The Inbox: Offsetting Declining Practice Revenue

June 21, 2016
Erica Sprey

In our recurring blog "Inbox" we share comments from physicians and practice administrators telling us what keeps them awake at night.

Editor's note: We work hard to write about issues that will help physicians run their practices in a manner that is both prosperous and efficient, while still delivering quality patient care. And we are delighted when our readers let us know what they are thinking. This month we are excerpting two articles on cutting costs at a pediatric micro practice and price transparency for medical procedures, written by Gabriel Perna, Terrence Redmond McAllister, MD, and Leann DiDomenico McAllister. The articles have been edited for space and are followed by comments made by readers at PhysiciansPractice.com.

CUTTING COSTS TO STAY AFLOAT

The current healthcare market is testing our personal ethics. Our income is down significantly, and when we evaluate the reasons and what can be done about it, we don't like our options …

Our financial outlook for 2016, so far, looks much better than 2015. To make up for the loss of revenue, we chose to cut costs and won't be replacing a nurse practitioner who left us last year. This change significantly reduces our expenses and has a relatively small impact on patient care For example: longer wait times for returned phone calls and no more Saturday appointments. Of course, with our fixed expenses growing constantly (EHR costs and our own healthcare premiums in particular), who knows for how long we can offset lower revenue by just cutting costs. So tell us, besides turning our backs on low-income families or charging concierge prices, what else can we do? What have you done? Have you sold your soul for decent income or are you sacrificing your financial stability for your ethics?

Narayanachar writes:

… Just based on what you have indicated you will come up better by eschewing Medicaid, and going "nonpar." In the event of Medicare for all, the affluenza patients you cite will end up paying you less and will result in you working for them in a capitated environment where the frequency of these visits will increase with no significant payment to you for those services.
Since you seem to have a busy practice, you can take the risk of being bold and kind to your patients at the same time. Declare your practice a no insurance zone / physician-only practice. Have three or four evening hours from 5 p.m. to 10 p.m. to accommodate parents who work. Charge more (about 30 percent to 50 percent more) for evening services. Post your visit fees based on what you know is a reasonable amount. Exclude immunization from the basic fee. Figure a visit fee including immunization for the 1-year-old to 5-year-old age group that get the most-expensive vaccines. Reduce practice overhead and staffing levels to reflect the decreased volume.

Dorothy says: The practice that I currently am employed by has also faced the same decision. Ninety-eight percent of our patient population are those who are the neediest. We mothballed some services that we provide, decreased work hours for some, laid off some staff members, and the administrator took a pay cut. This however, does lengthen the time it takes to process referrals, prior authorizations, prescriptions, etc. In my opinion this is directly affecting the manner in which we prefer to provide care. Because we are community based, we hope to achieve some other funding source that will help support us. However, we are committed to this community we serve, and will continue to provide the best quality service that we can, without sacrificing any ethics. We will also stay on the side of right and what is best for this community that we all love serving.

Leann responds: Thank you for sharing. I am inspired! In the situation you describe, time is at a premium and yet it would probably benefit your population if your doctors took time to become politically active (letters to the editor, meetings with local elected officials, your state's medical society, etc.).

Has your practice recently cut patient services to stay solvent? Tell us what you think; join the conversation at bit.ly/cut-costs-stay-afloat.

FIVE REASONS TO SHARE MEDICAL PRICES

While physicians typically shy away from listing medical prices on their website, there is a way to do it to ensure patients and practices are both winners. In fact, there are several benefits for physicians if they are transparent with the prices to their services, said Jonathan Kaplan, a plastic surgeon at Pacific Heights Plastic Surgery, a practice based in San Francisco. Kaplan presented on pricing transparency at the annual Healthcare Information and Management Systems Society (Conference), held this year in Las Vegas.

Cory Annis, MD, says: This is why I am now a direct primary-care physician. There is no conflict of interest or conflict with contracts. My membership prices are on my website and many services are included in the price. The only reason my individual a la carte prices aren't posted on the website for all to see is that I have been too busy signing up new members to stop and post the list! The government and insurance companies aren't going to lower the cost and improve the quality of healthcare. A strong, honest relationship that makes me accountable to my patients and my patients accountable to me is what makes me want to control costs. I want to do it because controlling costs is one of many ways I feel obligated to care for living, breathing people that I care about, not faceless bureaucrats, accountants, actuaries, policies, or computers.

Paula comments: It is my belief that patients will ultimately demand to be educated - even if they're not asking for price information now. "Physicians" are worried that patients are going to price shop. They should be. If the information is not easily available, they'll go somewhere else anyway. As healthcare consumers, we do this now with other services (e.g., dental, veterinary); the day is coming when consumers begin to be [savvier] about their own personal health expenses.

Rebecca says: Posting a price list is not "transparent" at all, except for non-insurance cash pay patients. For insurance patients, our office has 20+ different fee schedules. Not only would that be extremely confusing for a patient, we would also be in breach of contract for most plans if we posted that information. Not to mention, it would be an open invitation for insurance carriers to lower their contract with the office if they are one of the higher negotiated payers. What practice would open themselves up for that? … Unless you are a cash-based practice only, this is not as simple of an issue as the article suggests. The only way to accurately quote for non-cash services is to handle with personal communication with the patient and even that assumes that you know the exact service being provided. This may work for a plastic surgeon, but is not practical for most other specialties.

Would your practice ever consider posting some of its prices online? Tell us what you think; join the conversation at bit.ly/post-pricing.