A pediatric group gets help resolving its digital decision.
Brian Dionne’s* overhead is threatening to eat him alive.
OK, not really. But at an excruciating 86 percent - compared with a 63 percent average - that’s how it feels to this earnest, energetic pediatric practice administrator.
As in plenty of other primary-care oriented practices, Dionne nervously watches the prices of supplies and services creep up while reimbursements stagnate or even sink. Meanwhile, payments that do come into the practice require an ever-increasing level of effort to process.
But that’s not all. This practice is also dealing with a new physician-owner transitioning in. And the pricey office space is situated in a sleek facility that also houses a variety of sports and fitness amenities. In his geographic area, says the administrator, “Other practices pay $15 a square foot; we’re at around $30 a square foot.” And that figure doesn’t include taxes, or maintenance and cleaning.
And if that weren’t enough, here’s one more financial drain: all the paper, and consequent time-consuming cross-checks - required to maintain a smoothly functioning practice. Years ago, “When [the practice] was started, everything had a purpose; it was very well organized,” says Dionne. “Everything is double-checked - by color, number, letter code - so misplacing a chart is very hard.”
Given mounting staffing and supply costs, however, such protocols - quite advanced in the not-so-distant past - are becoming more and more difficult and expensive to maintain. Naturally, Dionne hopes to minimize that outlay while maintaining the failsafes. But how?
Dionne’s opinion is that much will be solved by implementing an EMR system as soon as possible, preferably within the next few months: “If we just eliminated the transcription and the physical charts and copying and faxing, that alone would pay for an EMR.”
But hang on: The equally important flip-side of this overhead coin is the revenue coming in. It’s too low, in fact, and that’s skewing the overhead percentage even higher. “Our patient load is going down a little bit,” Dionne admits. This has rippling repercussions: According to his accountant, prices on essentials such as vaccines have tripled over the past year, so patient volume declines are “hurting the practice more, and it’s harder to make ends meet.”
It won’t be long, Dionne fears, before the practice is no longer viable at all. An EMR ain’t gonna fix that - at least not in the short-term. Before incurring such a major expense, the practice needs to figure out why patient visits are down.
For starters, this practice has been around long enough to have year-over-year numbers on which to accurately base trending. Because of monthly variations, which can be dramatic in peds, it’s tough to get a valid comparison if you’re looking only at this past April compared to this past March. Is the practice experiencing a natural seasonal slowdown or the effects of provider transition (the practice’s original owner stopped practicing a couple of years ago), or does the problem run deeper?
Fact is, most practices lose money on an EMR implementation - often quite a bit - for the first year or so after going live. Some actually add staff and increase office hours initially just to accommodate the learning curve and account for conversion issues such as misplaced charts and scanning of old files.
Plus, many of the savings Dionne has so carefully totted up won’t be realized instantaneously. For instance, it’s going to take time for decreased spending on paper folders, stickers, and specialized forms to make a significant difference in the practice’s bottom line.
Basically, it costs money to switch from paper to EMR, so make sure your practice can afford to kick itself off the EMR cliff. I’d recommend that Dionne make the EMR transition a long-term goal, and instead immediately focus every available resource on ramping up his revenues. The practice really can’t afford to divert attention from the need to increase patient visits and making sure the most is being made of each one. At 3,500 active charts, the patient panel is simply too small right now to support three providers (two MDs and one NP) in a primary-care specialty.
I’m all too accustomed to having my many calls to physicians answered with a curt, “Practice XYZ-can-you-hold?” delivered all in one breath. But such brusque treatment went to the next level during a call to this practice: I was put on hold straight off, without so much as a hello.
This is not to imply that all subsequent service is lacking in the practice - because there were many subsequent thumbs-up moments as well - but before having your head turned by electronic bells and whistles, look back to the basics. Flawless customer service is the primary way for practices to improve patient retention, not to mention increase referrals.
Amanda Clymer, an experienced medical practice biller who’s been in the business for nearly 30 years, joined the staff a few months ago. “I’ve never worked with a nicer bunch of people,” she says with enthusiasm. The practice is also fortunate to have those three dedicated providers - an advantage to highlight in marketing and on the practice’s Web site, where the staff bio section currently sits empty. Simply stating for employees a renewed focus on patient service may be all that’s needed to ensure that customers feel well-loved and keep coming back.
