by Scott Forehand
Providing medical care to fellow human beings is a time-honored profession. The decision to enter the medical field is not one that is taken lightly or made quickly. The training requires years of schooling, testing, and sacrifice. The Continuing Medical Education requirements insure exposure to updated information until retirement. This is what it takes to practice the art of medicine.
Unfortunately, there exists an educational void in the current US healthcare system. Very little training or education, if any at all, is given pursuant to the management of a successful business to physicians. In discussions with peers, I have heard the position stated that the lack of business training for providers makes sense in that they practice medicine and not business management. Which brings us to the question, are you operating a practice or a business?
(Interested in writing for HealthcareWealthcare….or being a guest on HCWC Talk Radio for Doctors “For Doctors Only”? Talk to doctors. Contact Larry Jacobs , publisher at hcwclarry@gmail.com)
Whether you answered “practice” or “business” doesn’t really matter. The reality is that ultimately the practice owner/provider is forced to practice business management, even if their only decision is to decide which practice manager to hire. The simple fact is that most practice owners must make decisions without any business training, practice management experience, or idea of the long reaching implications of their decision. These are the reasons why 99% of the practices I visit have major issues financially. They may not be aware that they have the issues, but they are nonetheless there. For example, a practice may be a pleasant place to work, the staff is happy, the patients are well cared for and treated, and the office generally runs well. For most providers, this is the definition of a well-run practice. The financial issues that aren’t stated in the “well-run-practice definition” center on the fact that almost every practice leaves money on the table. My conservative estimate, based on my experiences at the hundreds of practices that I have visited, is that the average practice misses out on more than $50,000 per year. To some this may seem like a lot, and to others this may seem a pittance. In truth, this is a salary, a new car every year, a new boat, down payment on a new investment property, college tuition, new equipment for your practice, a satellite office, or even a sizeable philanthropic donation.
Private practices in particular and the healthcare industry in general, are under attack. In a bid to offer not only everything you need for your house, car, banking, vision needs, etc., major retailers are opening treatment and care facilities within their “big box” locations. Further, “big box” pharmacies and bulk discount store chains are also beginning to offer “care” within their facilities. Finally, within the healthcare industry itself, local and regional healthcare systems are purchasing private practices left and right. The writing is on the wall, and the only thing that can be done to combat the onslaught of this type of competition is to play their game. You must run your practice like a business, stay well capitalized, stay technologically current, and emphasize to your patients the things that set your practice apart from your corporate competition.
The reasons for the basic financial failings of medical practices are many. However, the basic business model, for the longest time, has been a fairly easy model to operate. Build your practice or buy into a successful one, see patients, keep your nose to the grindstone, do no harm, retire in 25 years if you want. However, “Times they are a changing.” Recent changes and pending healthcare regulation, system modifications, previously mentioned aggressive corporate competition, and the federal government looking everywhere they can to control healthcare and tax the system, is causing this easy-to-operate business model to become significantly more difficult to operate. Practice owners are no longer able to entrust a single “adequate” individual with practice and personal livelihood. Hiring of effective and appropriate staff has become more important than ever. Outsource service companies are more and more attractive. Labor leveraging through use of technology is now of paramount importance. Essentially, you must dot every “i”, cross every “t”, and “pull out all the stops” to capture all available revenue, create as healthy a practice as possible, and not sacrifice patient quality of care. This may seem overwhelming, but it really isn’t. Common sense should be the guide, as the financial health of your practice can no longer be a distant secondary or tertiary concern.
So, what are the things that you can do to increase the profitability of your practice? Here’s a brief list:
- Bill appropriately. Collect appropriately, and don’t be shy about collecting patient co pays. Based on a 2007 CMS survey, the average practice under charges 14% (i.e. under codes).
- Hire professional staff and outsource companies. FYI, hiring your family is usually the wrong answer.
- Train your staff. Workflow, presentation, compliance, patient interaction (in person and ON THE PHONE), organization. These aren’t just words; they are the lifeblood of your practice. The first and last person your patients see is your front desk staff. Other than the provider, they are the most important person in your office. Do you think I’m wrong? How many times have you said to yourself “that’s the last time I’m coming here,” simply because the cashier or receptionist didn’t treat you with the respect or consideration you felt that you deserved.
- Market your practice. Your corporate competition is absolutely going to market their services. Your regional or local healthcare system will market themselves. Haven’t you seen the billboards and heard the radio ads? You must do the same.
