Management Mistakes: Dodging Bullets

March 1, 2006

We asked America's leading practice management experts to dish on the biggest, most common mistakes they see. And boy, did they ever. Find out whether you're making any errors - and what to do about it if you are.


We asked some of the country's busiest practice management consultants about their biggest pet peeves. What mistakes do they see repeatedly in practices? What's the stuff that just makes them nuts?

Well, they had plenty of crazy stories (they might sound eerily familiar) and ample frustrations. "I'm 52, and I'm losing my hair, but I'm going to lose all of it if I keep seeing these same problems," worries Michael Brown, president of Health Care Economics in Indianapolis.

While the specifics differed for each consultant, it quickly became apparent that all their complaints fell into two big buckets: staff and strategy.

Luckily, they offered plain solutions that can help. Here's your chance to learn from the best and brightest, before you have to pay them to come in and fix things in your office.

THE RIGHT STAFF

You might expect practice management consultants to get worked up over poor A/R or bad collection policies, but the one thing that made everyone on our consultant panel groan is staffing. Too many offices have the wrong staff or the wrong number of staff. People are at the heart of their problems.

One major mistake? Retaining incompetents. Practices "intuitively know something is wrong but don't act on it," says Elizabeth Woodcock, a professional speaker and consultant based in Atlanta. "Change is hard for physicians, especially when it comes to personnel. ... I'll ask someone, 'What is this person really doing for you?' And they'll say, 'Well, Elizabeth, she's been loyal, very loyal. ... Other times I get, 'Oh, she's so sweet.' OK, is she working?"

Woodcock just consulted with a two-physician practice. One staff member had a full-time job credentialing. "It's physically impossible to fill your time credentialing for two doctors, but the employee was being paid $56,000 a year. Why? Well, she'd been loyal," says Woodcock. This staffer had been at the practice for more than 30 years, and the job was essentially the only position left for her at the practice - she wouldn't learn how to use a computer. "The impact on the rest of the staff is just phenomenal. One bad apple can ruin the batch," Woodcock observes.

Staff members who come in late, do nothing, or simply aren't doing a good job ruin the morale of everyone else, Woodcock says. Those who do arrive on time, for example, need to cover for the employee who is always late. Worse than the extra work, everyone on the staff begins to feel like management doesn't care. If the physician owners don't seem emotionally invested in the practice, you can be sure no one else will.

The only solution is to tackle underperformance head on. "Often times these people [poor performers] have had glowing performance evaluations for 15 years. For whatever reason, it's kind of swept under the table," Woodcock notes; everyone prefers to avoid conflict. But then, when it comes time to take action, Woodcock has seen some practices forced to resort to a big severance payout. It's difficult to terminate someone for cause if there is no record of poor performance. It's much better to accurately document performance along the way, based on well-established and consistently applied policies and job descriptions, and confront problems openly. Short-term pain, long-term gain. Just do it.

THE RIGHT NUMBER OF STAFF

Brown sees the same problems with prizing loyalty over competency. Sure, some staffers have been around 40 years, but "some of those people were incompetent 40 years ago, too." The result, he thinks, is overstaffed practices. When tasks don't get done because staff aren't capable, the knee-jerk reaction is simply to add more staff. Nine out of 10 times, practices he visits are overstaffed, he says. "Staff should never be paid more than 18 percent to 22 percent of total revenue," he maintains. "I know if I've got a million-dollar practice, I should be spending $200,000 on staff."

If you are spending more, "go in and see who is there, how long they've been there, and how efficient they are," he urges. Sometimes, it won't be a matter of inefficiency but simply of a lack of salary caps for long-term employees. "I've walked into practices where nurses are getting $80,000" simply because they got good raises year after year, observes Brown. To solve overspending on staff, you can fire staff, drop the number over time through attrition, or add physicians or services to raise the revenue side of the equation, he offers.

