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Three Reason Sleep Clinics Are Struggling


Sleep Clinics and DME companies are between a rock and a hard place. Attended Sleep Studies are becoming more difficult by the day to obtain authorization from insurance payors in favor of Home Sleep Apnea Testing, which the typical allowable is about 25% of the reimbursement of an Attended Sleep Study. The costs associated with home studies are reduced but the overall profit margins are still thin.

Many Sleep Clinics have attempted to counter this change by increasing the volume of patients, challenging the insurance payor's decision with peer to peer consultations and so on. These examples of change do work at some level, however, these tactics require more time on the employees and providers… or in other words, they are trying to do more with less.

The environmental changes will require more than doing more with less. The issue is the consequences of this extra work. Placing more work on your staff and providers in hopes to obtain the same production is a recipe for burnout, therefore not sustainable. In order for sleep clinics to continue to prosper, they must transform some key divisions within the clinic to align administrative costs with productivity. Below are three reasons that Sleep Clinics are continuing to fail.

#1 Lack of Attention in Revenue Cycle Management

Mark Cuban stated that "Sales cures everything". While that may be true in many industries, in order to work in healthcare, the Revenue Cycle System must be a well-oiled machine. Too often, cash flow issues spark a strong conversation with the Marketing and Sales teams on how to get more business in the door or finding a way to sell more CPAP supplies, meanwhile, the Account Receivables are growing due to denials, errors, and difficulty in collecting patient balances.

Revenue Cycle Managers and Billing Companies are doing their best to keep up with getting claims out and money in, but many times they lack the resources (staff, policies, systems) to keep the claims under control. This creates a reactive and frustrating environment.

THEORY TIP: View your RCM division as an asset, with just as much or more attention than your sales team. The Revenue Cycle Management division is not a liability, and if properly staffed and sourced, the ROI from this division is one of the best places to allocate resources.

#2 Under Utilization of Electronic Medical Records

Electronic Medical Record systems are insanely robust. However many practices rarely use the systems past the first level of schedule management, office visits, and claim generation. To further utilize your EMR, systems can be built within the EMR to reduce the employee's steps in scheduling a visit, verifying insurance, calculating patient responsibility, processing patient payments, correlating templates with office visits, exploding codes with office visits, setting flags for insurances requiring pre-authorizations… the list goes on and on.

Building these systems within your clinic creates consistency, predictability, and efficiency. It lessens the risk of employee errors and provides transparency for managers to understand areas that need improvement. I will go in more depth in a separate post on this subject.

THEORY TIP: Stop manually updating spreadsheets. If you laughed, I am talking to you :) Whenever you have a new process or need to make a change, you MUST research if your EMR can do this task. Your future self will thank you as you stop spending masses amounts of time updating spreadsheets through systems that are already collecting this information. This is an unsustainable model.

#3 Business Systems Are Built Around Staff

Employees will become The System when there is a lack of business systems. This is a very hard task to undo but it is required for the success of your company. The concept is that people manage the systems not BE the system. This is common for a Revenue Cycle Manager position, Administrator, Marketing Rep or any other key position within the company. The risk to this is the employee has leverage over the company as the company would be in serious trouble if that person suddenly left, and it increases the risk for fraudulent activities. Systems based on employees have an increased labor cost and is viewed as a liability if you are trying to sell the company.

A solid business system is transparent at all levels of the company. They are accurate and track Key Performance Indicators including warning signs of bottlenecks productivity, time stamps of employee's actions and flag erroneous patterns. Employees require less training in getting acquainted as well as typically a lesser wage to operate. As stated above, clinics need to be diligent with expenses in navigating the changes in healthcare.

THEORY TIP: Have a candid conversation with your employees who are currently the system. Explain to them that these changes are required because the current processes are unsustainable. Employees who are resistant to this process have a sense of job security within their system, however, they may also feel trapped and not take time off... which leads to burnout. Realign their focus to have the company's best interest at heart and encourage them that their skills and ability will be continually rewarded as they help build a company that will last. They will also be able to take a vacation every once in a while.

Sleep Theory is a healthcare consulting company focused on the business of sleep. Sr. Consultant, Jason Mueller has over 11 years in healthcare administration including ownership and general management in Sleep Clinics and Durable Medical Equipment Companies.

Contact Jason at jason@sleeptheory.org