Relative Value Units and the Financial Health of Your Practice
How often do you hear the statement, ”I am worried that our office is not as efficient as it could be”? In today’s troubled economy more than ever, keeping track of the true cost of business can directly lead to the ultimate success or failure of a practice. Whether a new provider is setting up his/her first practice or a seasoned physician is reviewing data for benchmarking purposes, the financial health of their business will ultimately depend on the margin between cost and revenue.
Relative Value Units (RVU) – a term that is becoming more and more popular amongst physicians - is a coding system allowing a provider to assign a specific cost for their services. Providers can perform accurate cost analysis by identifying the amount of reimbursement that they are receiving from insurance companies for each procedure and directly comparing this to the cost of performing the procedure, as well as various practice overheads, from office rent to malpractice insurance. The end result is figures that show how much money is coming in compared to how much is going out.
Some practice management systems (including NueMD®) feature a built-in RVU calculator that can automatically take the RVU data from procedures performed within a specified time frame and prompt you for your cost information to build up an accurate picture of what you might choose to charge per relative value unit. As relative value units continue to be identified by insurance companies as key to reimbursement in this pay for performance market, calculating RVUs will truly assist a provider in creating and maintaining a financially healthy practice.
For more information on how RVUs can be a useful tool in benchmarking, refer to Oranges and Apples: HIM Productivity and Benchmarking by D’Arcy Myjer, PhD, and Dan Butu, CCS, in AHIMA’s FORE library (members only).
Tags: benchmarking, practices, RVU