Keep in mind that the goal is to be staffed correctly, not understaffed - another pet peeve for our consultants. In fact, Woodcock disagrees with Brown's assessment. "I don't think I would agree that most practices are overstaffed. Medical practices are often under-invested in by their owners, the physicians. Most of them are under-resourced."

Woodcock recently was in a billing office flooded with piles of claims. The manager said her staff simply were drowning in work and didn't have the resources to keep up. "When I did interviews, the staff had tears in their eyes. When you have good employees who care but have too much work to do, you'll see that emotion come out. It's just classic." Woodcock stressed the importance of staffing around provider productivity instead of staff per FTE physician benchmarks. Busy physicians produce more calls, more claims, and more work for staff than less-busy physicians.


Judy Capko, speaker, consultant, and founder of Capko & Company in Thousand Oaks, Calif., agrees that "physicians underestimate how much work it is to run their offices. ... When managers start to talk about why the receptionists are overwhelmed, the physicians don't want to hear about it." They think staff responsibilities are sort of simple, she fears, and urges physicians to sit in on more staff meetings just to get a better sense of the complexities involved. At the very least, they should strive avoid this pet peeve: inconsistently applied policies.

Capko has been in offices with detailed written policies about scheduling that are completely bamboozled when a physician tells staff on Friday that she wants to take the next Tuesday off. "Physicians think you are just going to wave a magic wand and make this happen." They don't realize that every scheduled patient needs to be called, rescheduled, and - probably - double-booked. Or there will be an established policy of collecting payments due at the time of service, but physicians will privately tell patients in exam rooms not to worry about payment today. They "vary from the policy at a whim and put staff in an uncomfortable position," Capko says.

Karen Zupko, president of Chicago-based Karen Zupko & Associates, has also seen her share of underperforming staff, but she has a particular problem when people are promoted who aren't equipped for management positions. "Confusing loyalty with management ability is a deadly mistake," she says. The simple fact that someone has worked in, say, the billing office for five years does not mean he should become the practice manager. And, if you've already promoted someone and it's not working out, intervene, she urges: "You have to do something."

Zupko has had success doing it nicely. "You say something like, 'You know what, you were great in the billing office, and it was a mistake to give you this title. Do you want to go back to being the world's most successful biller?' And guess what they say? 'Yeah.'" Most people want to be successful, and, in most groups, everyone involved knows when it's not working out. It just takes a little guts to talk about it.

STRATEGY FIRST

It also takes a little planning. One reason staff problems get covered over is that no one is paying attention or taking responsibility. In most practices, management is about putting out the daily fires, not about looking at what is important for long-term success, argues Deborah Walker Keegan, consultant, teacher, and president of Medical Practice Dimensions in Surfside, Calif. "Practices are so focused on operations, that I don't see a lot of time put aside to focus on the bigger issues - goals, strategy, plan. We're reacting to problems versus making an ongoing analysis," Keegan explains. She has sympathy for how it happens - medical practice is hard - but the fact remains that essential work isn't getting done.

For example, Keegan worked with an OB/GYN practice that didn't realize its number of new OB patients had dropped. An OB practice can't sustain itself without new babies in the queue, but this practice didn't see the crisis coming.

Another practice wanted to develop a marketing strategy but had no idea where its patients were coming from. It didn't even know who its top eight to 10 referring physicians were or what kind of patient it was getting from them.

Another Keegan client thought its A/R looked great, but, in fact, it owed so many credits that had never been worked, the real picture was ugly. The money they thought they could take to the bank really belonged to other people. "They just hadn't stopped to look at the data. They were just moving too fast," Keegan explains.

She calls such blindness a side effect of "amoeba management." Like those single-celled creatures, managers and physicians float from one thing to another - voice mail, e-mail, a meeting - depending on where they're needed most at the moment. "They move based on where the fire is versus in relation to measurable targets and goals."

Even the nominal practice managers are usually doing something besides managing, agrees Zupko. Managers tend to be "the type of people who can kill themselves with their own competency. ... They are always doing something else." The manager helps cover the front desk, jumps in to tackle a backlog in billing, then fixes the copier. That's great, but it means no one is actually managing the practice. "If you want to be the floater, great, be the floater. But you can't, then, be the manager," Zupko says.

