Financial Reporting. ©2012 IntegraMed Fertility Proprietary & Confidential Introduction – John...

Financial Reporting

©2012 IntegraMed Fertility Proprietary & Confidential

Introduction – John Kearns

John J Kearns

• VP Finance & Corporate Controller

• IntegraMed America, Purchase NY

• 19 years fertility industry financial reporting experience


Introduction – IntegraMed America, Inc.

IntegraMed America, Inc.

• Started in June 1985 as “IVF America, Inc”

• 2014 Patient revenues > $300 million

• ~ 17,000 IVF cycles in 2013

• Taken private in Sept. 2012


Agenda

Financial Reporting for Fertility Clinics

1. Internal Control

2. Cash vs. Accrual Accounting

3. Revenue Cycle Management

4. Benchmarking


Internal Control

Good Financial Reporting Begins with Internal Control

Internal Control is defined as….• a means by which an organization's

resources are directed, monitored, and measured. It plays an important role in detecting and preventing fraud and protecting the organization's resources.


Internal Control

All public corporations are required by the Securities and Exchange commission to:

• Have a clearly defined set of internal controls, which,

• They must test annually

• Senior executives must personally sign-off on their effectiveness


Internal Control

You may say, “But I’m not a public Corporation”

• Internal control is still critical as it consists of a series of checks and balances designed to detect events outside of standard policies and procedures.

• It starts with a segregation of duties among staff• Separate posting cash from depositing cash• Multiple individuals needed to disburse funds

• And includes a reporting element.


Internal Control

You may know it by another name, but Internal Control:

• Also apples to non-financial activities• Who has keys to drug cabinets?• Are all patient encounters signed by provider• Is chain of control in the lab documented?• Are employees time-sheets accurate?

• At the end of the day, everything impacts practice financials


Cash vs. Accrual Accounting

All businesses must select a philosophy for managing their financial records




The two most common forms are Cash Basis and Accrual Basis





Many business owners think that Accrual Basis is a trick accountants use to steal

from them…





Many business owners think that Accrual Basis is a trick accountants use to steal

from them…

In reality, it’s good internal control!!



Cash Basis Accounting - Transactions are recorded when cash changes hands (i.e., when paid)

Revenue = Cash ReceiptsExpense = Cash Disbursement



Cash Basis Accounting - Transactions are recorded when cash changes hands (i.e., when paid)

Revenue = Cash ReceiptsExpense = Cash Disbursement

Accrual Basis Accounting - Transactions are recorded with the underlying economic event (i.e., when earned)

Revenue = When treatment is providedExpenses = When incurred


Internal Control – Cash vs. Accrual Accounting

Cash Basis Accounting• Advantage – Simplicity

• Disadvantage – Looser controls. Higher chance of fraud or loss.



Cash Basis Accounting• Advantage – Simplicity

• Disadvantage – Looser controls. Higher chance of fraud or loss.

Accrual Basis Accounting• Advantage – Higher control environment

• Disadvantage – More complicated



Accrual Basis Accounting = Greater Internal Control


Revenue Cycle Management

Revenue Cycle Management consists of:

• Scheduling of patients

• Accounting for all encounter forms

• Timely & accurate billing



Good Revenue Cycle Management consists of:

• …all the above, plus

• A denial review & management process

• Outstanding receivables management



Denial review & management consists of:• A formal process of continuous improvement

designed to identify and correct reasons for claims denial



Denial review & management consists of:• A formal process of continuous improvement

designed to identify and correct reasons for claims denial

Receivables management consists of:• A formal process for managing outstand receivables

which includes both the quantity and quality of receivables• Quantity - DSO (Days Sales Outstanding) • INMD $16.6 million with 27.2 DSO

• Quality – Aging by buckets• 84% 0 – 60 days• 10% 60 – 120 days• 6% 120 – 180 days


Benchmarking

Benchmarking is the process of evaluating oneself against either:

(a) others within the same industry, or

(b) oneself over time.


Benchmarking

Benchmarking is the process of evaluating oneself against either:

(a) others within the same industry, or

(b) oneself over time.Also know as, “How are we doing relative

to..???”


Benchmarking

Inquiry

Schedule

Show

NPV

IVF IUI FET Surgery

Other No Treatment

Induction


Benchmarking

Inquiry

Schedule

Show

NPV

IVF IUI FET Surgery

Other No Treatment

Induction

Schedule/Inquiry Ratio

Show/Schedule Ratio

NPV/Show Ratio

NPV/Inquiry Ratio


Questions?

Financial Reporting. ©2012 IntegraMed Fertility Proprietary & Confidential Introduction – John...

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