- Spend the money on technology. Take a realistic look at the ROI. For example: It is wonderful that your staff spends 3 hours per day calling your patients back to remind them of their upcoming appointment. However, doesn’t it make sense to have an automated system do it instead and re-task your staff to do something else? Hint: If you don’t have anything else for your staff to do, then you are overstaffed!
- Capture Any Available Bonus Money or Subsidy. Federal, State and even some local governments are offering significant financial incentives to update your in-office technology and practices. Regional Health Information Organizations are subsidizing EMR/EHR migration. There are enough incentives, bonus money, and subsidies available that any practice can procure a brand new EMR, with all the hardware, for free. YES I SAID FREE. You may need to pay for it up front or finance it up front, but the bonus money and subsidies available ($44,000 Medicare, $20,000 Medicaid, 2% for e-prescribing, 2% PQRI bonus, various RHIO subsidies) can actually turn the EMR “cost center” into an EMR “profit center.”
- Document, Document, Document. Voice recognition, Manual Writing, Transcription, or “check box” system? What’s right for you? Probably not what you are thinking and probably not what you’ve been told by salesman XYZ. Be realistic and weigh all of the pros and cons.
- Update your insurance contracts. So, in 2007, you negotiated yourself 155% of 2006 Medicaid fee schedule with XYZ insurance company on an “evergreen” contract that increases 3% per year. However, your contract with XYZ insurance company is based on the previous years Medicaid reimbursement. When Medicaid lowers their reimbursement, as they did a few years ago, you may actually be getting paid less than when you began. It’s like regular maintenance for your car. You need to do it regularly. Your car will run for a while without it, but will die eventually without proper maintenance.
- Manage your assets correctly. Don’t misinterpret my “Spend the money on Technology” directive. Purchase what is needed and what will affect your practice’s bottom line or improve patient care quality. You must be able to rationalize purchases. But if you can spend $15,000 on an in-house CBC machine that does 95% of what you need versus $55,000 on a machine that does 100% of what you need… well you get the picture.
The above activities represent just a brief overview of the possibilities that exist for managing your practice like a business, increasing your profitability, and increasing overall practice financial health. Over the next several months, I will be providing regular installments focusing on specific areas of potential improvement, and specific services and technologies that can be adopted to increase your practices bottom line. Look for the next installment regarding a specific third party solution to mitigate risk, leverage labor, increase patient quality of care, increase practice-patient communication, and increase practice productivity.
PART 2…Are you Operating a Practice or a Business?
The answer to the question is “Both”. If you lose sight of that reality, then your patients will be the loser in the end. If you focus only on the business aspect (financial), then your treatment may be perceived to be cold or sterile. If you focus only on the practice aspect (patient care); then your practice may suffer financially; resulting in a reduction in patient care quality.
Last week I was having lunch with a colleague who operates a local medical practice. He was remarking to me how everything seems to get more and more expensive every year, and staffing seems to be a larger and larger problem every year. At his practice, the ancillary staff are overworked and experience high levels of stress and work anxiety. The patients flow is good, but long patient waits are still more the norm than the exception. He needs to hire more staff, but cannot afford it in this economic environment. He is at odds trying to juggle financial, staffing, patient care, and customer service issues.
From my perspective, labor leveraging and outsourcing are the solutions. There are outsource applications for just about every function in a medical office. Following is just one solution available today.
SEMI-AUTOMATED SECURE RESULT REPORTING
PROBLEM In a traditional clinic or practice setting, patients would leave the office with instructions to call back in a few days to retrieve testing results (lab, x-ray, ECG, etc.). In many cases, an even worse process involving the mailing of medical results to the patient’s address of record is used, without consideration of who at that home might open the results. In the practices that I am familiar with, the office staff normally performs the processes of result collection, compilation, interpretation, review, and dissemination to the patients via phone or regular mail. The problems and information bottleneck occurs at the point of dissemination to the patient. Here are some of the potential issues:
- The patient calls back and the results aren’t back yet
- The patient calls back and results aren’t interpreted yet
- The patient calls back and the chart must be found
- The patient calls back and an authorized person is not available to give the results
- The patient calls back and it isn’t during normal hours of operation
- The patient never receives the mail, as the results get lost in the mail
- The mail gets delivered to the wrong address
- The mail is delivered correctly, but someone else at the home opens the results
In all of these common scenarios, the following results occur: staff time was wasted, the phone line was engaged unnecessarily, the patient didn’t get the result, the patient must call back again, the results never get delivered, the results get delivered to someone other than the patient, the results are read by or made available to someone other than the patient, and the patient gets frustrated with the practice or clinic.
