Insurance Divot Spreadsheet

During the NCE, Dr. Couchman suggested that I whip together a spreadsheet to show how to quickly calculate the divot made when you drop a poorly paying insurance company.  Here it is.

The concept is fairly sound and simple: if you have an insurance company that pays you less than the rest of your payers, dropping them does not require a 1:1 visit replacement ratio for you to do well. If you average $100 visit from most of your payers, but only average $50 from the company in question, you really only need to replace 1/2 of their visits to be revenue neutral, right?

And, given that some percentage of your patients will stay with you at your typical revenue rate(somewhere between 30-60%, usually), you will need to replace even fewer than you think.

I have written about this phenomenon before and have done some spreadsheet/sketches for my own use, but I’ve attached a working copy (M$ Version here, OpenOffice version here).

For it to work, you only need fill in five cells.  The first four you can get from your PMS (right?!): the number of visits and revenue per visit of the company you want to examine and the rest of your payers.   You then need to estimate the percentage of patients from the plan you expect to keep.  In essence, just update the fields in light blue.

The spreadsheet then calculates the impact on your revenue and the number of visits you’ll need to replace in order to be revenue neutral.  For example, I’ve tossed some numbers into the form – the insco represents 1000 visits @ $85 visit while the rest of the practice is 5000 visits @ $100 visit.  If 50% of the patients stay with you and generate “average” revenue, you lose only 6% of your revenue and you only have to replace 350 visits to get back to “break-even” (vs. the 500 most people expect).

Play with the numbers for a little bit and you can see how it works.  Once you realize that your practice probably has 100s or 1000s of kids overdue for their well visits, ready to fill in the divots, it might not be so bad.

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