The Great Practice Makeover: Breaking New Ground

January 1, 2007

We help a small subspecialty practice compete with the big dogs


It’s never easy being a pioneer. Alvin Perelman, MD, MBA, is one of only a handful of independent pediatric endocrinologists in the United States, many of whom work in academic or hospital settings. Pediatric endocrinologists in private practice are a relatively new breed.

Perelman himself was with Phoenix Children’s Hospital for 17 years before he started his own practice in 2001. He opened Southwest Pediatric Endocrinology in hopes of gaining more control over his career. But the world of private practice inevitably came with new frustrations, particularly since he wanted to continue to care for his patients as they grew into adults.

“In pediatric endocrinology, we don’t cure anybody,” says Perelman. “All of our stuff is chronic. And the transition from pediatric to adult care has always been difficult to manage.”

Hoping to improve upon this situation, Perelman is opening a new facility in concert with two other organizations - Scottsdale Healthcare Diabetes Center, which offers patient education programs and other services, and an adult endocrinology practice. The new group will share a charting system and exam rooms, but administratively it will function as three separate practices; patients will see only a single, integrated office.

But how to avoid the payer and market punishment that often accompanies such innovation?

Pediatric endocrinologists don’t generally perform procedures, and there are no big revenue generators in the specialty. E&M charges are the norm. Perelman asked Physicians Practice how small practices, particularly those in pricey cities like Scottsdale, Ariz., can compete with hospitals to recruit top-notch staff and offer sufficient incentives to retain them.

Show me the money

“One of the big issues we have,” says Perelman, “is all of our interactions are longer than the typical pediatric interactions at the same E&M level.” In contrast to, say, an ear infection in general pediatrics, “Diabetes is not just a, ‘Hi, how are you?’ kind of thing,” he explains. “You end up with a 30- to 40-minute visit plus at least half a dozen phone calls, if not more, in a three-month interval. And none of that is reimbursable.”

Physicians Practice called upon coding consultant and author Betsy Nicoletti to help sort through the billing complexities Perelman is facing. Because he’s presumably seeing higher-acuity patients than would a general pediatrician, she says Perelman should already be billing using higher-level E&M codes, largely determined by the difficulty of his medical decision-making during patient encounters. Like many others, this experienced, well-intentioned doctor may benefit from a refresher on exactly how he’s paid for his services. It’s an issue worth exploring, says Nicoletti, particularly if you’re coming from a hospital. In that setting, payments are based on ICD-9 codes; in private practice, diagnoses still follow ICD-9, but payments are tied to CPT codes.

Nicoletti adds that ff a physician spends more than 50 percent of a visit in consultation with a patient (or the patient’s parent) or on care coordination, timed E&M codes may better capture the true costs of the appointment. The time spent must be documented in the patient’s medical record, not just the billing record. The record should also describe the nature of the counseling and explicitly state that it constituted more than half of the visit. According to CPT rules, “counseling” can include discussion about diagnosis, prognosis, condition management, and patient and family education.

Prolonged codes - add-ons tied to specific E&M services - are another option if the service requires 30 minutes more than the typical time for a given code. This should help address Perelman’s complaint about unrealistic visit levels, if not his unreimbursed phone calls. Add-on codes can get complicated, so it’s probably wise for anyone who uses them to enlist professional help to ensure they are accurately capturing the care they provide.

Perelman may insist he can’t afford it, but it’s not a bad idea for him to retain an experienced coding consultant to follow him during a typical day and perform a chart audit. After all, this relates directly to the practice’s bottom line. Perelman needs to make sure he’s billing for everything he’s doing that is reimbursable. And coding has become such a nuanced enterprise that it’s nearly impossible for busy clinicians to keep up with continually changing regulations.

Look for a coder with experience in your specialty. Although not a guarantee of results, certification can be another search criterion. Two well-recognized coder designations are Certified Professional Coder (CPC), issued by the American Academy of Professional Coders, and Certified Coding Specialist–Physician Based, issued by the American Health Information Management Association.

The counsel of an experienced, well-qualified coder can be well worth the investment. For example, Perelman says there’s no code for growth-hormone testing, but in reality he’s paid based on the physical exam, history taking, and medical decision-making that led him to order the test. And an experienced coder could tell him that there are also several codes for testing HGH. Perelman may want to consider implementing an in-house lab to capture that revenue, especially as he configures his new office.

Although some practices shied away from establishing in-house labs with the advent of the Clinical Laboratory Improvement Amendments in the late 1980s, the certification process hasn’t turned out to be as complicated as some had anticipated. A bigger obstacle: Many payers now refuse to reimburse physicians for lab services, preferring to contract at lower rates with large lab companies. Before investing in laboratory equipment and set-up, determine what your payment arrangements are regarding these services.


Perelman says no one in his small practice is qualified to undertake payer negotiations on his behalf. He has no problem networking his own computers or making Costco runs to buy supplies. But in view of its effect on his livelihood, the matter of contracting is more crucial to his practice than stocking the restrooms with toilet paper. Because Perelman is in a high-demand subspecialty that performs specific tests, he should be able to present his own solid case for receiving payment for his services.

