Accounting Insights for Radiologists

April 26, 2012

It's important that data and reports be complete, accurate, and timely. It's an essential part running a successful business and a critical part of the revenue cycle in diagnostic imaging.

Early in my career, I was doing some accounting consulting work for a group that had recently purchased a telecom company. Nobody from the original accounting department was left, and it was a mess. I mean a complete mess.

There were a lot of problems with their customers in trying to figure out which invoices had already been paid and which were outstanding. To make matters worse, for the first three months the company ran on Excel until it could implement its own systems. During that time, the business kept working, of course. It was like trying to change the tires on a car while driving down the freeway.

I remember sitting down and trying to figure out what insurances had been paid, what was still owed, and if any amounts had been overpaid. Armed with stacks of invoices, cancelled checks, and spreadsheets calculating the expenses, I started to get to the bottom of the balances.

At one point I had everything figured out to within $0.45. Getting to that point was relatively straightforward, but finding where less than one dollar was took a couple of hours. At that time, early in my career, it seemed ridiculous to pay my hourly rate to find less than one dollar. It seemed that a better strategy was to just write it off (ignore it) and move on to seemingly more important things.

Turns out, what I discovered was that I wasn't as close as I thought. The Excel models had errors in them and the insurance bills were incorrect. So there were a few different errors going in opposite directions - what the client should have paid versus what they did pay. I finally resolved the errors and made sure that everything was accurate and complete.

In accounting, it is important that data and reports be complete, accurate, and timely. It is an essential part running a successful business - and a critical part of the revenue cycle in diagnostic imaging. The main purpose of policies and procedures is to capture complete and accurate information and process it in a timely manner.

Think of how the information is processed in your organization. Know that regardless of all the improvements that have been made in the past, there is always room for improvement, and there always will be more.

Over time each step of the process will contain errors. Perfection is impossible. Not every procedure will be charged. Wrong codes will be used, leading to lower reimbursement or rejections.

Employee turnover and lack of training can cause some of these errors. But want to know the largest cause? We are human. Did you know experienced radiologists make mistakes too? After all that education, continuing education, better tools and even decades of experience they can make mistakes. Best to accept them and go about trying to fix them. New mistakes will be made, which is why the best policy is continuous improvement. Automation and technology can reduce some failures, but these can fail too. Servers crash, networks and hardware fail, interfaces can be set up incorrectly. The list could go on.

So how does a company make things better? Six Sigma has a framework that is helpful to improve any process. The acronym is DMAIC: Define, Measure, Analyze, Improve, and Control. There are a lot of tools and documents that have been developed to help in this process. If they are helpful, then by all means use them. I find that the framework is a sufficient guide on what to do. It can be summarized thus: Find out what could be better. Make sure you can measure what is happening, and then measure it. Figure out how to improve it and then improve it. Then check the measurements to make sure that it is better. 

The steps that are usually done incorrectly in DMAIC are measuring both before and after any changes are made. I am not sure which is worse, not measuring at all or measuring the wrong metric. Both have problems. In my example above about reconciling insurance costs, the metric was not getting to zero differences between what should be paid versus what was paid. The real metric was having everything correct. I could have "plugged" or hidden the $0.45, because it was insignificant. If my metric was getting to zero, then I would have apparent success.

The only thing that you can be sure of is that some portion of your data and processes are incomplete, inaccurate and delayed. Don't worry, it will never be perfect. And never believe anyone who tells you otherwise.

David Fuhriman is CEO at Bern Medical, where he analyzes radiology data to discover under-billings.