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Financial Reporting. ©2012 IntegraMed Fertility Proprietary & Confidential Introduction – John Kearns John J Kearns VP Finance & Corporate Controller.

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Presentation on theme: "Financial Reporting. ©2012 IntegraMed Fertility Proprietary & Confidential Introduction – John Kearns John J Kearns VP Finance & Corporate Controller."— Presentation transcript:

1 Financial Reporting

2 ©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

3 ©2012 IntegraMed Fertility Proprietary & Confidential 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

4 ©2012 IntegraMed Fertility Proprietary & Confidential Agenda Financial Reporting for Fertility Clinics 1.Internal Control 2.Cash vs. Accrual Accounting 3.Revenue Cycle Management 4.Benchmarking

5 ©2012 IntegraMed Fertility Proprietary & Confidential 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.

6 ©2012 IntegraMed Fertility Proprietary & Confidential 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

7 ©2012 IntegraMed Fertility Proprietary & Confidential 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.

8 ©2012 IntegraMed Fertility Proprietary & Confidential 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

9 ©2012 IntegraMed Fertility Proprietary & Confidential Cash vs. Accrual Accounting All businesses must select a philosophy for managing their financial records

10 ©2012 IntegraMed Fertility Proprietary & Confidential 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

11 ©2012 IntegraMed Fertility Proprietary & Confidential 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…

12 ©2012 IntegraMed Fertility Proprietary & Confidential 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… In reality, it’s good internal control!!

13 ©2012 IntegraMed Fertility Proprietary & Confidential Cash vs. Accrual Accounting Cash Basis Accounting - Transactions are recorded when cash changes hands (i.e., when paid) Revenue = Cash Receipts Expense = Cash Disbursement

14 ©2012 IntegraMed Fertility Proprietary & Confidential Cash vs. Accrual Accounting Cash Basis Accounting - Transactions are recorded when cash changes hands (i.e., when paid) Revenue = Cash Receipts Expense = Cash Disbursement Accrual Basis Accounting - Transactions are recorded with the underlying economic event (i.e., when earned) Revenue = When treatment is provided Expenses = When incurred

15 ©2012 IntegraMed Fertility Proprietary & Confidential Internal Control – Cash vs. Accrual Accounting Cash Basis Accounting Advantage – Simplicity Disadvantage – Looser controls. Higher chance of fraud or loss.

16 ©2012 IntegraMed Fertility Proprietary & Confidential Internal Control – Cash vs. Accrual Accounting Cash Basis Accounting Advantage – Simplicity Disadvantage – Looser controls. Higher chance of fraud or loss. Accrual Basis Accounting Advantage – Higher control environment Disadvantage – More complicated

17 ©2012 IntegraMed Fertility Proprietary & Confidential Internal Control – Cash vs. Accrual Accounting Accrual Basis Accounting = Greater Internal Control

18 ©2012 IntegraMed Fertility Proprietary & Confidential Revenue Cycle Management Revenue Cycle Management consists of: Scheduling of patients Accounting for all encounter forms Timely & accurate billing

19 ©2012 IntegraMed Fertility Proprietary & Confidential Revenue Cycle Management Good Revenue Cycle Management consists of: …all the above, plus A denial review & management process Outstanding receivables management

20 ©2012 IntegraMed Fertility Proprietary & Confidential Revenue Cycle Management Denial review & management consists of: A formal process of continuous improvement designed to identify and correct reasons for claims denial

21 ©2012 IntegraMed Fertility Proprietary & Confidential Revenue Cycle Management 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

22 ©2012 IntegraMed Fertility Proprietary & Confidential Benchmarking Benchmarking is the process of evaluating oneself against either: (a) others within the same industry, or (b) oneself over time.

23 ©2012 IntegraMed Fertility Proprietary & Confidential 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..???”

24 ©2012 IntegraMed Fertility Proprietary & Confidential Benchmarking Inquiry Schedule Show NPV IVFIUIFETSurgery Other No Treatment Induction

25 ©2012 IntegraMed Fertility Proprietary & Confidential Benchmarking Inquiry Schedule Show NPV IVFIUIFETSurgery Other No Treatment Induction Schedule/Inquiry Ratio Show/Schedule Ratio NPV/Show Ratio NPV/Inquiry Ratio

26 ©2012 IntegraMed Fertility Proprietary & Confidential Questions?

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