personal property.
Written by Christa Shephard
Even in today’s ever-evolving world of leadership, there remains a belief that admitting vulnerability is a sign of weakness. However, in the latest episode of Coachify Over Coffee, Laura Baldwin and Savory Turman, leadership development coaches, challenge this misconception head on by diving into and emphasizing the importance of authenticity and its transformative power in leadership.
The fourth episode of Coachify Over Coffee, It’s OK Not to Be OK, addresses a common misconception among leaders in healthcare and across all industries: the fear that admitting they’re not okay diminishes their credibility. Our coaches discuss how authenticity breeds trust and connection, strengthening teams and organizations. They highlight lying about one’s well-being can undermine trust far quicker than acknowledging vulnerabilities.
It’s important to define what “fine” really means in different contexts. Rather than accepting superficial answers, Baldwin and Turman encourage leaders to dig deeper. When leaders ask probing questions and foster genuine conversations, they uncover the truth behind their team’s well-being. Recognizing signs of burnout early on can help leaders and teams address stress before it escalates, preventing the negative impacts of prolonged stress.
The conversation extends beyond individual leadership and acknowledges organizational culture. Baldwin and Turman share how fostering authenticity can positively impact employee morale and organizational trust. According to a recent survey by the Society of Human Resource Management, a significant percentage of organizations may claim to prioritize employee mental health, but many fail to implement meaningful strategies. Missing substantive opportunities to support employee mental health only reinforces the need for genuine, actionable steps toward creating supportive work environments.
Baldwin and Turman leave listeners and leaders with practical advice: Regularly self-assess and reflect, asking ourselves, “What do I need in this moment?” Though it may seem like a simple question, its answers may be complicated, which can inspire deep self-discovery and a more balanced approach to leadership. When leaders own and address their personal struggles, they both enhance their own credibility and create environments where others feel empowered to do the same.
If you’re looking to improve your leadership effectiveness and have a greater impact on your practice, Coachify Over Coffee offers valuable insights and actionable strategies. Learn to shift your mindset, view daily problems through a different lens, and apply a new approach to your leadership with the help of Laura Baldwin and Savory Turman, two certified coaches dedicated to sharing their expertise with listeners like you.
Written by Christa Shephard
As new tools come to the forefront of healthcare delivery, staying compliant with updated billing and coding policies is crucial. VMG Health’s Compliance Risk Analyzer (CRA) is designed to help health systems and practices navigate the shifting healthcare landscape with ease, ensuring they remain compliant and avoid small mistakes that can lead to big consequences, like audits. Additionally, the financial returns from the undercoding of E&M codes and the potential FTE savings through improved efficiency, resource reduction, and cost-effectiveness underscore the value of implementing CRA.
Analytics are increasingly driving healthcare and its delivery. Government agencies and private payors use advanced statistical models to identify improper claims and target providers for audits. To balance the scales, healthcare managers need a fundamental understanding of these statistical practices. A manager does not need to be an expert statistician, but a foundational understanding of statistics is critical to properly coding, billing, and understanding common mistakes. A fundamental understanding of trending analysis, time series, confidence intervals, and other factors empowers providers and managers to maximize the benefits of CRA’s data analytics.
Health systems and practices should closely monitor their billing and coding processes. It is crucial to efficiently perform internal, risk-based audits that produce accurate results that mimic how the government audits. Catching and addressing mistakes early is key.
CRA employs artificial intelligence to simplify the compliance process. Instead of requiring managers to become statisticians, CRA handles the heavy lifting. Through its sophisticated algorithms, CRA automates the complicated task of data analysis, allowing healthcare providers to conduct risk-based audits as efficiently and accurately as possible. It also employs predictive analytics to identify which claims or services will be most likely to be audited, allowing providers to take proactive, preventive measures, saving time and money.
