DATA COLLECTION LISTS & TOOLS

The following list includes the documents that should be collected and reviewed when exploring a merger opportunity. Reimbursement/Billing Questionaire

For each of the past three full fiscal years for the practice, and the most current accounting period:

Income and expense statements

This should contain sufficient detail to allow analysis of building and occupancy costs, personnel costs (salaries and benefits separately defined), medical supplies, malpractice expense, physician salaries, physician bonus, physician benefits, telephone, etc.

Balance sheets

Aged accounts receivable by payor classification at year end

Copies of corporate tax returns

Number of Procedure by CPT Code

Top 20 CPT codes by revenue generated

Gross revenue by physician and Net collection by physician.

The reports should be completed by payer category for all payers accounting for more than 5%. An "All Other" category should be used provided for the aggregation of all smaller payer classifications into one lump sum.

The current automated practice management system, if any.

The year each physician started practicing medicine and how long he/she has been in practice in the area.

Malpractice history for each physician, type of malpractice insurance (occurrence or claims made), policy carried and name of carrier.

A listing of employees by title, date of hire, number of approved hours, current hourly wage, and benefits eligibility.

The complete list will include licensure status for all paramedical personnel (i.e., registered nurse, licensed practical nurse, medical technologist, etc.). The name of any employee whom you would not allow to be terminated if a merger or acquisition is completed should be identified.

FTE report by position

An FTE is a "full-time equivalent" position. By definition, this is a person who works, or is paid for working (on a salaried basis) for five full days per week. In most areas of the country this means 8-hour days, or the equivalent of 2,080 hours/year. You can determine the number of FTE's by calculating the total hours each person is scheduled to work per year, for a particular category of employment such as registered nurse, adding all of the individual totals together and then dividing by 2,080.

For Example:

One R.N. works 32 hours/week, 1,664 hours/year

One R.N. works 40 hours/week, 2,080 hours/year

One R.N. works 8 hours/week, 416 hours/year

Total Hours 4,160 hours

Total FTEs (4,160/2,080) 2 FTEs

Identification of any person working for the practice (drawing a paycheck or paid as a subcontractor) who is a relative of a physician.

Copies of any leases (equipment or building). Identify who owns the current building, how many square feet it contains, and the per square foot lease cost.

A brief description of any debt (amount, collateral or security pledged, rate, term, monthly payment, and date when debt obligation will be fulfilled).

A Copy of the current employee handbook. If not available, written summary description of all benefits provided to employees (vacation schedules, personal days, paid holidays, health and life insurance, etc.)

A copy of your most recent invoice for any employee benefits programs (i.e. health insurance, life insurance, disability insurance, etc.).

Copy of office hours schedule for each physician including an estimate of average number of appointments scheduled/day/physician.

Listing of physician time off for vacation, sick or CME for each of the last two years.

Identification and quantification of any income earned by the physicians outside the office which passed through the corporation for each of the last three years.

A summary of income distribution formula with mathematical example or copy of actual worksheet for last payment to physicians for group practices.

Copies of relevant employment agreements. Include income guarantees or other financial arrangements supported by local hospitals.

Number of Active Medical Records.

The preferred method of obtaining this information is to allow your practice management computer system to run a report. However, if this not a capability of your system or you do not have an automated system, you may have to estimate the number.

If you have no other option other than guessing at the number of active records, you can estimate by counting the number of records in a six-inch span of record storage space, in six different areas of your storage facility. By averaging this number of records/six inches, and then multiplying that number by the total number of one-half linear feet areas in your file space, you can come up with a reasonable estimate of the number of records you currently have stored.

For Example:

In 6 different, six-inch linear spaces of records storage, you have an average of 18 records. Your storage area contains 10 sections. Each section is 4 feet long for a total of 40 linear feet of storage area.

The following calculation yields:

18 records X 40 linear feet = 720 records
 

REIMBURSEMENT / BILLING QUESTIONNAIRE

The following document will assist potential partners in evaluating reimbursement and billing issues that should be studied prior to mergers.
 

1. List the plans with which each practice presently participates and which account for five percent (5%) or more of total revenue.
   
   
2. Review a copy of the participation agreement for those plans identified in #1 above.
   
   
3. List all provider numbers, individual and group, for each plan listed above.
   
   
4. Collect the current tax identification number for the practice(s).
   
   
5. Describe the medical billing software and its status with respect to revision upgrades.
   
   
6. Review an aged accounts receivable report, by payor classification on a current basis and at the most recent fiscal year end.
   
   
7. Review a list of the charge, payment and adjustment codes used and the definitions describing their use at the practice.
   
   
8. Review the current fee schedule, by CPT code, by payor classification, as produced from the billing software system master file.
   
   
9. Review a copy of current superbills or encounter forms.
   
   
10. Review a list of the active CPT codes from the billing system master file.
    
    
11. Review a list of the active ICD-9 codes from the billing system master file.
    
    
12. Review gross charges by payor classification for the last three fiscal years and most current period.
    
    
13. Review cash receipts, net of refunds, for the last three fiscal years and most current period.
    
    
14. Review the manner in which capitated charges and payments are posted.
    
    
15. Review the manner in which cash and checks are received and handled.
    
    
16. Review any security levels on the present billing system and the staff access by position type.
    
    
17. Review daily balancing of accounts receivable process, with copies of supporting documentation for a representative day.
    
    
18. Review year end production by CPT code reports for each location (by volume).
    
    
19. Review a copy of the most recent month's capitation payment with supporting documentation from each payor for whom capitation is contracted. Information should list lives covered and per member per month payment.
    
    
20. Review copies of 1099's from all major payors (5% or more of revenue) for the last three calendar years.
    
    
21. List all withholds, bonuses, etc., paid by capitated payors, during the last two calendar years, including amount and date received.
    
    
22. Review how withholds and bonuses are posted to the billing system.
    
    
23. Review billing cycles for patient statements.
    
    
24. Review the process for follow-up on outstanding patient accounts.

    a. 60 days
    b. 90 days
    c. 120 days
    
    

25. Review how accounts are selected for collection agency follow-up.
    
    
26. List the collection agencies used.
    
    
27. Review agency fees.
    
    
28. Review process for tracking outstanding insurance company balances.

    a. 60-days
    b. 90-days
    
    

29. Are accounts sent to collection still included in the outstanding accounts receivable balance on the billing system?
    
    
30. Review mechanisms for posting

    a. Amounts transferred to collection
    b. Payment received from collection
    c. Fees charged by collection agency
    d. Bad debt not collected by agency or internal staff.
    
    

31. Review procedure and timing for billing system back-up.
    
    
32. Review emergency power supply requirements for billing system computer.
    
    
33. Review procedure for rotating back-up tapes and storage of sensitive back up media.