The practice’s location is another barrier to bringing in patients. Unlike a more suburban or even urban location, the fitness facility isn’t a place that parents will automatically consider when they’re picking a pediatrician for little Johnnie. Dionne suspects that at least some patients are transferring to physicians closer to their homes or offices, or even taking their children to their own family physician because of the one-stop-shopping convenience factor.
I’m not suggesting that the practice pull up stakes and move, particularly as that pricey triple-net lease was recently renewed for a three-year term. But the practice should make darn sure to reap every possible benefit from its location - and from that lease.
Dionne is taking steps down this road. “I was just talking to [the center’s management] to see if we could have a closer relationship with them.” For example, he says, “Maybe when we give a Lamaze class we give [the patients] a tour of the facility. And [the center] would extend the courtesy and give a tour of the medical facilities available in the complex” when new clients come in.
Not a bad idea to pursue, although the practice will want to beware of any activities that could divert time from the practice’s existing patients. Is there some perk they could offer parents through a one-time negotiation with the fitness center? An upgrade on membership in the health club, or maybe discounted tennis lessons for the kids?
Clymer says that Dionne “has some excellent ideas about marketing, which I’m encouraged about.”
“I’m going to brand the practice - theme it,” says Dionne. He describes a fun sports-ball motif carried throughout the décor and marketing materials. Makes sense given the office location, and the practice might take this a step further by reaching out to the summer-camp and Little League sets to offer sports physicals, injury rehab, and training guidance.
Dionne has also started staggering staff shifts to cover busy times, and is “considering changing operating hours to accommodate more patients later or earlier.”
Do it whole-hog if you’re going to do it, though. The current nine-to-five weekday and Saturday-morning-only “urgent care” hours won’t be sufficient to get people thinking of the practice as the go-to spot for after-hours treatment, and they’ll have to give folks a concrete reason - improved care continuity, a more personal approach, something - to entice them to bypass the perceived convenience of the urgent care center or, worse, the retail clinic.
Other ideas Dionne would like to pursue, including in-house prescription dispensing and even an ear-piercing service, should probably go on the back burner for now. A deep breath and a critical look will tell him there’s either not enough potential for immediate profit or too much effort and expenditure required to do these things right.
Take a breath
Every number in this practice is affected by the computer system that we use,” explains Dionne. In addition to being on the EMR hunt, he’s less than thrilled with the current practice management software. “We need to reduce the amount of time that it takes for us to receive our collections,” he says, worried about the complexity of the billing system and again raising the specter of cash flow.
Clymer takes a slightly more sanguine view. She admits that the practice management system isn’t the most user-friendly, but she has a lot of experience with it and plans some streamlining in the weeks and months to come. Clymer also stresses that she’s not yet fully up to speed in her new position, especially after an illness forced a two-week absence early on.
For most practices, staff costs consume the largest portion of the operating budget, and she notes that this one recently lost three experienced employees. The learning curve involved in replacing them contributes to the outsized overhead, too.
“It’s those things - having to learn new systems because the person who knew it or set it up is gone - that have thrown us, but I’m getting a good handle on it,” she says. “For so long we were just treading water, trying to keep up with the day-to-day claims submissions.” She’s happy to report that following up on collection calls has now made it back onto her daily to-do list, and Dionne is even happier that they were able to close out this month’s accounts a full two weeks earlier than the previous month.
When dealing with new systems and staff, some amount of trial and error is unavoidable, but this practice is on the right track. Dionne’s challenge - and that of the physicians - is figuring out what’s truly a problem, and what just needs time to work itself out. “I did panic when I first got here, because so many things were undone,” says Clymer with a laugh. “But it’s getting better now.”
The accountant and/or a financial advisor may be able to help with tax-planning strategies to increase the amount of cash on hand and ease those cash flow worries. The practice will also want to plan expected outlays each week, paying bills strategically within their 30-day windows, and ensure that an adequate line of credit is in place for emergencies.
Before further straining the practice’s finances with a major new software purchase, even one that stands to improve cash flow in the future, spend some time focusing on the top opportunities for bringing patient visits and revenue to a more comfortable level.
The bottom line: If your patient-procedure mix isn’t profitable when you’re on paper, breaking into the black will be even harder when you go digital.
Laurie Hyland Robertson is a senior editor with Physicians Practice. She can be contacted at email@example.com.
This article originally appeared in the October 2008 issue of Physicians Practice.