The financial well-being of medical practice is dependent on various factors. One of them is Payor Mix. It is the percentage-wise composition of various insurance carriers with respect to the total revenue of the practice.

A well-balanced payor mix is crucial to the long-term viability of a practice. Not all payors pay the same rate for services. To compensate for lower payments from government payors, it is important to have a healthy roster of well-paying commercial payors.

Having a few dominant payors is very risky for the practice. Payors tend to impose their lower fee schedules in a “take it or leave it” offer without recourse. In addition to the lower fee schedule, they can impose burdensome pre-authorization and pre-payment audits. Any revenue recoupment using a retroactive audit by a dominant payor can also put a practice out of business.

While the payor mix is largely determined by the demographics and employer mix in your practice area, it is recommended that you review your payor mix and fee schedules periodically to actively correct any imbalance. These reports are available in Glenwood’s practice management system.