A Little Help From Our Friends

July 15, 2005

The first Great Practice Makeover hit the road this spring, paying a visit to the physicians of New Horizons for Women and their staff. Our mission? Help them raise revenue and quell culture clashes. Apply our expert advice to your practice.

Visitors to New Horizons for Women in Jacksonville, Ark. will find the place a fairly typical OB/GYN practice, with some nice touches geared toward patient comfort. Yes, there's the obligatory bulletin board loaded with snapshots of children the practice's doctors have delivered. The exam rooms are warmly decorated to give each one the feel of a cozy living room, and the cotton gowns are handmade by the clinic administrator's mother. There's artwork everywhere, most of it with a mother-and-child theme. No utilitarian furniture, stark fluorescent lighting, or scratchy paper gowns for these patients.

Yet when senior editor Pamela Moore and I visited New Horizons for Women in April, we also found a practice that is lagging behind industry benchmarks for revenue and that has a pervasive "front versus back, us versus them" mentality among staff that's common in many medical practices. (One of the physicians describes it as "an undercurrent of cliquishness.")

But despite the underlying tension, the physicians are fortunate to have the respect and affection of their staff. Many staffers have a dozen or more years' tenure, and several of them cited the physicians as the reason they stay.

"There are no doctors more conscientious and wonderful," says Elizabeth Hunter, the practice's nurse practitioner.

Physicians Practice chose New Horizons for Women from among nearly 100 applications for our Great Practice Makeover, in which we asked readers to share their biggest practice management headaches. In turn, we'd select a practice to visit for a day and provide a free management consultation and analysis. We were so overwhelmed by your response that we decided to make the Great Practice Makeover a regular column, so look for it every month starting in September. The goals: to help transform a troubled practice, and to show you how to apply our advice to your own office.

Not surprisingly, problems with collections, staffing issues, and general office organization were mentioned time and again by practices that applied (see "A Snapshot," p 34).

But what helped New Horizons stand out from the crowd was the fact that the practice sent us 13 individual applications, having opened up the process to their entire staff.

"Many were pretty candid with the problems they see," says Karen Grant, MD, one of three physicians in the practice. Still, it's a good sign that the physicians value their employees enough to find out what they think - and that maybe the staff tensions won't be so difficult to ease.

'I'm not a businessperson'

First, a look at the finances at New Horizons. The three physician partners - Grant, David Taylor, and Leasa Prince - have experienced a steady decline in income over the past few years, and admit they feel "outdated" when it comes to coding, billing, and documentation.

"I'm not a businessperson," says Grant in frustration. "I feel like I don't know what I need help with."

One area of concern for the partners is growing overhead, and they've begun to take some steps toward controlling overtime costs. But while overhead for the practice is costly, averaging $309,897 per year, per physician, it is $95,000 less per year, per physician than the norm for OB/GYN groups, according to data from the Medical Group Management Association's Cost Survey: 2004 Report Based on 2003 Data.

Still, overhead hurts. "The largest part of our overhead is salaries," says Bob Johnson, CPA, who was brought on following the sudden death of the practice administrator two years ago. "We need to watch it."

The practice needs to consider not only its level of staffing relative to the physicians' productivity, but also staff salaries.

OB/GYN practices have a median of 4.6 support staff per full-time equivalent (FTE) physician. But Taylor, Grant, and Prince each take a day off every week, and Taylor does locum tenens work a few days per month - so the practice effectively has about 2.25 FTE physicians in a given week. At that level, there are 5.3 support staff per FTE physician, slightly more than what's likely needed.


We also advised New Horizons for Women to look into whether staff salaries are in line with the going rates in the region.

The bottom line is that while the practice's absolute overhead costs seem fine relative to benchmarks, they are off in terms of the percent of medical revenue spent on overhead.

The primary problem is not that the overhead is high, but that the denominator - revenue - is low and has not kept pace with overhead growth.

Raising revenue

Why is revenue so low? Partly because of the physicians' limited work hours. When you aren't seeing patients, you aren't earning money, plain and simple. According to the American College of Obstetricians and Gynecologists (ACOG), most OB/GYNs spend 62.5 hours a week on professional services, including both administrative and clinical time. Taylor, Grant, and Prince are completing far fewer procedures and gross charges compared to FTE physicians in their specialty (MGMA's Cost Survey 2004). Working longer hours or seeing more patients is the single most obvious thing they can do to plump up revenue.

Also, Grant and Taylor work together on most surgeries; one bills out as an assistant surgeon. If instead, each worked alone, or with a hired assistant, they would be able to perform more surgeries and boost revenues without working more hours.

