Evaluate your cap rates with this chart

Numbers don’t lie about contract’s profitability

During the four months since Mobile, AL-based Cardiology Associates became the cardiology specialty network manager for United HealthCare, practice administrator Vance Chunn has used a basic financial matrix to help assess the contract’s success.

The chart helps answer the essential question: Is the practice better off with or without the contract? (See chart at left.)

Using a spreadsheet, the practice’s Monthly Capitation Analysis worksheet compares the practice’s fee-for-service charges to the fee- for-service allowables paid under indemnity or discounted fee-for-service contracts. By recording data on capitation payment, capitation copays, and chargebacks for patients who received out-of-network services, for example, the practice can determine a net capitation payment. It also allows a practice manager to view any cost excesses (or shortfalls) of net capitation payments compared to total costs.

In addition to a monthly analysis, Chunn looks at the revenue/expense picture in six-month and one-year increments to get a "big picture" look at the financial impact of the contract. This prevents the practice from judging the contract based solely on one month’s performance or based on flukes that occurred during a particularly high-utilization month.