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Simple calculations to help your medical practice determine if the investment in a medical scribe would pay off.
Two comments on a recent blog about the use of a medical scribe with an EHR addressed the additional cost a practice might incur from hiring a scribe. As important as costs are, they can be worse than useless data unless they are considered in relation to the corresponding financial benefits.
What counts is the change in net income, i.e., the difference between additional revenue and additional costs. Decisions are seldom based solely on finances, but when they are:
Change in Net Income > 0 Do it.
Change in Net Income < 0 or = 0 Don't do it.
The challenge is in accurately anticipating the relevant changes in income and expenses, which requires a series of estimates.
Many providers, or their staff members, get bogged down in making these estimates because they believe precision is required. In most cases, quick and dirty, otherwise known as "back of the envelope," estimates are good enough and they facilitate quick resolution of the question. The examples below illustrate the technique.
Marginal monthly revenue
Increased revenue because more patients can be seen each day is the most obvious financial benefit of utilizing a medical scribe. Estimating the increase in revenue requires numerous subsidiary estimates.
•What is the average revenue per patient visit?
Number of patients seen in last three months: 1056
Receipts for physician's services in last three months: $85,000
Average revenue per patient visit: about $80
• How many more patients will you be able to see in a day with a scribe?
The most conservative approach is to assume the scribe will get you to pre-EHR levels of productivity, although it is likely that an effectively utilized scribe will make you even more productive.
Number of patients seen in three months just before EHR implementation: 1320
Number of weekdays in three months (3 X 22): 66
Number of patients per day, pre-EHR: 20
• How many patients do you currently see each day?
Number of patient seen in last two months: 660
Number of weekdays in two months (2 X 22): 44
Number of patient per day, post-EHR: 15
• What is the currently unmet demand for your services?
The most conservative approach is to assume the demand for your services is what it was pre-EHR, although there may have been unmet demand then.
Patient demand per day: 20 visits
• Estimated monthly increase in revenue with addition of medical scribe
Increases in patients per day: 20 – 15 = 5
Average revenue per patient visit: $75
Average days per month: 22
5 X $75 X 22 = $8,250
Marginal monthly costs
Salary, taxes, and benefits are probably the only additional costs incurred for a medical scribe. Given the nature of the work, she probably does not require additional office space or equipment.
Who knows? A great deal will depend upon the specialty and how the practice wants to utilize the scribe. I have seen annual salaries as high as $75,000 suggested. Consistent with a conservative approach to estimating the change in net income, that is what I will use for the estimates.
• Taxes and benefits
Taxes include at least the employer's share of social security (6.2 percent) and Medicare taxes (1.45 percent) , federal unemployment taxes (effectively 0.6 percent on first $7,000/employee/year) and state unemployment taxes.
Benefits include health insurance, disability insurance, education plans, 401K, etc. Some offices offer these and more. Others offer less.
Whoever prepares your payroll will be able to give you a percentage "load" on the salaries for taxes and benefits. It is not likely to be above 30 percent.
• Estimated monthly increase in costs with addition of medical scribe
Monthly salary: $75,000/12 = $6,500
Monthly taxes and benefits : $6,500 X .3 = $1,950
$6,500 + $1,950 = $8,450
Marginal monthly income
Increase in monthly revenue – increase in monthly costs = increase in monthly income
$8,250 - $8,450 = ($200)
Based upon the criteria above, and assuming the addition of a scribe is dependent only upon financial considerations: Don't do it.
It is, however a really close call. If your analysis is this close, you may want to go ahead anyway, assuming that our consistent approach was to estimate low on increased revenue and high on increased costs. You may also want to revisit the estimates and "sharpen your pencil," e.g., make the estimates less rough and more precise.