Typically, organizations use about 1.3 full-time employees (FTEs) per 1,000 providers just to start identifying audit targets. CRA completely eliminates this step, saving much of the upfront work and boosting the accuracy of risk prediction by reviewing 100% of claims. Creating and implementing an audit plan usually takes 0.8 FTEs per 1,000 providers; CRA handles it in seconds with just one click. Finally, practices usually spend about 20% of their resources just digging through claims within the EHR to choose which claims to audit. CRA automates this process, picking claims based on statistically valid, random samples or non-probability convenience samples. This data-driven, proactive technology allows healthcare organizations to address potential issues before they escalate.
Ultimately, CRA is about empowerment. Understanding the basics of statistics and data analytics is vital to fully capitalizing on its services. CRA is designed to help healthcare providers protect themselves from unwarranted audits and compliance issues. By integrating advanced analytics into everyday operations, health systems practices can enhance their compliance strategies and focus on delivering exceptional patient care.
Stay tuned for more insights on how CRA and other VMG Health solutions are transforming healthcare compliance.
Written by Glenn Morley
The aesthetics industry has grown significantly over the past few years, driven mainly by investor-backed consolidation of practices. Whether large or small, buy- or sell-focused, organizations focused on growth should explore acquisition and de novo development strategies. Aligning the right and best growth strategy with your organizational vision is critical and requires an examination of the strategic advantages both options can offer.
Aesthetics practice consolidation typically refers to the trend of medical aesthetics practices and medical spas merging or being acquired by investor-backed organizations. Consolidation in medical aesthetics has gained momentum over the past five years for several reasons:
The de novo strategy is the process of opening a new practice or medical spa or expanding to a new location from scratch. When choosing the de novo path, it is crucial to understand your business model. You need to identify the target market that offers the most significant probability of success in your area. Key population factors to consider include age and financial bands, and the competitive landscape. Consider launching a target market analysis to focus on your ideal region and region and entail customers. You can also evaluate the demographic data in your practice management system, complete focus group research, or hire experts to ensure there will be demand when you build.
A de novo growth strategy can offer compelling advantages, including control over branding, culture development, service offerings, and management. This also allows you to initiate your build with the retail mantra: location, location, location. A de novo strategy may also require a lower initial investment than an acquisition. However, this strategy can be challenging and time-consuming due to factors such as building a patient base, recruiting providers, and a team willing and able to build from scratch. A less arduous approach to de novo location growth is securing an anchor practice poised for expansion, a target geographic location, or an organization with expertise building de novo in other sectors.
An acquisition growth strategy involves purchasing established medical aesthetics practices and integrating them into an existing organization. While this approach offers immediate access to an established patient base and can provide a steady revenue stream, it comes with its challenges and risks. When a business is acquired, careful due diligence is required to ensure the revenue streams, operations, and systems are reliable and scalable. It will also require integrating many components, starting with culture, HR/personnel, marketing, and operational and financial systems.
Owners looking to expand to multiple locations should carefully evaluate the pros and cons of both de novo and acquisition strategies. Furthermore, it is critical to align these strategies with long-term goals, your current organization’s ability to scale, risk tolerance, and existing market opportunities.
Many growth-minded medical aesthetics organizations seek expert guidance in this process. Engaging industry professionals, including financial advisors like VMG Health and BSM Consulting, can offer invaluable insights and steer you toward informed decisions that align with your strategic expansion goals. Once you have a plan, creating a model of your new acquisition or de novo location is essential for a thoughtful approach to growth.
Whether you build a practice from the ground up or acquire an existing one, you must complete thorough due diligence, including examining financial health through day-to-day operations. Early phase due diligence will reward you with greater prosperity and less disruption.
Acquisition or de novo growth strategies offer excellent business owner opportunities; the choice should align with your practice’s risk tolerance and growth goals. Regardless of your chosen strategic growth plan, stay abreast of the changing landscape and dynamics in the expanding medical aesthetics marketplace.
