In the past few months, I have asked practices and practice managers all over the country to do a simple test to see if their in-office Infusion Centers are leaking money. I ask them to secretly remove a single vial of expensive medication from their inventory and then see how long it takes someone on their staff to notice the missing vial.
The test is a dead simple way of checking one of the most fundamental systems every Infusion Center must have which is inventory reconciliation. If your Infusion Center is not reconciling purchased inventory against billed patient claims and against physical inventory, you could be leaking serious cash.
I know what you are thinking, “Wouldn’t someone know if they were missing thousands of dollars of expensive medications?” No, in most cases, this is very difficult to account for.
Here is why. Most infusion medications are purchased on payment terms that range from 30 days all the way to 120 days out. Most insurance companies pay correctly authorized and correctly filed claims within 14-30 days. The point to know is that inventory invoice payment dates and revenue from patient claims are rarely synchronized. In many cases, revenue comes in much sooner than inventory invoices are paid.
Since we are dealing with chronic patients, meaning that most of the treatments occur perpetually for years, this unsynchronized revenue before invoice payment situation causes there to be a constant stream of cash to flow into a practice. It is inevitable that practices will start to use payments from one patient treatment to pay the drug costs of another patient. For those offices on cash-basis accounting, this can be hard to see and mislead the practice manager into thinking that all is well on the P&L. After a while, finding out which payment or invoice is linked to a single vial in a month where 100’s of vials come in and go out is very difficult.
In many cases, even if offices are aware of the issue, they are inclined to keep the status quo. After all, if a practice keeps growing its Infusion Center patient census, there may always be enough cash coming in to cover the bills. If they have access to a line of credit, the float can be extended even further out.
Want to see if this if your practice is leaking money? First, identify just the portion of your Accounts Receivable (AR) and Accounts Payable (AP) that are from just your Infusion Center patients. Then take a physical count of your Infusion Center inventory on the same day and value it based on your costs for that inventory.
Subtract your AP from your “collectible” AR (be honest here) and add back your inventory value. If that number is positive, you are good to go, congratulations. If it is negative, you have been leaking cash.
Where is, the leak coming from? Any part of your infusion patient workflow that is a separate system or process leaves you vulnerable to leakage.
Without a connected, seamless system most offices will enter patient orders, verify insurance, schedule appointments, document treatments, manage inventory, and bill claims using a range of separate or semi-connected, but different processes. Many times, there is a part of this process that leans on excel spreadsheets, interactive PDF’s, or even Microsoft Outlook as parts of the workflow.
Most of these processes were never designed to deal with the complexity of the infusion patient workflow, and they were certainly not designed to be used together across multiple users in the dynamic environment of a busy medical practice.
The leakage occurs in the gaps between these systems. Without each system reconciling to the other, information becomes out of sync or lost altogether. What does that mean to your practice in terms of dollars? If the nurse treats a patient who has inactive insurance, uses buy&bill medication on a specialty pharmacy patient, or neglects to document a vial on her treatment note leading to that vial not being subsequently billed on a claim – these situations can cost the practice thousands of dollars in unbilled or lost revenue.
WeInfuse is seamlessly designed to manage your Infusion Center, reconcile your processes and prevent cash from leaking.
Contact us to learn more about how WeInfuse can help your practice Infuse Better.