PRACTICE MANAGEMENT "IN THE TRENCHES" -Managing people

July 1, 2006

In our final series installment, Dr. Hayworth discusses establishing a compensation system, investing in staff training, whether to bring on fellow physicians as partners or employees, and much more.

During the years I've served as Chief Executive Officer for a multispecialty group, the group has nearly tripled in size, going from about 35 physicians to more than 100, and from approximately 200 staff members to more than 600. Needless to say, I've learned a great deal about managing people in those years.

Among the lessons learned: how to make partner versus employee decisions, deal with the pay-for-performance issue, maintain quality control without alienating your staff, and establish a streamlined governance system.

Should physicians be partners or employees?

But the larger a partnership, the more cumbersome the process of decision-making can become. Therefore it's important to both set up a plan of governance, and consider offering new physicians an alternative, namely working as an employee. Employee status may be appealing to physicians who prefer not to take on the obligations of partnership, or who are engaged part-time; and a plan of governance, as discussed below, will preserve representation while preventing paralysis.

Make sure all partner physicians work full-time

To run your practice in a businesslike way, you have to bear in mind the overhead costs involved in each physician's practice. Certain costs, such as real estate and information/communications infrastructure, are fixed regardless of whether or not a physician is working full-time or part-time. Inherently, the relative overhead costs for a part-time physician are typically going to exceed those of a full-time physician. Even if two physicians are sharing a job, the cost of malpractice insurance and benefits for the two will exceed those for a single physician.

With that in mind, only physicians who work full-time should be eligible for partnership, and full-time scheduling should be a requirement for continuing partnership.

Structure the compensation system to reward productivity

It's human nature that incentives enhance productivity, so make certain to include a significant production element in your compensation formula for non-capitated work. Your patients benefit, too, when their physicians have an incentive to fit in an extra visit during the course of their day, so make sure that your formula rewards that initiative. The profitability of your entire group will rise as well, making it a winning solution all around.

Now more than ever, be conscious of quality

We're moving fast into the era of pay-for-performance, in which Medicare and commercial insurers offer reimbursement incentives for meeting certain criteria. Relatively speaking, then, you'll be penalized for failing to meet those criteria.

While the insurers will be measuring your practice, your practice needs to take measures to ensure that every physician in your group knows and follows the standards. And because the latter requires more than simply being the best doctor one can be, it's wise to have someone overseeing the quality-assurance and compliance processes on behalf of your group. Designate a member to be your Medical Director and/or Director of Quality Assurance; the latter title can also be phrased as Chief Quality Officer, or CQO.

The CQO is charged with keeping track of both ACOG practice guidelines and the pay-for-performance requirements of Medicare and other insurers. He or she must share all of this information with group physicians and, as indicated, staff members, and establish procedures for monitoring compliance. Discuss how you approach the diagnosis and treatment of commonplace clinical problems as a group; the CQO should be empowered to formalize policy recommendations for all to follow. Make all physicians and staff aware that you will regularly review both medical records and coding, and that deficiencies will be handled with counseling and with disciplinary action if necessary. Set out formal policies regarding deficiencies to facilitate compliance.