Written by Johnny Zizzi, CPA; Lukas Recio, CPA
When considering a new acquisition or transaction, accurate financial reporting is paramount for informed decision making. One significant aspect of financial reporting is the choice of accounting method: cash, accrual, or a hybrid of both. Many companies begin their journey with cash accounting, but as they grow and evolve or are otherwise acquired by a larger entity, they often transition to accrual accounting to meet regulatory requirements or achieve a more comprehensive financial picture.
This transition is not without its pitfalls and considerations, particularly when understanding its impact on enterprise valuation resulting from the quality of earnings process. Key considerations when converting from cash to accrual accounting include revenue recognition in accordance with ASC 606, expense accrual recognitions, managing changes in working capital, and earnings volatility.
Cash accounting, also called checkbook accounting, entails recording transactions when cash changes hands, which provides management with a straightforward method for tracking cash flow. Small businesses often prefer this method because the IRS allows it when certain size criteria are met and because it is easier to track money as it moves in and out of bank accounts. Further, there is no need to evaluate accounts receivable or payable to determine income when using cash accounting, simplifying the management of the financial statements as a whole.
However, for healthcare entities, this simplicity can be misleading, as it does not capture the true financial obligations and revenues tied to patient care and insurance reimbursements. Accrual accounting, on the other hand, records revenues when they are earned and expenses when they are incurred, regardless of when cash is exchanged. While cash accounting may be simpler for small businesses, accrual accounting offers a more accurate representation of a company’s financial health, especially as they grow and become more complex.
A crucial component of most healthcare services transactions is the quality of earnings analysis, which aims to assess the sustainability and accuracy of historical earnings and the achievability of future earnings, thereby providing potential buyers with a clear understanding of the company’s true earning potential.
Transitioning from cash-basis accounting to accrual accounting entails significant differences and challenges in revenue recognition. Under cash-basis accounting, revenue is recognized when cash is received, while accrual accounting dictates recognition when revenue is earned, irrespective of cash-flow timing. This shift necessitates adjustments to accurately reflect revenue generated within a given period, especially for long-term contracts or services rendered where cash receipts may occur at different points from when the revenue is earned. Challenges arise in estimating and timing revenue recognition, requiring careful assessment of performance obligations, delivery, and collectability.
Issues stemming from the diverse revenue streams and payment models prevalent in healthcare, such as fee-for-service, capitation, and bundled payments add an additional layer of complexity when converting from cash to accrual accounting, as each payment model has distinct timing and recognition criteria. Additionally, healthcare entities often engage in complex contractual arrangements with payors and providers, leading to variations in revenue and expense recognition practices. Moreover, healthcare organizations may have unique regulatory requirements and accounting treatments for certain transactions, further complicating conversion efforts.
Differences in case mix, payor mix, and procedure mix among healthcare entities can also impact revenue recognition as the collectability of outstanding accounts receivable is often different for specific payor and case mixes. Cash waterfalls, zero-balance analyses, and other revenue hindsight analyses are leveraged as part of VMG Health’s comprehensive quality of revenue analysis to ensure revenue recognition is converted from a cash basis to an accrual basis in accordance with ASC 606. Adherence to revenue recognition principles, while requiring meticulous analysis to mitigate misinterpretation and manipulation, is a critical component to a quality of earnings analysis, as it ensures financial statements provide a more comprehensive view of revenue performance, enhancing transparency and comparability. For further detail on quality of revenue analysis, see VMG Health’s previous article: Proceed with Caution: Five Key Considerations in Quality of Revenue Analysis.
Transitioning from cash to accrual accounting presents unique challenges beyond revenue recognition. One significant hurdle lies in accurately accounting for expenses, particularly in healthcare facilities where costs often span various departments and service lines. Accrual accounting requires recognizing expenses when incurred, irrespective of cash outflows, which can be intricate in healthcare settings due to the complex nature of patient care, procurement of medical supplies, and maintenance of facilities. Ensuring accountants properly match expenses to the periods in which they contribute to patient care or administrative functions may require complex allocation and estimation methodologies.
