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Improving Financial Performance at Your Medical Practice

Improving Financial Performance at Your Medical Practice

Financial performance is always a high-interest topic among medical practices, but this year it is especially so.

Healthcare organizations are experiencing a perfect storm of financial stressors: rising overhead costs, potential Medicare reimbursement cuts, a slow and definite shift toward value-based reimbursements, and increasing patient payment burdens among them. Now is the time many are wringing their hands, wondering what their next steps should be.

This year's annual Medical Group Management Association (MGMA) Conference in San Diego features more than a dozen sessions devoted to the topic of financial performance, from improving billing staff's ability to collect payment to adjusting to new fee schedules.

For conference attendees wondering which session to attend, considering where you're bound to see the greatest challenges may be a good place to start. These may depend on many variables, such as physician specialty or whether your practice is independent or hospital-owned.

Still, there are some issues being faced by all, said Owen Dahl, who is spending nearly six hours at the MGMA13 preconference educating attendees on improving financial performance. His session, "Optimizing Your Medical Practice: Current and Future Financial Performance," is scheduled for October 6.

Owen Dahl "Practices are being financially challenged in a couple of different ways. One way is the declining reimbursement in general," Dahl told Physicians Practice. "There's the declining reimbursement per level [of service] or per service that's provided. And there's also the concept on the horizon of more emphasis on capitation, or looking at bundled episodic payments; in other words, moving away from the good 'ol fee-for-service. I think when you start to look at the incentives that physicians had — and to be blunt, the incentive has always been 'the more you do, the more you make' — I think that there are constraints that are going onto that piece as we see different payment models. So the physician mindset has to change, but so does the mindset of the manager."

LOOKING DEEPER

During his session, Dahl plans to discuss how practices can drill down and examine, in greater detail, the true costs of what it takes to provide a service (looking at everything from the cost of the provider's time to the cost of administering treatment, as well as reimbursement).

"We don't [always] know how much it costs us to provide service," said Dahl. "And because we don't and haven't looked at, in any great detail, what it costs us to provide a service, we don't know when we look at providing a service, whether or not … it's financially viable.

By doing a thorough examination of costs, practices can start to figure out the answers to important questions such as, "How many patients does it take for me to be able to keep my doors open?" said Dahl.

So, for example, "If that patient has diabetes, and congestive heart failure, renal failure, or some other kind of comorbidity, there's [significantly] more costs that go into seeing that patient," than a patient with diabetes and no other comorbidities, said Dahl. Therefore, to avoid losing money on its neediest diabetic patients, a practice might have to utilize cost-saving strategies such as encouraging group visits, using disease-management protocols, or having nonphysician providers see less-complex patients, he said.

UTILIZING TECHNOLOGY TOOLS

Jasmine Gee, director of product marketing for athenahealth, agreed there are a number of financial challenges facing practices these days. But two of the more difficult ones are a pressure to increase productivity and the rise of self-pay collections.

"As healthcare costs continue to rise, patients are being required to pay more and more of those costs out of their own pockets, in the form of higher premiums, deductibles, and copayments," Gee told Physicians Practice. "This means that healthcare providers must derive a growing portion of their revenue from direct payments by patients, an often aggravating process that involves significant work, hassle, and cost."

Gee suggests practices look into technology that will aid their payment-collection efforts.

"Many practices are finding that the patient collection work flow functions [can go] more smoothly — and can be more successful — with third-party patient communication and collections tools and services," said Gee. "When properly designed and integrated into a practice's regular routine, these tools and services relieve the staff of excess workload, make the self-pay process more efficient, and help boost revenue and speed of payment."

P.J. Cloud-Moulds Healthcare consultant P.J. Cloud-Moulds, who works with practices to improve financial performance, said some of the biggest challenges are internal. Specifically, there's often little to no transparency in positions where monies are exchanged, and this can increase a practice's chance of becoming a victim of embezzlement.

"By creating the transparency, you are creating a new atmosphere and work environment," said Cloud-Moulds, who is a regular contributor to Physicians Practice's Practice Notes blog. "Identify who your staff members are that can work well with a set of metrics [including] goals, standards, requirements for the position, and someone monitoring their activity. Those who have nothing to hide won't mind, and in fact, will feel a sense of overall relief that someone knows what is going on. Set the expectation and follow through."

 
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