LACK OF KNOWLEDGE

Part and parcel of such distracted management? Lack of knowledge and focus among the physicians. "There is a lack of knowledge in general for physicians in terms of business management," says Woodcock. "I don't blame the physician. In part, our training programs are to blame. ... But physicians are going bankrupt because of it, and I think it's a tragedy."

Zupko says she, too, routinely works for physicians who don't understand "the larger scheme of how they get paid." One client complained that he was booked to capacity but still wasn't making money. Zupko pointed out that he kept recalling post-surgical patients who had no clinical need to be seen again; it was just a habit to tell patients to come back in a few months. Such visits crammed his schedule but were essentially unbillable because they were not medically necessary and no care was rendered.

Capko complains about physicians who wonder why it takes so long to get paid, yet can't turn in their charges - especially hospital procedure charges - in a timely manner. "Personally, I think it should be the day you do the service. I certainly don't see any reason why it should be more than two days. ... I understand there is a lot going on," she adds, "doctors just need to make a habit of it. Make it a priority." After all, that's how you get paid.


Similarly, we heard lots of complaints about managed-care contracting. Brown points out that most practices don't read their contracts. "Typically, the physician doesn't even get the contract. They get a cover sheet, an explanation that you are now signing up with Humana or Cigna or whoever ... and we're going to pay you this amount, then a page for a signature. [The payers] don't even send the contracts because the physicians don't read them. What they don't read is the liabilities - what the payer can do if they think the doc is doing something wrong." For Brown, the fee is only part of the issue. "Physicians never understand the leverage they have" to change the terms of contracts, whether it's about the fee schedule or the auditing details, he adds.

And Zupko says fees are too often ignored or misunderstood. "I'm sick of physicians complaining about Medicare when they have signed dozens of agreements that are lower paying," she says.

SWEATING THE SMALL STUFF

"Doctors fail to pay attention to anything important, but micromanage distractions," Zupko summarizes. Contracts are just one example. One physician, for example, got enraged when inventory was in the wrong cabinet, but never noticed that no one had ever shopped for better prices on those supplies. Another group spent 30 minutes of a physician meeting discussing whether to repaint the parking lot. They were worried about the cost, but, in fact, had the physicians been seeing patients for 30 minutes instead of sitting in a conference room, they would have generated enough revenue to cover at least a third of the project. Most small stuff can be appropriately delegated, Zupko argues. Physicians need to keep their eye on the big picture and make simple yes or no decisions on the small stuff.

Brown swears he'll quit consulting if he meets one more physician who asks him what her overhead should be. "Physicians don't understand why they are not making money, but they don't track and don't control overhead," he complains.

Too often, Zupko can't even get accurate data on overhead or anything else because no one in the office knows how to run the reports from the practice management software. "Only 20 percent of the practices we work with use their practice management software to somewhere between 80 percent and 90 percent of its capacity," she says, an indication of a lack of focus on the bigger picture - not to mention inefficiency.

"One of the most important reports, we think, is the CPT frequency report, and I'm told all the time, 'Our software doesn't do that.' Well, maybe it calls it the 'production report,' maybe it calls it 'CPT by charges,' but if I can't get a CPT frequency report, why the hell did you buy the software? I tell the doctors, anytime someone says to you, 'The software doesn't do that,' ask to see the manual, and if there's not a manual then you get on the phone to the software company. ... That is one of those things where I just say, 'Come on.'" You have to know what the big issues are - to have the reports on hand - to be able control them.

"Healthcare is one of the most complex environments," Walker stresses. It's hard to do it perfectly all the time. But paying attention to common mistakes might make you at least a little more expert.

Pamela Moore, PhD, CPC, is senior editor, practice management, for Physicians Practice. She can be reached at pmoore@physicianspractice.com.

This article originally appeared in the March 2006 issue of Physicians Practice.