Can the Traditional Physician Practice Model Survive?
Nicki Chalik, CPA
The traditional physician practice model is changing. Single or small numbers of physicians in private practice are finding it more and more difficult to retain independence. Some are even considering leaving the practice of medicine. Before one gets to that point, however, this article offers several suggestions for consideration on innovative ways you can reinvigorate your practice:
- Attempt to grow your practice by bringing other groups in similar practices together. This can increase your market clout and improve your attractiveness to insurance and other payers. By adding doctors to your current group or merging with another group to create a larger practice, you may be in a better position to negotiate payer rates and provide increased exposure to capital to invest in new software and hardware to improve the practice’s technology.
- Explore joining a multispecialty group practice. There is research that states that large multispecialty medical groups provide higher-quality care at a lower cost than physicians in small group practices. A greater volume of revenue can more easily support expanding overhead and the cost to purchase technological improvements, such EMR and other practice management technology.
- Many practices are also exploring concierge or direct-pay practices. These probably work best in cities that have a higher average wage base. This allows a physician to practice top quality medicine without dealing with the insurance paperwork. In a concierge practice, patients are charged an annual fee ranging from $1,500 to $15,000. In return, patients receive amenities such as same day appointments, 24/7 access, e-mail consultations and longer appointment times. Under the direct pay model, the patient pays a $60 to $100 monthly fee for all primary care services needed. In either case, the physician benefits by spending more time with patients and less time on non-patient matters. This works best when the physician has a large patient practice before switching to a concierge practice because not all patients will follow.
- In many markets, hospitals are hiring physicians as employees to support referral bases and capture admissions. Doctors are chosen on the basis of their quality, reputation, patient rapport and service. As part of many agreements, the hospital does not buy the assets from the physicians’ practice, but rather leases the office space and equipment. The physicians continue to work in their own offices while the hospitals handle the administration and contracting, which are the areas the physicians would prefer to not do. To enhance physician loyalty and clinical effectiveness, the hospitals are granting doctors larger roles in governance and management. In the end, physicians may gain greater job security, but give up complete control of their practice administration.
- Another way of working with a hospital is to become a strategic partner. You may be able to achieve some of the security of affiliating with a hospital by managing a specific service line within a hospital. A physician can work with other physicians and form a management company for this purpose.
- The last option is to continue to stay in private practice. This option works best in practices in rural areas and certain specialties where elective surgery (cosmetic surgery) is the practice. This also works well for large primary care groups or multispecialty groups with enough market share to win the support of payers and other health care systems.
Before allowing dissatisfaction to force you to leave your practice, consider some of the changes mentioned above. Adopting a new practice model may allow you to modify and spend more time with your patients and allow you to remain happily independent.
If you have additional questions about how changing your practice model will benefit you, contact Nicki Chalik at firstname.lastname@example.org or 312.670.7444.
The Business Imperatives of High-Performing Practices
Greg Koelling, CPA
In the face of rapidly changing fiscal and regulatory conditions, physician practices must be proactive and nimble, while still paying attention to the bottom line and patient care. The highest-performing practices will be sure to focus management attention on the business areas of highest priority, set goals for their improvement and track their performance towards achieving these goals.
Tackling Financial Goals
The greatest imperative is to strengthen a practice’s financial competencies. Management’s goals should be to increase profitability; to collect full, prompt and accurate payments from insurers and patients; and to prepare the practice for risk-based payer contracts and constantly changing reimbursement models. And, with the deadline less than a year away, forward-looking practices are preparing for the transition to ICD-10 diagnosis coding.
Successful practices achieve these goals using several strategies. Many are enhancing contract audit and recovery processes to maximize compliance with payer contract terms. They are also developing a central financial infrastructure that is optimized for current payment modalities, yet adaptable to the new models on the horizon, such as:
- Bundled payments;
- Value-based payments;
- Accountable care organizations (ACOs); and
- Patient-centered medical homes.
The highest-performing practices are also working aggressively to eliminate denied claims, cut claims processing errors (at both the practice and payer ends) and reduce accounts receivable collection time. Many of them are also looking to their CPAs for assistance in benchmarking their financial information against other practices and to identify operational areas where performance can be improved.
In an age of growing patient empowerment, well-run practices are seeing their value enhanced by engaging more fully with their consumer-patients. They are accomplishing this through a few broad goals, with the most important being to significantly increase each patient’s involvement in maintaining his or her health, including compliance with clinical directives.
On top of that, practices are taking steps to enhance the clinical experience, health education and satisfaction levels of patients and their families. Several strategies are used to accomplish these goals, including:
- Enabling patients to access their medical records;
- Allowing them to upload data from home medical devices; and
- Using online self-service tools to schedule visits, renew prescriptions, review lab results, check in for visits and make payments electronically.
Practices are also helping patients take more direct responsibility for their own care management.
Upgrading Clinical Systems
The Affordable Care Act and modern medical practice in general requires that physicians upgrade their clinical systems. The objective is to give providers the right clinical tools at the right time, making sure they are stable, flexible and user-friendly. In a high-performing practice, this should coincide perfectly with a practice-wide commitment to demonstrate the “meaningful use” of EHR technology.
Strategies that lead to fulfillment of these objectives include automating clinical workflows and achieving meaningful use for all physicians. Moreover, such strategies should demonstrate success in raising patient outcomes, providing clinicians with evidence-based guidelines and making preparations for the ICD-10 transition.
The trend toward integration and collaboration requires providers to take steps in improving interconnectivity and care coordination. To help lower costs, the best practices are pursuing these objectives across the full continuum of care, taking such steps as:
- Adopting patient-centered care plans;
- Streamlining care transitions;
- Applying evidence-based protocols; and
- Improving resource utilization, resulting in lower costs.
A key strategy in accomplishing all this is the rollout of interoperable EHR systems among coordinating providers.
Enhancing Data Analytics
The delivery of health care is particularly amenable to improvement through the application of data analytics and the insights they reveal. Through the measurement of clinical outcomes, it is possible to determine the best treatment options for patients. A side benefit is the reduction of unnecessary variation in care delivered.
Another valuable application of statistical analysis is management of entire populations of patients, rather than individuals. This is a necessary skill for those participating in ACOs, but valuable to practices of all sizes and specialties. To achieve these ends, practices are gathering knowledge about reimbursements, accounts receivable, physician and staff productivity and process efficiency. From this information, they can identify bottlenecks in patient flow and revenue cycles and then introduce transformational system improvements.
Time to Roll Up Your Sleeves
Because of the Affordable Care Act, reimbursement pressures and the rapidly-changing health care environment, implementing these strategies and objectives is not optional. They are mandatory for any physician practice that wishes to keep pace with the ever-changing health care system. When implemented properly with management oversight, goal-setting and monitoring, all of these systems should enhance the practice’s bottom line.
If you are interested in benchmarking your practice’s financial information, discussing accounts receivable collection strategies or would like any further guidance, please contact Greg Koelling at 312.670.7444 or email@example.com.
Sidebar: Physicians Rank Their Business Objectives
Last December, the Physicians Practice website surveyed some 300 physicians and practice managers about their highest-priority business objectives. The five highest-ranking imperatives were to:
- Improve and maintain profitability (59.7%);
- Improve patient compliance and engagement with their own health (52.3%);
- Obtain complete, timely and accurate payments from payers and patients (43.8%);
- Improve patient and family experience, education and satisfaction (41.7%); and
- Improve resource utilization and lower costs across the continuum (31.1%).
Other goals being pursued include providing effective health education to patients, allowing patients to access their medical records, demonstrating excellence in improving patient outcomes and achieving meaningful use of their EHR systems.