Apples to Oranges: The Importance of Retina-specific Tools
Wednesday, May 22, 2019 9:00 AM
The eye is a complex organ and so are the diseases that it can incur. As a result, the field of ophthalmology is comprised of nuanced sub-specialties that deal with specific areas of the eye. General ophthalmology, which specializes in treating the anterior (front) portion of the eye, can vary markedly from retina-specific practices, which specialize in the posterior (back) portion of the eye.
To monitor their financial health, practices use dashboard and benchmark reports to ascertain key information at a glance and over time, respectively. Both serve a purpose in determining how a practice compares to itself and its peers. While certain data between general ophthalmology and retina practices overlap, it can be problematic to compare retina against general ophthalmology markers across the board.
Since treating the back of the eye often requires an entirely different approach, the same data and tools for general ophthalmology cannot be used exclusively to monitor the health of retina practices — doing so is akin to comparing apples to oranges. To determine which general ophthalmology benchmarks should be avoided, let’s explore the areas in which the specialties differ.
Regardless of the practice specialty, it is important to ensure that accounts receivable (AR) is turning over within a reasonable amount of time. Ophthalmology practices containing an optical shop, as well as retina practices, must have inventory on hand for purchase or use. In this respect, retina and general ophthalmology practices with optical do have an item in common: the cost of goods sold (COGS).
For both, the COGS must be inventoried on a regular basis, and the inventory must be paid for upfront. However, their inventory and cost differ. For optical, one of the COGS are frames, which generally have a price range of $25 to $1,000. For retina, the COGS includes the drugs for intravitreal injections, which can range in price from $21 to $10,000-plus per injection. These prices, coupled with the fact that retina practices generally see a high number of injection patients, lead them to incur a high inventory and cost for COGS.
To ensure they receive payment, the companies selling intravitreal drugs only accept credit. Meaning, for every drug purchase made by a retina practice, it incurs debt. As a result, a medium-sized retina practice may carry an accounts payable (AP) as high as $1 million each month. Retina must use the drugs in time to pay off this debt and prior to their expiration; failure to do so results in the retina practice being in a predicament. Knowing all this, it’s easy to see why retina practices must closely monitor their AR to keep from getting upside down financially — which can happen quickly if left unchecked.
As a result of these nuances, retina practices cannot simply compare their AR benchmarks to an ophthalmology practice that deals with optical. If they were to do so, their numbers might appear to be tracking successfully at a glance. However, when the COGS is separated from the physician’s professional fees, it is not uncommon to find discrepancies related to intravitreal drugs.
Each ophthalmic sub-specialty has unique procedures and billing and coding patterns; however, to generate revenue, all practices (including retina) use Eye Codes and Evaluation and Management (E&M) codes, as well as diagnostic testing and office- and operating room-based procedures.
Specifically, intravitreal injections take up a bulk of a retina practice’s schedule. Such a visit typically includes a brief workup by a technician, followed by diagnostic testing — which usually differs from a general ophthalmology clinic — and then a trip to the exam room, where the patient is prepped for the injection. Once the injection is performed, the patient is walked to the checkout counter. Overall, intravitreal injections require (1) the patient to spend less time in the clinic, (2) a shorter workup, and (3) a minimal examination performed (or none at all).
Due to the number of injections taking place, retina practices have fewer Eye and E&M coded office visits that generate revenue. Knowing this, retina practices would do well to benchmark against themselves in addition to using available national benchmarks for ophthalmology. While it is important to compare apples to apples, sometimes you need to compare the Gala apple to the Macintosh apple — similar but different.
Apples to Apples
While it’s undeniable that retina and ophthalmic practices share certain similarities, they are not uniformly distributed between the sub-specialties. Knowing this, it’s important to determine what measures are specific to retina practices. Understanding the unique characteristics of the retina practice and consciously choosing tools that provide appropriate benchmarks will enable you to accurately determine the financial health of your practice. This allows retina practices to ensure they’re comparing apples to apples.
LET US HELP: Starting tomorrow, BSM Connection® for Ophthalmology members will have access to our new retina practice toolkit. For non-members interested in gaining access to the toolkit and other practice management resources, please visit BSM Connection® to learn more.