“Better Performing” Practice Concept

William R. Pupkis, CMPE, Healthcare Consultant

The basic premise of “better performing” practice is an exercise to learn from others. It is the use of metrics that can be measured that will lead to improving the bottom-line in most practices. However, when discussing best practices, there is no “silver bullet.” The practice involves attention to detail and analysis.

There are several shared characteristics of “better performing” orthopaedic surgery practices. One is the use of business and strategic planning. Just as a global positioning system (GPS) is helpful in getting from point A to B, business and strategic planning can be a great roadmap to success. As part of this looking forward process, look out one to two years and conduct a “SWOT” (strengths, weaknesses, opportunities, and threats) analysis. Trying to forecast beyond that point is difficult, given the rapid changes in the business environment of healthcare.

Another characteristic is solid billing and business processes and protocols. Physicians usually do not go to medical school to make money, but they must collect money to stay in business. Look at your reports to watch for trends, both good and bad. Studies have shown that better performing practices spend a great deal of time assessing and evaluating these processes to ensure financial success.

The primary source of income is via services provided by physicians, but there are only so many hours in a day. Plus, with reimbursement declining, there is a need to find other ways to enhance the bottom-line and to improve patient care. The additional revenue from ancillaries is another shared characteristic. Having an ambulatory surgery center, physical therapy, durable medical equipment, and/or investmentMRI can help to enhance the bottom-line and improve patient care. A related subject is the use of physician extenders. In the right circumstance, using these additional resources could free the physician to see more complex cases, which could generate a higher relative value unit-per-encounter ratio than would have occurred without them.

Continuing the discussion of improving revenue, financial success might be simpler than one might think. I highly recommend that you think of your practice’s payer mix and contracts as an investment portfolio. They are not that dissimilar. Both provide economic returns. The more diverse they are, the better, and both demand careful management. Calculate the percentage of each payer to total charges and collections to determine its impact on total revenue. Then determine the collection ratio of each payer to find the worst payer. If the medical group decides to jettison its worst payer, it shifts the mix and automatically makes a difference in total revenue by filling the empty appointment slots with better paying patients.

A discussion about improving the bottom-line usually turns to cutting expenses. Understand the details behind the numbers, which allows you to analyze expenses more precisely and compare your expenses to national benchmarks. A line item like supplies does not tell you enough. There should be detailed sub-categories, such medical supplies, injectibles, office supplies, etc. Guard against cutting back in some areas because it may cost you in lost revenue. Consider that if you add a medical assistant or cast tech, you might be able to see one or twobenchmarktext additional patients per day, adding to the bottom-line. However, if you are convinced that payroll seems to be high right now, if someone leaves, consider redistributing their responsibilities over the short term.

Look for other savings in areas like deleting yellow page, local newspapers, radio, or billboard advertising. Join a buying group to gain better pricing. Put all of your cell phones under one contract after comparative shopping. If you have a lease on a satellite office that is due to renew, do not keep it open just because it is convenient for one of the partners; run the numbers and make your decision based on objective data. “If you have the right numbers to analyze, most decisions are easy.”

Why do all of this? The best practice concept is smart business. You get to compare your practice to others, and by doing so, you might make some operational changes that can increase your bottom-line, which can affect your physicians’ incomes. Another goal is that it could ultimately impact YOUR income.

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This entry was posted on Monday, October 7th, 2013 at 3:43 pm and is filed under Practice Management. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

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