How? Consider hiring a surgical technician to work just Monday mornings, the practice's designated surgery time. At about $14 an hour, a surgical tech is less expensive than having one physician to serve as a tech for the other, and it opens up revenue-making opportunities for both doctors.

Get staff into the money-making act, too. "Not everyone is clued into revenue," admits Taylor, the practice's founding physician. There was a time when bonuses were awarded to staff for the practice's good financial performance. "That was back when we had two doctors and only three or four employees. We're too big now" to offer bonuses, he contends.

Money-makers around the office

Successful practices tie staff performance to established benchmarks and goals to ensure that revenue is top-of-mind for everyone. Billing and front-office staff, in particular, are positioned to improve practice cash flow, and should be rewarded for exceeding performance goals that are tied to the practice's bottom line. Everyone benefits.

In order to make benchmarking and rewards work, New Horizons needs written procedures in place and must follow them consistently. The practice appears to have good policies that are not always followed. Enforce collection of all copays, deductibles, and past-due accounts from patients, for example.

Also:

  • Train the front-desk staff to deal with patients who don't know their copay or who claim they can't pay. Role-playing exercises can help get them accustomed to asking for money. Offer a reward (a pizza party, an extra afternoon off) if copay collection goes up 10 percent in the next three months - or whatever measure of success the physicians decide.

  • Track why denials occur, how many denied claims are paid on appeal, and how many just get written off. Also, track contractual versus noncontractual adjustments to understand why money is getting written off, and create codes for all major causes of noncontractual adjustments to make necessary changes in the process. In most practices, about 30 percent of claims are denied - a significant revenue loss.

  • Do pre-authorizations and insurance verification for major surgeries and obstetrics. Sure, it's time-consuming to verify - and collect copays - from every patient, but it's worth the time. At the very least, make sure patients coming in for surgeries have coverage so those higher fees aren't ultimately written off.

The simplest way to do verification is through online services. Most carriers have their own sites for providers; consolidated sites are another option.

Finally, New Horizons has one vacant physician office and should take advantage of it. Consider subleasing the space to a massage therapist who can offer pre- and post-natal massage and ease menstrual pain. Or rent the space to a 3-D ultrasound franchise, or to a physician in a complementary specialty such as pediatrics (making sure not to violate Stark and anti-kickback rules).

Code it right

Accurate coding is another way to boost revenue without increasing the physicians' hours. At New Horizons, undercoding seems prevalent, and staff crave (rightly so) more education and training.


"We get a new coding book every year," says medical assistant Jill Clement when asked about coding processes. That's a fine start, but it's important to also ensure that charge tickets reflect annual CPT and ICD-9 coding changes, and that everyone involved is trained and retrained on selecting the appropriate E&M level and applying modifiers appropriately.

According to trends from the MGMA and Centers for Medicare and Medicaid Services (CMS), E&M coding levels for OB/GYNs usually reflect a bell curve, with most existing- and new-patient visits reported as level 3 visits.

While most OB/GYNs charge mostly level 3s, at Horizons for Women, level 2 codes are far more prevalent than level 3s and 4s, according to several people at the practice. In fact, "we've left a lot of money on the table" because of inaccurate coding, according to NP Elizabeth Hunter. Charging a level 3 or 4 instead of a level 2 is not fraudulent if it is appropriate for the work performed. Nor does it mean forcing patients to pay more. Most patients' copays are the same regardless, and for patients paying out of pocket, the difference is negligible. Still, when the practice repeatedly undercodes, on hundreds or thousands of patients over time, the money really starts to add up.

Keep an eye on payers

Thanks to community demographics, New Horizons has a tough payer mix to contend with: Medicaid and TriCare, the military's health plan (the practice is located near the Little Rock Air Force base), together account for the bulk of New Horizons' patients.

"There's no one major payer anymore," says Grant. "It used to be CHAMPUS [precursor to TriCare] and we knew what to do. Now none of the payers follow the same rules."

Still, familiarity with a given payer doesn't always translate to more money in the practice's coffers. "TriCare pays worse than Medicaid now," says Prince. "That's a big deal." Indeed it is when the majority of the practice's new patients this year come from those two payers.

The public's perception of the local hospital is also causing some problems in terms of attracting patients who are likely to pay. While it couldn't be more convenient for the doctors and patients - the hospital is across the street from the practice - there is a certain bad vibe. ("I've heard about that hospital," patients say warily, according to Grant.) Thus, patients from growing and prospering Cabot, Ark., a few miles north, are driving past New Horizons to see OBs willing to refer to newer, glitzier hospitals.

