Managing large substance use recovery and behavioral health agencies is challenging because of the sheer quantity of moving parts you need to track. Every aspect of your organization has data that needs to be collected, tracked, and analyzed. That includes your financial performance. You’re most likely using a variety of financial performance management software, but did you know your EHR can help? While EHRs primarily focus on capturing and managing clinical data, their billing components can also provide valuable financial data when integrated with other financial management tools. They won’t encompass all financial aspects of your organization, but they can help you add more granular data or help you bridge gaps in your financial software’s information.
You should consult with your EHR vendor or seek guidance from other financial professionals to ensure appropriate setup, integration, and use of the EHR system for financial performance measurement.
Revenue Affects Your Financial Performance
Tracking revenue allows agencies to understand their financial health and overall income generated. This includes revenue from sources such as patient services, government reimbursements, grants, private insurance, and donations. It’s essential to track revenue from different sources separately to identify the main income streams and evaluate their contributions to the agency’s financial stability. Your EHR should offer data pulled from the billing components, like payment collection or client payments.
Operating Expenses
Monitoring and reporting operating expenses is crucial for assessing the cost of providing services. This includes expenses related to staffing, medical supplies, medications, facility maintenance, utilities, administrative costs, and other overheads. By analyzing operating expenses, agencies can identify areas where cost-saving measures can be implemented, and resources can be allocated more efficiently. While your EHR usually doesn’t track these expenses directly, you can leverage MAT, e-prescribe modules, and room or equipment usage, as well as staff productivity metrics, to verify your data is accurate or drill on specific expenses.
Accounts Receivable and Financial Performance
This metric represents the amount of money owed to the agency by patients, insurance providers, or other entities. Tracking accounts receivable helps agencies monitor cash flow and identify any overdue payments or outstanding balances that require attention. It ensures that appropriate measures, such as follow-ups or collections, are taken to minimize bad debt and maximize revenue collection. This is a must-have in any EHR. Your billing module and dashboards should include various ways to monitor accounts receivable, including various reports you can export in Excel or as PDFs.
Billing and Collection Rates
These metrics provide insights into the effectiveness of agency billing processes and the overall success rate of collecting payments. By tracking the percentage of bills sent out and the percentage of payments collected, agencies can evaluate their revenue cycle performance and identify any bottlenecks or areas for improvement, such as denials management or improving documentation for billing purposes. Another must-have: your EHR’s revenue cycle management tools should include dashboards and reporting that lets you drop down on your billing metrics. EHRs can assist in capturing charges for services rendered.
Profitability and Margin Analysis
Assessing profitability metrics helps agencies evaluate their financial viability, sustainability, and future growth potential. Metrics like operating margin, net income margin, or return on investment (ROI) provide insights into the agency’s ability to generate profits relative to revenue and expenses. These metrics help agencies make informed financial decisions and understand the cost-effectiveness of their operations. Your EHR won’t have this data directly, but collects metrics such as clinical productivity, such as patient encounters, time spent on various activities, and service utilization. By analyzing this data alongside revenue generated from the corresponding services, organizations can assess the efficiency and productivity of clinical staff and departments. This analysis can help identify opportunities for improvement, streamline operations, and optimize resource allocation.
Cash Flow and Financial Performance
Monitoring cash flow is essential in ensuring the agency’s financial stability and ability to meet financial obligations. Agencies need to track cash inflows and outflows, timing discrepancies, and fluctuations in cash reserves. Analyzing cash flow trends can be used to anticipate any potential cash shortages and take necessary actions, such as managing billing and collections more effectively or adjusting spending and investment strategies. Your EHR’s billing data is necessary to properly measure cash flow.
Financial Ratios
Financial ratios provide meaningful insights into the agency’s financial health and performance when compared against industry standards or previous periods. Ratios such as debt-to-equity ratio, current ratio, or days in accounts receivable help agencies assess their liquidity, solvency, and financial efficiency. By monitoring these ratios, agencies can identify areas that require attention or improvement. EHRs usually include data like claim status, aging account receivables, percentage of collections and unpaid claims, and other data that help you gauge your financial performance.
Please note that the exact financial metrics to report may vary depending on the specific goals and objectives of the agency and any external reporting requirements from regulatory bodies or funding organizations. However, the above metrics encompass key areas that substance use recovery and behavioral health agencies should consider in their financial reporting practices to ensure effective financial management and decision-making.
Therapy Brands offers EHR solutions tailored to substance use recovery and behavioral health agencies, with fully integrated billing, financial reporting, and dashboards that provide the business intelligence you need to keep your agency profitable. Schedule a discovery call to discuss how we could boost your organization’s financial performance.
