Are you hearing footsteps behind you? It might be staff salaries and benefits creeping up on your practice’s profits.
The Medical Group Management Association (MGMA) culled cost figures for multispecialty groups over the past five years and found that staffing expenses had risen by nearly 12 percent, from $177,000 per physician in 2002 to almost $198,000 per physician in 2006.
Even though many physicians increased clinical production during that time period — seeing more patients and doing more procedures — staffing costs still consume more than 30 percent of medical revenue on average. And that’s after payers have taken their contracted discounts.
What’s a physician to do? Cut staff to save money? Freeze wages?
None of the above, suggests Donald Skinner, a Carroll, Iowa, family physician. Skinner, whose practice is part of the large physician-owned multispecialty McFarland Clinic PC, warns that getting lean and mean with staffing just makes it harder to produce revenue.
“We’ve taken the tack in our office that we will try to maintain our staffing levels in order to maintain maximum efficiency for our providers, which is what drives the revenue stream,” Skinner says.
His office, one of the McFarland clinics’ 21 practice sites across central Iowa, houses 11 physicians who are supported by 45 clinical and administrative staff. Many of the group’s business functions are handled by a central office; otherwise, its employee head count would be even higher, he says.
“Our ability to raise prices is near zero, but even in central Iowa we feel pressure from other medical groups and local hospitals to be competitive in the marketplace for staff,” Skinner says.
Physicians at Skinner’s office recently implemented a triage system to improve patient flow and physician productivity. The plan puts more registered nurses on telephones to handle patients’ questions and prescription refills or assigns them to take on higher level tasks like patient education. Meanwhile, medical assistants and LPNs room patients and help physicians with paperwork and other patient care tasks.
Elsewhere, physicians are keeping a lid on staffing costs by creating salary grids, taking steps to reduce staff turnover and rethinking work assignments. Some physicians are investing in new information technology. Some even hire more staff to help them see more patients or run a more adept billing and collections operation.
Staff for opportunity
Even as medical reimbursements remain flat, physicians spend more time pushing more paper and handling a myriad of other administrative tasks that don’t bring in revenue. To do so, they must hire more staff.
John Deane, chief executive officer of the consulting firm Southwind Health Partners LLC, says physicians are caught in a vicious cycle: They need more help but can’t afford to pay for it.
“Today’s healthcare payment environment undervalues physicians so they don’t have enough revenue to attract and retain the quality staff that they need to be more productive,” Deane says.
Deane suggests shifting more staff to work on the professional fee revenue cycle: collecting copayments; verifying insurance coverage, deductibles, and allowables before patients are seen; and gathering information needed for effective billing and collections.
“Eighty percent of the opportunity for more revenue we see when assessing practices is in the front end of their revenue cycle — at the front desk,” Deane says. “Physicians tend to under invest in things like billing, patient registration, scheduling, coding, charge capture, and cash receivable management functions.”
Invest in staff
Don Michaels, PhD, a principal and vice president of Hayes Management Consulting, says hiring extra staff can pay dividends. More staff might help you collect on more claims, collect money faster, or help you and your patients move more efficiently through each clinical session, he says.
