All right, so I want to welcome all of you titans of industry, titans of Wall Street, to something I'm sure you're very familiar with. I have allotted in this talk time to pull every one of you in the audience to see how many lectures you've had in your fellowship on finance, accounting, economics. Okay, that time has expired. So we know you've spent a ton of time on that. So I think what I want you to take away from today is really learning a new language. You will not be able to create a balance sheet. You'll not be able to create an income statement. But you can learn some terms that will be very helpful. No matter what practice model you go into, you really need to understand the finances, the cash flow, and how money moves around. It's important to you and your livelihood, and it's important to the unit's success. And it doesn't matter what the model is. Jason probably, you know, he talked about his writer's block yesterday. My guess is he may also have financial block at times. But he knows the finances of his unit just as well as we would know it in our unit. I have no disclosures for this talk. Our goal today is to look at how does a medical practice monitor and manage its finances? What are some of the important financial reports, and what do they tell us when we review them? What's revenue cycle management, and why is it important? What are some common financial pitfalls? And at the end, where can you learn more? Okay, let's start with some simple accounting terms. Something you may hear is something called GAAP, generally accepted accounting principles. These are a set of principles and guidelines that are issued by a central accounting foundation or body that really tell us how accounting should take place in the United States through principles, guidelines, and other factors. It allows these statements and forms that we will see, they become easy to read, easy to analyze, and easy to understand. And you can compare them across other organizations that are similar to yours. There are two main accounting methods that are used in the United States. One is the cash accounting method, and that's the one used by most independent practices and smaller businesses, larger institutions, and public institutions. Public institutions actually have to use all the principles of GAAP, but smaller institutions do not, and the cash accounting method works well. And that's where income and expenses are recorded when funds are received or paid. It's very simple, it's very easy, and you can think of it as the Quicken method for accounting. It's an accrual form of accounting, and this is the one you must use if you are a public company, and that's where income and expenses are recorded when the transaction occurs. And it's actually a much more accurate information as far as looking at the financial status, because you are doing this in real time, essentially. But again, in most practices, you'll see the cash accounting method. In the next few slides, I want to start going over the financial statements. We'll look at a balance sheet, an income statement, a cash flow statement, and then look at some dashboards. Dashboards can be used in financial matters and outside of financial matters, they're very popular with medical institutions, but we'll look at financial dashboards to assess some trends over time. So this is a statement of financial position, or the balance sheet. So very simple, on the left we have assets, so something that has value within the organization, and then liabilities, these are financial obligations or cash that will flow out of the business. And in the end, on these balance sheets, the total assets, which we'll talk about in a moment, and total liabilities and equity must balance out or equal each other, so that's why it's called a balance sheet. Total assets are equal to equity and total liability, so total assets are resources that are within an organization, and they are based on the definition of equity and total liability. Equity are investments that the organization makes and retained earnings, and liabilities are financial obligations, so again, cash flowing out of the business. If you want to find out what the worth of a practice is, or the equity, you take the total assets minus total liabilities, and at any point in time, you can find the value of your organization. This is an income statement, and an income statement are financial statements that institutions use to follow profit and follow cash through the business. There are typically time periods in this particular case. It's January through June, and here's an example of an income statement as profits or revenue coming into the business, so let's start to just, again, don't worry about all the details, but we see revenue, so an example of revenue is gross patient service revenue, some expenses that are common, salaries, wages, benefits, medical supplies, professional fees, purchase services, things that we buy, and then something called EBITDA. EBITDA is earning before income, income taxes, depreciation, and amortization, so a couple terms we should define. Depreciation, depreciation is where you allocate the expense of a tangible asset over time, so in GI, an endoscope, an endoscope has value, but over time, its value declines, and you can spread that out over time. Amortization is the allocation of the asset, of an intangible asset over time, so for instance, something like legal services, and these are all used for accounting principles, again, to allocate assets over time. Here's a cash flow statement, so the second type of, third type of statement you'll see, cash flow statement. Cash flow statement's pretty easy, probably easiest of all the statements to understand. Cash flow, cash coming in and out of the business, pretty simple, okay? We want to, when we look at cash flow, we talk about positive cash flow, that means at the end of a period of time, you have positive cash flow, that means more cash is coming into the business than out of the business, and negative cash flow, more cash is going out of the business than into the business, so we obviously always want positive cash flow, however, during the pandemic, that was one of the few times that you will see successful practices actually started to have some worries about positive and negative cash flow. It was a very unique time last year, but this is, again, a very simple way to understand cash coming in and out of the business, so let's talk about a couple terms that you should become familiar with. Accounts receivable, that is money due to the organization, typically from patient