Acquiring a medical practice via private equity involves extensive due diligence and research to accurately assess its value and risks. Evaluating the Revenue Cycle Management (RCM) process and related Key Performance Indicators (KPIs) can provide crucial insights into the practice’s true value.
Many medical practices struggle with RCM optimization, leading to missed revenue. RCM experts can quantify this missed revenue, impacting the practice’s actual worth. Large revenue discrepancies may reveal hidden opportunities for growth.
With RCM expertise, equity firms can make well-informed acquisition decisions, ensuring sound investments in medical practices. Let’s delve into how to analyze financial performance and secure prudent investments for your private equity group’s medical practice acquisitions.
Mastering Medical Practice Valuation: A Comprehensive Guide
The popularity of private equity acquisitions in medical practices is increasing. However, it’s crucial to accurately assess the practice’s value for maximum returns, and this is where Revenue Cycle Management (RCM) becomes pivotal. RCM evaluates a practice’s performance across various key metrics such as patient volume, net collection rate, denial rate, writeoffs, days in A/R, payer mix, reimbursement rates, and billing accuracy.
An RCM analysis assists potential buyers in understanding the practice’s performance and investment viability. For instance, if a practice’s net collection rate is 74%, an RCM expert can determine potential improvements compared to industry standards, such as a 95%-97% net collection rate. Additionally, RCM experts can identify issues like under or over-coding, affecting revenue accuracy, and benchmark the practice’s performance against its peers.
- Patient Volume
- Net Collection Rate
- Denial Rate
- Writeoffs
- Days in A/R
- Payer Mix
- Reimbursement Rates
- Billing Accuracy
Post-Acquisition Responsibilities of RCM Experts
Boosting the value of a medical practice post-acquisition hinges on efficient revenue collection. Whether managing RCM internally or via an ill-suited outsourced approach, this remains a common challenge. Engaging a capable RCM firm typically yields the best results, offering numerous advantages. Such firms streamline billing processes, minimizing errors and delays while curtailing expenses related to hiring and training staff. Moreover, they expedite payments through their expertise and resources, ensuring timely claims submission.
Read: CSK Clinics: Your Trusted Partner in Healthcare
The wealth of expertise offered by professional RCM firms is unparalleled, enabling them to optimize reimbursements and negotiate higher rates with insurance companies. The COVID-19 pandemic underscored the superiority of competent RCM firms in delivering exceptional performance compared to the industry at large.
Work with UMBS
Maximize your medical practice acquisition with Revele. Comprising RCM Experts, we specialize in evaluating RCM processes for target practices using proprietary tools. Dedicated to optimizing your investments, Revele ensures you get the most value.