Still, these are a few ways the practice can attract additional new patients from better payers:

  • Reach out to referring physicians. Run a report on who is referring patients from better payers and cater to those primary-care providers. Schedule their patients promptly, send notes on their patients back to them the day of their appointment or the next day, and send a brochure showing them what innovative services the practice can provide.

  • Reach out to the patients themselves. Conduct advertised educational sessions at locations where well-insured women are likely to gather - a local health club, bookstore, or employer who contracts with lucrative payers. Send a direct mail postcard to a targeted patient population inviting them to an open house at the practice.

  • Generate word-of-mouth referrals. Send a postcard to all your patients in high-paying commercial plans inviting them to send you the name and address of one female friend. Everyone who replies gets entered in a prize drawing for, say, a free massage. Send personalized notes to all the friends your patients refer, letting them know about the practice.

Culture clash

It was evident right away that New Horizons needed help instilling teamwork and camaraderie among its front- and back-office staff. We heard comments like, "We are so divided it is unfair," "The front and back are pitted against each other," and "There's lots of attitude."

Part of the problem may be that there is no single, designated manager in place at the practice. Bob Johnson, Jill Clement, and Margie Litton, the clinic administrator, each has a management role. So does each of the three physicians. Too many chiefs, lots of disgruntled Indians, and not one person who is clearly in charge of managing staff or the financial health of the practice. That also means no one feels responsible for making sure changes are implemented - or is particularly motivated to create change.

The very fact that this management consultation occurred gives the physicians a golden opportunity to set a new tone for the practice, erasing the staff division and setting direction for the appointed office manager. Keep in mind that the manager should not be one of the physicians.

Come together

Having a separate manager for the front and back of the office only deepens the cultural chasm between them. As difficult as it may be, the practice must make it a priority to bring staff together.

  • Cross-train staff. Have each medical assistant and nurse spend a half-day or so training at the front desk. One thing to practice? Asking patients for their copay or payment on a past-due account. Similarly, have the medical assistants train front-office and billing staff on their jobs - perhaps using the practice's nurse practitioner as a mock patient. These teams need to be aware of how their work affects the other team and that they really are one unit.

  • Meet and greet. People are less likely to see the bad in each other if they also know one another as people, not just coworkers. Set up a friendship program that joins one or two clinical staff members with a front-office team member. Pay for them to go to a local eatery for lunch once a month, or encourage them to share cards for birthdays or just for a job well done.

  • Put an end to negativity. Announce that from now on, anyone gossiping in the hall or lunchroom has to put $1 in a pot. The same goes for saying, "That's not my job," or talking about patients in the back areas. Donate the cash to a local charity. Don't allow separate holiday parties or lunch gatherings. The physicians need to simply say they won't tolerate it and that they want the team to work together, no matter the challenges. Refuse to hear complaints that don't also offer a constructive path to resolution. The physicians are the only ones in a position to set a new tone and enforce it.

Open communication

Giving air time to important issues goes a long way toward snuffing out gossip. For example, if there is a misperception about how no-shows are handled or how coding is done, bring it up for discussion and explanation in a staff-wide company meeting. Work through the best process, write down the policy, and agree that everyone will follow it. No exceptions.


New Horizons needs to clearly establish expectations for staff meetings that are designed just for the purpose of airing issues. Currently, there "are no consequences" when staff simply don't show up for these meetings, says one staffer. To encourage people to get involved, set up meetings so everyone is a participant, not just a passive listener.

When setting new policies or re-establishing old ones, invite all staff to speak up if they see a better way or have had problems with a policy - before it's set in stone. Once it is, though, document every office policy and procedure clearly. This includes HR issues: All staff members should have a defined, written job description and understand how and when their performance will be reviewed, what goals would help earn them a raise, and the benefits available to them.

The biggest hurdle for New Horizons for Women - and for any medical practice that must make dramatic changes to get (or stay) ahead - is getting beyond the inertia, the clinging to "this is always how we've always done it." It isn't easy to change processes or people in any organization. But seeing the problems and doing nothing is worse than not seeing the problems at all. The typical practice is a million-dollar or multimillion-dollar business. Start treating your practice problems as business solutions to be solved, and you'll be richly rewarded in many ways.

Joanne Tetrault is director of editorial services for Physicians Practice. She can be reached at jtetrault@physicianspractice.com. Pamela Moore, PhD, is senior editor for Physicians Practice. She can be reached at pmoore@physicianspractice.com.

This article originally appeared in the July/August 2005 issue of Physicians Practice.