billing. You like your accounts receivable to be 30 days or less, we'll talk more about that in the revenue cycle, so accounts receivable is a term here. Accounts payable, these are bills that you owe, this will be cash going out of the business, and then we have, again, some other terms ending with total cash flow at the end. So other terms, definitions, notes that you may see accompanying financial reports, so cash, pretty simple, cash is legal tender in the United States or a country that's used to pay for services, goods, pay down debt. Banks and financial institutions will look at cash as other assets that can be turned into cash, typically in less than a year's time. Cash equivalents are not necessarily cash ready on hand, but are bank accounts, marketable securities such as stocks, and short-term bonds that can be turned into cash in less than three months, so assets that can quickly be turned into cash if needed. And investment, very simple, it's taking assets that you have, investing them in something with the hope of return over the long term. Equipment or other practice assets, using the depreciation method, we briefly talked about depreciation and amortization. Handling of patients' billings and adjustments, really what we want to focus for terms, again, accounts receivable, we'd like that turnover to be 30 days or less. The longer bills are outstanding, the more trouble we have trying to collect bills, we're less likely to be successful. And then insurance adjustments, you can charge whatever you wish for a colonoscopy, but you're only going to get the contracted rate, so I could say I charge $2 for a colonoscopy, but the insurance company's only going to pay me 80 cents, so there's an adjustment in that billing cycle, typically down. Uncompensated care, so our group, we see everyone. If you don't have insurance, we see you, but we do have to account for the non-paid patients in our financial reports, so you might see that. Some other factors that might impact financial reporting, more recently, IT, obviously IT is now in every practice, it's very expensive up front, but over time it can make us more efficient and really help us with our cash flows in and out of the business. Other line items you might see are medical liability coverage, because it's such an expensive expense, and then you might see data regarding leases on the financial reports. Let's talk about some trending dashboards, and these have become wildly popular in the last couple years because of COVID. Very simply, trending dashboards are ways to look at, in healthcare and in non-healthcare, but in healthcare, key performance indicators. So these are indicators within your practice or group that you consider important that you must follow to help determine the success of the organization. So this example shows a balance sheet from March 31st, so March of 19 and March of 18, and you can pick any of these variables to compare to see how you've done year-to-year in one month, overall year-to-year, a six-month period of time, it's a very good way to compare. So for example, we had the feeling this year that our volume was up across many different business lines. Well feeling it and knowing it are two different things. So we couldn't really look at last year, because last year was a very bizarre year, we went back to 2019, and then started comparing for seven months, all of our business lines. And that's how we quickly realized every volume was up, colonoscopy up, clinic visits up. And so very simple way to pick a variable, compare and get accurate information. And in many ways, it's more important to know when you think you're having a down year, where are your deficits, and then start to come up with a plan to correct those deficits. So here's the trending dashboard, this down here is a cash flow, so looking at cash flow statements and again comparing cash flow. Okay, busy slide, I typically don't like busy slides, that's why I don't like most of these slides in the business talk, but the revenue cycle is an important aspect of a practice and important for you to understand, again, across all practice models. So the revenue cycle is very simply the time that a patient makes an appointment to come to your office to seek the care, to seek medical services, to the completion of that cycle when all claims and all bills are paid. So lots of moving points, but worth me quickly going around this wheel to show you how complex it is, this is just for one patient's billing. So patient registers, check their benefits, are they eligible to come see you? Data entry, patient demographics, and at every one of these points someone is working. Referral and authorization, patient is seen, we have coding and billing. Bill gets posted, bill gets submitted, are there any denials and then we have to go back to work to fix that claim. Payment gets posted, back to denial management, any further refining, secondary filing, end up with accounts receivable, what's owed the practice, any problems with them then we can appeal again, and then patient billing and finally you ultimately collect it. It gets to Klaus's point about the complexity of the U.S. health system, I think this tells you a lot how complex it is, that's one patient's billing cycle. Some problems that can derail this process, so when the patient comes in, if you put in some incorrect data, birth date is 3-31-36, 3-31-63 gets put in, that derails the process and someone else has to go back and fix that and the whole process starts all over again. Paper versus electronics, you have to be using an electronic submission process and billing process, makes you much more efficient, decreases that accounts receivable. Blanking out on the other one I wanted to tell you, I apologize. My next slide will remind me, I believe. Some notorious financial pitfalls related to and unrelated to the financial cycle, revenue cycles. First, a failed charge submission, again, any time that process fails, that process gets derailed, you have to start all over again, many people working to fix that process, it costs your practice a lot of money to collect the bill and now your profit margin decreases. Other failures in the revenue cycle, you have poor rates, so your discounts and some of your contract rates are poor, management of patient denial, a lot of time, a lot of effort, and here's the other one I was thinking of, collection of patient obligations. We're seeing an increased population that has higher co-pays, higher deductibles, so not only are you trying to collect their insurance part of their bill, you now are trying to