Here is a common example of current telephonic practice:
SCENARIO A child is taken to the pediatrician for evaluation of a sore throat. A swab of the child’s throat is collected and sent off for evaluation. The child’s parent is told to call back in 48 to 72 hours to get the results. The parent calls back 2 days later in the morning, and is put on hold while someone at the front desk tries to find the chart and retrieve the results. As it turns out, the results aren’t back yet, and the parent is told to call back on the next day. {5 minutes staff time, 5 minutes phone time, 5 minutes patient wait time}. The parent calls back the next day, and asks for the results. The parent is put on hold, while the file is found. Then someone with authority to give out the results is found and they get on the phone with the parent. The results are given as negative, but the parent is told to complete the antibiotic course anyway, and call back in 48 hours if still symptomatic. The parent then asks why they should continue taking the antibiotics if the result was negative, and a 5-minute discussion begins. Upon conclusion of the discussion, the staff member should make notes about what was said during the discussion, and the results that were given to the patient’s parent {15 minutes staff time, 10 minutes phone time, 5 minutes patient wait time}. The preceding all-too-common scenario yielded 20 minutes of aggregate staff time use, tied up a telephone line for 15 aggregate minutes, and made the patient’s concerned parent wait 10 total minutes for a negative result.
THE MATH
The scenario above is more often the norm than the exception. If you extrapolate the numbers to that of a busy clinic or large practice (assume 7 full time providers seeing 25 patients per day with 30% of the patients calling back for some kind of result), this process will yield around 17.5 hours of staff time and 13 hours of telephone time used to deliver one days results via one-on-one telephone conversation. The patient will certainly appreciate the one-on-one interaction with a familiar voice, but the clinic or practice bottom line most certainly will not. To put things in perspective, let’s say the normal process can be completed in one half of the time (because the person doing the process is so efficient.) Let’s say that person is willing to work for $12.00 an hour (good luck finding an efficient $12.00 per hour staff member). The result will still yield a daily labor cost of $105.00. That’s the cost for the labor before employee benefits, taxes, phone line use, etc. The actual costs should come in at seventeen to twenty-seven percent higher yielding an actual daily cost between $122.85 and $133.35.
SOLUTION What happens if we automate what we can? Patients are instructed to call back at a certain time, and to call a toll-free number. After the results are reported to the practice or clinic, they are reviewed, interpreted, and given to whichever ancillary staff member is responsible to give the patients their results. Here is where the timesavings and labor savings happen. The staff member responsible for giving results will call the secure voice system and leave the results and instructions for the patient under that patients unique ID. There is no possibility of getting a wrong number, no possibility of needing to leave a message for the patient to call back and get the results, and no possibility that the staff member will get involved in a protracted conversion about “the negative lab result and what else could be causing the problem.”
RESULT The entire process is now streamlined to just under 3 minutes. The results have been disseminated efficiently. The patient can call anytime, day or night, to retrieve the results. The patient hears a familiar voice (as opposed to a completely automated system’s computer generated voice). Only one practice phone line is in use, and it is calling a toll-free number to leave messages for the patients. The patient perceives a higher level of customer service (as noted in a Press-Gainey® study). The staff takes almost 85% less time to complete this task. Lastly, a HIPAA compliant medical-legal record is made by a third party verifying when the patient retrieved the results, thereby mitigating some practice risk. Go ask your mal-practice insurer if this will reduce your premium!
PRICES There are several companies that offer this service. Pricing typically comes in the form of per call, or per provider. Per call pricing can range between $.29 and $.79 per call. Per provider pricing can range from $79 per month to $245 per month (for unlimited use).
CONCLUSION Leveraging your labor, through use of technology or outsourcing, is an efficient and cost effective way to help out your bottom line. The benefits go beyond that of just financial. Add a dash of increased employee morale (due to lower stress levels), add a pinch of increased patient perceived customer service, and add an additional layer of legal protection through mitigation of risk, and you have the perfect recipe for a more profitable practice offering higher quality of care.
AUTHOR: Scott Forehand can be reached at forehands@escribeinc.com or by calling 757 567 5726. Please mention you saw his article on HealthcareWealthcare.
—
