Controlling Your Payer Mix
Written by Amy Jorgensen   
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Controlling Your Payer Mix
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Free Online Tool: Evaluate Practice Payer Mix, and see how your revenues would change with a different mix.

Profitable practices have one thing in common: an effective payer mix. Whether you are just starting a practice or are trying to make your current practice more profitable, your payer mix is one of the major factors which will determine whether you can afford to keep running.

Even though effective payer mixes do vary considerably, once you determine which mix is going to work for your practice there are easy ways to control that mix and keep it stable.

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Determine the Profitability of Your Current Payer Mix

Before you can decide how you want to change or stabilize your payer mix, you must first determine whether it is profitable. We have developed a free online tool to explore the effect of payer mix on your bottom line (Payer Mix online tool). If your practice is doing well financially and you are happy with the amount of revenue being brought in, then your payer mix is probably working for you.

On the other hand, if your practice struggles to meet overhead costs or if you've had to cut back your own salary just to be able to pay your staff, then these are signs that you need to reconsider your current payer mix.

You also have to look ahead. Will the current payer mix continue to support your practice in the future if you decide to grow or expand? Does your current payer mix promise to increase payments in line with your expected increases in cost? Answers to these questions may help you decide whether your payer mix needs some tweaking now in order to keep your practice in good financial shape for the future.

After you have determined whether you want to make changes or not, you should breakdown your payer mix to give you a good idea of where the problem might be coming from. To do this, you should take your gross revenue for the past year and break it down by payer. Your list should include only the top 8 to 10 payers because these are the ones who make the biggest difference in your revenue.

Once you've calculated your list, you need to determine the percentage of your total revenues which each payer represents. For example, Medicare may make up 20% of your payer mix. If you're satisfied with your payer mix's profitability now and for the future, then these are the percentages you want to maintain.

If you're not satisfied, now is the time to do some fine-tuning. Think about your overall satisfaction with each of the payers. Do some take longer than others to pay? Which ones pay less than the others? Think about these questions as you make decisions about how you want your revised payer mix to look.

Ways to Control Your Payer Mix

After you have determined the type of payer mix you want or what type of payer mix you already have, then your job is to control and stabilize that mix. There are several ways to accomplish this.

One method is by not taking any new patients from certain payers. If you already have an abundance of patients from one payer, particularly a payer you want to represent a smaller percentage of your revenue, then you usually have the option to refuse new patients from that payer. By doing this, you'll be more able to maintain or reduce that payer's contribution to the mix.

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