collect cash in some form from the patient, so that could derail the process. Just spend a moment of time on embezzlement and theft. There are some very creative and very bad people out there, and embezzlement has happened in all practices, small to large, to famous institutions, people are very creative, and I think this last line, especially in the private world, but again, I think you can apply this in every practice. If there is not physician oversight of what's happening in your practice, in your department, you're setting yourself up for danger. So in our practice, we have a business manager, he has an assistant. They are the first wall of defense of making sure everything is correct. It then comes to the physician partners. We review these statements at our financial meetings. Still not good enough. At the end of the year, we have a firm come in, and every year they're reviewing the financials, doing our due diligence to make sure, one, that we're accurate, and not breaking the law or committing fraud, but more importantly, to make sure nobody is filtering funds outside of the practice. And that can be a very bad situation and cost the practice some really great, great pains. If you want to know more information, again, you're not going to have an MBA after today, so I apologize. Today is more just to start to learn the terms of finances. You can go to the American Association of Physician Leaders. Lots of good courses, culminating, if you wish, to an advanced degree. A Physician's Guide to Financial Statements. Here's some data on cash versus accrual accounting. I think a great way is to go to meetings like this that the ASGE sponsors. In November of every year, we have a trifecta to business trifecta. Lots of coding and billing, practice operations, financial discussions, a great way to learn. And then network. Meet people, talk to people, ask lots of questions. You do not have to become, my sarcasm, a titan of finance, but you really do need to understand some of the basics to protect yourself and protect your organization. Thank you. That was fantastic. Thanks, Jill. I've heard a lot of basic finance talks, but this was probably... among the best. All of those materials, again, as has been said, will be on GILeap accessible to you all, so make sure you keep these kinds of basic talks available. They may not mean a whole lot today to you, but they're a nice resource to go back to. Any questions from our virtual audience for Dr. Vickari? I'm expecting a high number of questions. Well, here we go. How can I negotiate for 0.1 FTE in an academic affiliated hospital, and what programs might be more open for an arrangement? I'm going to toss that one to Jason. Can you repeat the question one more time? How can you negotiate? I assume this is meaning in a, how could you negotiate for a 0.1 FTE in an academic affiliated hospital, but I think this was referring to if you're in a private practice. Yeah, I think if you're in a private practice and they wanted a small, yeah. I really don't want there to be much negotiation because most of these are, all right, there's really not going to be a whole lot of negotiation. Most of these groups already have set arrangements set up with the university, so we, Samit, who's one of my partners here, we both have appointments at the University of Illinois, and frankly, it's a volunteer position. You're really doing this out of the goodness of your heart. I mean, the stipend we get is, what is it, 80 bucks a month, something like that, Samit. It's very, very small, so you're really doing it because you want to teach, you want to work with medical students, you want, perhaps want to do research with them. I don't think there's a whole lot of negotiation these days. It's almost a volunteer position. Previously, there was more money involved and benefits, but that has all gone away. It's a fun thing to do. If any of you are interested, I think it's a great way to stay engaged. You can do research projects with students. We love working with students, but there's really not much of a financial win here. Sure. And then I think you already touched on this, but during contract negotiation with the private practice, is it reasonable to request their financial statements? Yes. So, again, if you ask me, I'm a staunch yes early on. I like the Colleen approach that I learned yesterday, start general, then focus in. But I think it's fair game at the end of the first visit if it's gone well. And hopefully, the practice actually brings it to you. That would be the best scenario. I believe the practice should open those on the very first interview. I think the days of three interviews seems to be excessive. We're one interview, and if it's gone really well because we've done our due diligence, we're mostly ready to offer a job at that point. And so we want it all out there in the first interview. Joe, I have a question for you. It's interesting to hear your comment about your group taking patients irrespective of their insurance status. And I know that's not true at every practice. And I wonder if you have any advice for the fellows on asking about insurance mix and what their philosophies are on accepting Medicaid and how that should influence decision making. Yeah. So yesterday, I mentioned it's important to ask about the patient demographics to understand, as Jason just said, the insurance mix. It's become difficult, I think, and somewhat disappointing to me because a lot of private practices now have really started to eliminate insurance products. Some won't see no pay. They won't see Medicaid. Some will even limit Medicare in certain circumstances. So I think you need to ask what the demographics are. And then you could even ask, well, what happens if someone shows up and doesn't have insurance? And I see them in the hospital. I take care of them in the hospital. Can I see them in the office? How does that work? You could always work with the group to maybe start to engage new insurance products. But a lot of the focus now has really been on trying to make that insurance mix and blend as positive as possible. We are an outlier, even in our own town. I think we're the last person standing that sees everything. We have people coming from Chicago and the suburbs with Medicaid to see us. So I don't really have any great answers, Jason. I think a lot of that is set, and then I think in a lot of groups they are not turning back. We sleep well at night knowing that, and I think that is valued. Any other questions for Jill? If not, thank you again.

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