Improving productivity by reducing capacity in your schedule

It's been than several years since COVID-19 and the March 2020 lockdown. Today, many of our schedules are full, with patients waiting 3-4 weeks for an appointment, yet our revenues are flat or even decreasing. This is a situation all too familiar to many physicians and their practices. (If you are compensated by the number of RVUs, note that the Medicare conversion factor for 2025 decreased by 2.83% to $32.3465, down from $33.2875 in 2024) With declining reimbursements, what do we do?

There are two solutions to this dilemma: 1) increase capacity, which entails increasing the staff, adding more providers, increasing space, increasing overhead expenses, and creating a trajectory to burnout, or 2) reducing a select volume of patients. As volume reaches capacity, doctors must be prepared to give up the bottom 15% of patients to increase revenue. By eliminating the bottom 15%, there will be increased capacity for patients, allowing physicians to focus on areas where they are exceptionally skilled and/or have the greatest interest or expertise. The bottom 15% of revenue is frequently generated by a disproportionately high number of patients, for whom reimbursements are inadequate for the care provided. Now, an additional capacity will be freed up for revenue growth when the bottom 15% of patients who create more work with less productivity are eliminated. Opportunities to reduce the costs associated with this excess capacity can also be identified.

Two situations in which reducing the bottom 15% should be considered: 1) the bottom 15% of a practice's revenue is likely to be generated by the lowest paying payer, and 2) the bottom 15% of revenue may be generated by specific diagnoses or services that are not appropriately compensated or productive.

Usually, the bottom 15% of revenue is often generated by a disproportionately high number of patients. As a result, a greater capacity in the schedule will be freed up for treating patients which has the greatest interest, require the greatest skill and enjoyment, and receive the most favorable reimbursements. When excess capacity removes the bottom 15%, there is usually an associated reduction in overhead costs.

The four situations where elimination of the bottom 15% is appropriate occurs: 1) when the schedule has reached full capacity, 2) when patients must wait 3-4 weeks to access the practice, 3) when you have identified the lowest payers or those payers who take weeks or months to pay for your services, and 4) when your revenue is flat or declining.

Before reducing the bottom 15% of patients, it is important to consider the impact of removing the bottom 15%. You should consider what effect this will have on your referral sources. One option is to refer those patients to another doctor in the practice who does not have a full schedule, such as a new associate who has recently joined the practice.

The benefit of reducing the bottom 15% is greater physician satisfaction in treating those conditions, allowing them to focus on procedures they prefer. Now the physician has more time to manage the chief complaint, but also discuss secondary issues that have been "put off to later". This can occur when the doctor rushes to see all the patients on the schedule. This results in less time spent with each patient, which decreases patient satisfaction, reduces the likelihood that desired medical outcomes are achieved, and may increase the risk of litigation. By removing the bottom 15%, you are likely to experience increased revenue from additional procedures and tests, greater patient satisfaction, improved online reputation, and better outcomes.

The bottom line: By eliminating the bottom 15% of work, the physician has more time to focus on the things that they prefer treating. This is a win-win for doctors and patients, with increased patient satisfaction and revenue.

Neil Baum, M.D., is a physician in New Orleans and the author of Business Basics for Creating and Managing a Healthcare Practice (Springer 2022)