Revenue optimization calculator



In order to provide quantifiable, demonstrable results, Ingenious Med has combined third-party research, CMS payment files for millions of physician services claims and over 30 quantitative ROI studies of our customers to build the ROI Calculator. These quantitative studies look at two critical drivers of professional fee revenue: the average charges per patient and the average dollars per charge. Ingenious Med has developed a standardized process to measure these impacts, comparing the customer’s billing data before and three to four months after implementation. The analysis further takes into consideration census fluctuations to normalize charge volume and compares billing data year over year to account for seasonal variations in procedures, fee schedules and case mix index.

For the purposes of the ROI Calculator, Ingenious Med is using the median rather than mean values. While both calculations can be representative of potential improvements, the median number is included as a more conservative projection. The use of CMS data for average dollars per charge also provides a more conservative result for those leveraging the default values. In many practices, Medicare comprises only 45 to 65 percent of charge volume and the rates for Medicare are 15 to 20 percent lower than typical private payer allowable charges, thus typical average dollars per charge is likely to be 6.75 to 11 percent higher than shown in the tool.

Based on these sources, payment data for dozens of primary care and specialty practices was used to build the model.

The average payment data used for each physician specialty represents the weighted average of all payments for different types of billing codes, such as initial, subsequent and discharge day of care.1 Payment rates will vary based on a number of factors, including:

  1. Size of the physician group or its hospital/health system employer and the degree to which they aggressively negotiate with commercial payers for higher rates.
  2. Diligence around coding and denial resolution of the physician group, its employer hospital or health system and its billing/revenue cycle provider. Additional data from MGMA was used to determine the typical charge volume for primary care (e.g., hospitalists, internal medicine, family medicine and geriatrics) and specialist physicians.2 Specialty physician volume is estimated to be typically 15 to 20 percent below that of primary care physician volume.

There are two primary reasons for reduced specialty billable encounter volume:

  1. Specialty providers see patients with more complex issues and/or multiple chronic conditions that take more time to resolve than generalists.
  2. Many critical care units on which specialists work are closed units with fewer beds than general medical-surgical units (15 to 18 ICU bed units vs. 24 to 32 Med-Surg bed units). They therefore have fewer patients to bill.

Current State

Based on the above data sources, the default setting of the ROI calculator is for a 50-physician hospitalist group, with a charge volume of 87,500 and an average of $81 per charge.

When you select any of the 21 preset specialties (see Appendix), the ROI Calculator modifies the latter two fields based on industry averages for a 50-physician practice in that specialty. Further refinement of those fields results in a more accurate model of your organization. The physician count is used in the calculations below for improvement per physician and FTE (see Revenue Improvement).

Below is a more detailed description of the three numerical input fields.

Number of Physicians in Your Group Rounding at Hospitals: This input is the count of individual physicians, not full-time equivalent providers (FTEs), staffing the specialty. The ROI Calculator sets this default at 50 physicians in a group. Changing the value in this input will not affect any of the other calculations onscreen but does impact values in this report.

Annual Number of Charges (Group): This input is the current annual total charge volume for all physicians staffing this specialty. As a default, our research suggests that the typical charge volume of a 50-physician practice is 70,000 for specialist practices and 87,500 for primary care. This input is for the entire practice and not a per physician average, so will not be affected by changing the total number of physicians in the practice.

Average Dollars Collected per Charge: This input is the current average collection per billable event for all individual physicians staffing this specialty. Selecting different specialties reveals a distinct default average dollars collected per charge in the calculator. These defaults are defined by CMS rates and are far more conservative than most organizations’ realized rates per charge.

By entering your data in the three fields above, the ROI Calculator immediately multiplies the Annual Number of Charges (Group) and Average Dollars Collected per Charge to calculate the Current Annual Revenue Collected for all providers staffing this specialty. This calculation should be familiar and match up to your expectations of your physician fee-for-service revenue.

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