A lab venture may offer a revenue stream separate from the physician’s own time, and it might be just the ticket for someone who says he’s always seeking new stimulation. Perelman is the type who’s usually doing more than one thing at once - setting up that new network while talking to a writer from Physicians Practice, for example.

Value-added staffing

This always-on-the-move physician wouldn’t have his days structured any other way, but what about employees who’d prefer to focus on one task at a time? “I adore my junior associate [Grazyna Piekos-Sobczak, MD],” says Perelman. “She does a great job clinically, but she’s not as efficient as I am.” He has similar concerns about his staff. Although it’s not always realistic - and allowances must be made for different personality types that tend to gravitate toward different careers - steadily rising overhead and declining reimbursement makes increasing staff productivity a crucial objective.

“I want people to be excited about what they do, be proud of where they work,” says Perelman. That philosophy is a great start, but he asks, “How do I share my enthusiasm … and get [staff] to want to put in extra effort?”

One answer: Aim to give employees a sense of the bigger picture. Perelman is proud of his practice’s educational and clinical research efforts, but does everyone else in his office know exactly why the practice is relocating? Staff members mention that the space will be larger and more convenient, but do they recognize the significance of the new practice model?

Physicians can help their employees share their vision by creating common goals, clearly outlining milestones along the way to change, and establishing criteria for success. Petty conflicts are less likely to crop up when everyone feels that they are working toward the same goal. Knowing there’s room for advancement within the practice gives employees an incentive to remain on staff and develop their skills with you. It may seem like overkill in a small practice, but each employee’s roles and responsibilities should be spelled out in writing.

“Managing expenses is one of my biggest issues,” says Perelman, citing the fact that the longer people stay, the more raises they expect. That price is worthwhile, provided the employee continues to bring value in the form of patient satisfaction and work-flow efficiencies, but salary increases shouldn’t be a given. Align rewards directly with performance. Those job descriptions and formal evaluation procedures can help even the smallest practices minimize wasted effort.

Another staffing headache for Perelman comes from handling different communication styles, which he says leads to mistrust. “[M]y style is when I think of something, I’ll fire off an e-mail … If I don’t put something down on paper right away, I’ll forget it.” Be aware of the effect of your own style on others: For a slow-and-steady type, it can be supremely annoying to arrive in the office every morning to a full inbox or a stack of scraps bearing the doctor’s latest great ideas. Edit outgoing messages for length, content, and volume, and communicate with people the way they signal they want to be communicated with. In the most simplified terms, a staff member who consistently responds to your e-mails with phone calls may do better with verbal contact.

The best person for the job

“The more people you have,” notes Perelman, “the more potential for relationship problems.” To avoid yet another unreimbursed task eating into his practice’s revenue, at least part of the responsibility for handling staff conflicts should be delegated to someone other than Perelman. A good candidate would be Cecilia Villarreal, the longtime front-office staffer Perelman calls “my godsend.” Or perhaps Perelman and Villarreal may determine she’s better suited to a different role. In any case, a practice’s manager must be given the authority - and the training - to handle most of the personnel challenges that crop up during any given day.

Currently, Perelman and Villarreal share practice administrator duties, but office management is too important to be a seat-of-the-pants operation. A new practice arrangement will most likely bring new complications, so it’s probably time for Perelman to appoint a designated go-to person aside from himself to handle administrative concerns.

Perelman says he can’t afford to hire anyone else, but he certainly can’t afford to devote more time than is strictly necessary to unpaid administrative work. Some unreimbursed work is unavoidable. It’s one thing if Perelman helps a child avoid a trip to the ER by spending some time on the phone with her parents to adjust her medication, but its’ quite a different matter if Perelman spends time on a task someone else could do just as well. An IT consultant to help with his computer system may be expensive to hire, but college students aren’t, and they’re an abundant resource in Perelman’s area.

Make sure every duty is logically assigned given the staff you have. “We all know that we have to do each other’s jobs,” says Villarreal. She feels fortunate to work for a physician who’s always willing to pitch in, saying Perelman even answers the phone and schedules patients when necessary.

“Of course,” she laughs, “I’ll have to get the rest of the information down the road.” Maybe it makes better sense to let calls go to voice mail once in a while rather than have two people - one of whose time costs more than anyone else’s in the practice - perform a task twice. Although this is a challenging proposition for small practices, Southwest Pediatric Endocrinology will have to balance its competing needs for cross-training and clearly defined roles.


“Patients don’t know if I’m a good or a crappy endocrinologist,” says Perelman, and that’s almost certainly true. Instead, most patients base their judgments about quality of care on more readily accessible factors, like how smoothly the office runs and how well the staff treats them. So it’s imperative to compete at the highest levels in the areas that most affect patient satisfaction.

Laurie Hyland Robertson, BA, is a managing editor for Med-IQ, the parent company of Physicians Practice. She has been in the medical publishing field for nearly 10 years, working editorially on both clinical and management topics. She can be reached at lrobertson@med-iq.com.
This article originally appeared in the January 2007 issue of
Physicians Practice.