For instance, the timing and recognition of expenses related to medical supplies and pharmaceuticals can vary based on inventory management practices and rebate arrangements with suppliers. Historical cost of goods sold analysis and margin analysis are two of the most common strategies implemented to understand underlying changes in the business, providing a basis for accurately matching expenses to the relevant accounting periods. In large healthcare systems, these complexities are further amplified by the need to allocate costs accurately across multiple departments and service lines, such as inpatient, outpatient, surgical, and emergency services. Addressing expense accrual challenges necessitates a comprehensive understanding of healthcare operations and collaboration between finance and operational personnel to ensure the accuracy of accrual conversions.
In the context of a transaction, small businesses may prepay (malpractice insurance) or pay after the fact (common area maintenance charges) for certain expenses, which must be converted to an accrual basis to properly inform a buyer of the business’ financial condition.
Shifting from cash to accrual accounting also affects the management and assessment of working capital. Under cash accounting, working capital appears straightforward, often mirroring the cash flow directly. However, accrual accounting requires a more nuanced view, recognizing accounts receivable, accounts payable, and inventory changes that may not have immediate cash implications but significantly impact liquidity and operational efficiency. Accurate tracking and managing these elements is crucial, as they influence a healthcare organization’s true financial position and operational performance and may have purchase price implications.
Understanding and converting net working capital on an accrual basis also helps shareholders and potential buyers identify a business’ strengths and potential weaknesses. For healthcare entities, a rise in accounts receivable under accrual accounting indicates future cash inflows but also highlights the importance of effective revenue cycle management, including timely billing and collection processes. Similarly, accounts payable under accrual accounting provide insights into a company’s obligations and upcoming cash outflows, lending toward robust vendor management and procurement practices. Healthcare entities must develop comprehensive systems for monitoring these working capital components to ensure they reflect the actual financial health and to make informed decisions regarding cash management, investment opportunities, and strategic planning. However, there must first be benchmark net working capital to compare future trends.
Under cash accounting, earnings may appear more volatile, as revenues and expenses are recorded only when cash transactions occur. However, accrual accounting captures economic events more accurately and consistently. Fluctuations in reported earnings can be caused by timing differences in revenue and expense recognition and can be particularly pronounced in the healthcare sector, where seasonal variations and payor reimbursement lags are common, causing revenue to be recognized in one period and the corresponding expenses in another on a cash basis of accounting.
For stakeholders and potential investors, understanding the sources and implications of this volatility is crucial for assessing the company’s true financial health. Cash-to-accrual conversions within a quality of earnings analysis help identify and normalize these fluctuations, providing a clearer picture of sustainable earnings and operational performance. By aligning revenue and expense recognition to an accrual basis, stakeholders can benefit from more reliable insights into the company’s financial trajectory, aiding better investment and management decisions. For healthcare entities, this detailed analysis is particularly vital, given the sector’s unique financial dynamics and regulatory landscape. The application of advanced analytical techniques, such as trend analysis and scenario modeling, can further enhance the understanding of earnings volatility and its impact on long-term financial planning and stability.
Converting from cash accounting to accrual accounting in a quality of earnings analysis offers several positive benefits. Accrual accounting provides a more accurate reflection of a company’s financial performance by matching revenues and expenses to the periods in which they are earned or incurred, offering a clearer picture of the company’s profitability over time. This enables stakeholders to make better-informed decisions regarding operational changes, investment, lending, or acquisition opportunities. Additionally, accrual accounting enhances comparability with industry peers and facilitates benchmarking analysis, as financial statements prepared under an accrual basis are inherently more standardized and comparable. Moreover, accrual accounting can uncover trends and patterns in revenue and expense behaviors, providing deeper insights into the company’s underlying financial health and operational efficiency. Overall, the conversion to accrual accounting strengthens the transparency, reliability, and credibility of earnings analysis, fostering trust among investors, creditors, and other stakeholders.
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