MEDICAL ECONOMICS SPECIAL SECTION: Your toughest practice problems solved!

December 1, 2007

Our roundtable experts have the cure for declining reimbursements, billing bottlenecks, long hours, and unhappy patients.

Key Points

Doctors solve other people's health problems all day long. Meanwhile, they're often desperate for somebody to solve their practice management problems.

Health plan hassles, hectic schedules, coding rigmarole, and efforts to grow the practice are familiar challenges of modern medicine. To find a cure for what's plaguing your practice, Medical Economics convened a roundtable panel of practice management experts at the 2007 annual meeting of the National Society of Certified Healthcare Business Consultants in Nashville. Each panelist presented a chief complaint he's heard from doctors, then offered a treatment plan. In the following roundtable presentations, you may see a plan of action that could work for your practice.

DAVID ZETTER - Health Care Professional Management Services, Mechanicsburg, Pa.

A solo FP in Pennsylvania invested $2,500 in a spirometer a year ago. Spi rometry now grosses roughly $1,000 a month, almost all of it profit. Likewise, a seven-doctor internal medicine group in the same state nets $50,000 a year-more than $7,000 per physician-from a refurbished bone densitometer purchased 3 years ago for $20,000. The numbers are bolstered by bone scan referrals from other practices.

However, you can lose money on ancillaries if you don't do your homework. You have to consider what's needed in your community, calculate the cost of offering the service, and estimate how much revenue the service will generate based on projected volume. Is it enough to break even? Remember, you may need to hire a specialized technician. There's also the hidden cost of lost productivity associated with staff and physician training. (To learn more, read the series, "Adding Ancillaries" at http://www.memag.com/addingancillaries/.)

Consult a health-care attorney as well to ensure that an ancillary service will comply with federal antikickback and self-referral laws. Otherwise you could count on more revenue than you can reasonably expect to garner, and risk running afoul of the Feds. Some practices rent diagnostic imaging equipment and assume they can bill Medicare for both the technical and the professional fee, but that may not always be possible.

You can avoid some regulatory hassles by introducing ancillary services not covered by the Stark self-referral law-cosmetic procedures such as Botox, hair removal, and chemical peels, for in stance. However, like any ancillary service, they may increase your malpractice premiums-another cost to factor in when you crunch the numbers.

Keep in mind, too, that ancillary services aren't the solution for a practice that's struggling financially due to poor management. If your office manager can't get scheduling or billing right, he or she won't get the ancillary service right, and you could lose money. So look before you leap.

KEITH BORGLUM - Professional Management and Marketing, Santa Rosa, Calif.

DOCTORS' PROBLEM:
A crowded schedule. Lengthy patient waiting time. Long office hours. How to catch up-and keep up-is a huge challenge for doctors who have more patients than they can handle.

A better approach: Execute a "triple play": Leverage midlevels, leverage hours, and leverage plans.

I've never found a practice that didn't make money when it hired midlevels to meet patient demand. Physician assistants and nurse practitioners are more profitable than associates, producing more revenue in proportion to their salary. Most of my client practices net at least $50,000 per year per midlevel.

However, when I recommend midlevels, the response often is "I don't have enough space." If you're a soloist with two or three exam rooms working from 8 AM to 5 PM, that may be true. That's where leveraging your hours-by expanding your schedule-comes in. Patient demand typically runs from 7 AM to 7 PM, peaking before work, during lunch, and after work. Most doctors aren't accommodating that demand.

If you're open from 7 AM to 7 PM, you can see patients from 7 AM to 1 PM and schedule the midlevel from 1 PM to 7 PM. You may need to spend a few hours supervising your midlevel in the afternoon, depending on your state's supervision requirements. However, both of you needn't see patients at the same time, and you won't have to stay until 7.

Once you leverage your midlevels and your hours, leverage your payer mix by dropping poorer-paying plans. Unfortunately, many doctors accept any plan that comes along. I've walked into the manager's office at practices that take 300, 400, 500 plans, and the only visible place on the floor is the path between piles of paperwork. However, in most practices, five plans account for 80% of patient volume. So do an analysis to see where you can afford to slim down.

You're not just dropping plans, though; you're becoming an out-of-network provider, which has certain advantages. Patients in dropped plans can still come to you, and many usually will, even though their out-of-pocket expenses go up. With the network discount no longer in effect, they'll pay the full amount of your fees, plumping up revenue. You'll also reduce your workload and overhead because, as an out-of-network provider, you'll no longer have to check eligibility, secure preauthorizations, or submit claims.

You can't execute a triple play overnight. After identifying the worst payers, gradually drop them, perhaps at a rate of one plan every month, according to your comfort level. In time, leveraging payers, midlevels, and hours will move your practice into a healthier, more manageable situation.