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Sachin Gupta, CEO of IKS Health, discusses how independent practices can remain administratively stable during the pandemic and after, as well as provides the key determinants of success for new and growing practices.
It’s an understatement to call 2020 one of the most turbulent years in recent memory.
Throughout all of the changes this year, physician practices have been faced with the greatest challenge with remaining stable and functioning efficiently.
We recently spoke with Sachin Gupta, CEO of IKS Health, to discuss how practices can maintain stability in turbulent times.
Sachin Gupta: You know, Drew, my thinking is on this is, the sooner the better. The reality is, as you think about some of the actions that practices have had to take in light of the pandemic, where they've had to furlough a large part of their administrative staff, in some cases, some of their clinical support staff, there's a lot of cases for actually beginning to act now. Because given that, you know, much of this, bringing relief to the administrative burden anyways involves change and change management.
The reality is change has been imposed upon us in these circumstances. And so given that that change has already been imposed, given that a lot of the institutional knowledge has already sort of walked out the door, if a practice can move to a variable cost model on their administrative infrastructure, then now would be as good a time as any, to embark on that change.
Generally speaking, I think when you talk about solutions that alleviate administrative burden, the biggest aspect of them is change management.
The second related factor is having the right leadership in the physician group that is able to help identify the right solutions to mitigate the administrative burden in a variable cost, cost-optimized manner construct like that. And then those physician leaders be able to handhold the organization through that change.
So, I'd say act sooner rather than later and take advantage of the change that has already been brought upon us by this pandemic. Take advantage of the fact that we've already had to let go a whole bunch of our administrative industry structure instead of going out there and rebuilding that infrastructure in house all over again, in anticipation of the rise in volumes. This is a brilliant time to now let that infrastructure be outsourced, at least for what is not owed to the practice, and let that risk and cost be transferred to people that have core expertise in those areas.
Physician’s Practice: Sachin says that independent practices can learn from how health systems handled the pandemic. Similarly health systems have a lot to learn from independents.
Sachin Gupta: I think the first thing I'd say is: standardization, standardization, standardization.
I think sometimes independent practices can be victims of the lack of standardization, because it is a combination of several physicians that all perhaps might be running their own institutions within the larger group practice. And so the one thing that I think health systems tend to aspire to do well, whether they end up doing it or not, is to standardize. So I would say that would be one.
The second is, I think, a clearer understanding again of that core versus chore that I think is a discipline that are not just health system or rooms where the larger group practices or larger enterprises are tend to apply.
Anyways, the third thing would be how to set up window partner relationships in a financially aligned manner, such that neither of the two parties are taking too much risk in the process of building this sort of cool managed type of infrastructure, if I may call it that.
And then I think the other piece that's interesting, there are also many physician groups sitting on what I call implicit intellectual property. That actually is monetizable best practices that they're doing that could be useful for the rest of the industry, but they really don't have the commercial or the technological wherewithal to take that internal IP and, in a formulaic manner, convert it into an asset that could then be monetized across the industry by bringing it to other players in the industry.
I think health systems have shown the ability to do that, where they take these internal assets and convert them into actual third party service providers or third party technology providers. I think that's another piece that perhaps smaller group practices could learn from logical practices, be them health system owned or independent.
On the flip side, I'd add one thing, which is as we vote through large group practices across the country, you know, we have worked with about 35,000 physicians across 35, or large groups, each of them having an average of thousand operators. One thing we've learned is oftentimes, many of the independent group practices actually have a much more acute focus on efficiency than some of the large health system one practices. And so actually, I'd say there's also something for the health system or groups to learn from the smaller groups, because in the smaller groups, the doctors treat the money like their money, because they're not employees, they're co-owners, whereas in the large health system own groups, they can be employees. The clear focus on efficiency would be one thing that health system groups could actually learn from the independents.
Physician’s Practice: Growing during the pandemic has likely been a struggle. But the pandemic aside, Sachin offered some of his key elements of success for new and growing practices.
Sachin Gupta: I guess the first and most important thing would be having a set of engaged and truly aligned physicians. And relative to that, something that we've learned, especially through this crisis, with some strong leadership skills, as well as a clear alignment between the health of the economic health of the practice and their compensation, so engaged aligned physicians with some strong leadership In the physician, Carter ranks if you would, as well as some level of alignment between physician compensation, as well as you know, the economic health of the practice, that would be one.
Second, obviously, is an acute focus on patient care and really managing the journey of the patient lifecycle across the continuum of care.
Third, of course, which is very relevant to our conversation today, I would say would be having a sustainable, scalable, variable cost-optimized administrative infrastructure that is able to support the growth of the practice through a period of time in a predictable manner. I think that would be absolutely critical and you know, for that to happen, it's really important that practices understand the new core of their business and the ever expanding chores in their business.
I think one of the big things this crisis is revealing is that groups that have a really acute understanding or can revisit their understanding and adjust to the fact that where they create maximum value using patient care, and perhaps everything else might be really sure, would be something that would be pivotal to the group success or period of time. Additionally, I think, if there's another thing that this crisis revealed is groups that have progressed farther in the road to value based care, especially the ones that put down the journey of either prophy cap, or all the way to global cap, they're going to probably be benefiting through this time frame. So, having a really good strategic plan for the transition to value based care and executing along those lines would be another key determinant for success.
One that is more economically related would be just having a balance sheet. As you know, many independent physician groups typically distribute all of their earnings to the physicians at the end of the year. And so they don't really have retained earnings, a balance sheet. And I think times like these actually reveal the criticality of having one. So, I think having a balance sheet or developing a balance sheet over a period of time would be a critical issue.
And then I think another one of the key strategic revelations of this situation has been the fact that the telemedicine genie is out of the bottle and it's here to stay. And so, having an effective telemedicine strategy, not just telemedicine technology, which then includes not only being able to virtualize the visits that lend themselves to that but then be able to monitor and enable the patient journey beyond that to connect with the physicians of their choice, with whom they've had long standing histories. And then for that physician to be able to nurture the patient through the journey across the continuum of care, even through a telemedicine platform is critical.
And then last, but not the least, sort of in sync with that would be the critical ability to deploy technology effectively. As we know, one of the biggest challenges in healthcare has been that it's probably unlike any other industry where technology has actually drained this industry, rather than actually improving productivity and efficiency. And so I think one of the other team readings for successful physician practice would have to be an acute ability to identify the right technologies and then deploy them as business solutions rather than widgets. Those, I think, would be some of the critical key determinants of success.
Physician’s Practice: IKS Health offers three different suites to help providers navigate regulations and complexities, which may be especially useful during the repercussions of the pandemic.
Sachin Gupta: The way our clients tend to think of us often is we're actually one solution that has three components. And what that one solution does is it enables enterprises, in a financially sustainable manner, to focus on the patient as they navigate on their journey from the exam room, to the front office to the middle office, to the back office. And it really allows these enterprises to do that in a financially sustainable manner.
Then, what it allows the physicians to do, is it gives them the freedom, the intellectual, emotional and economic freedom to solely focus on the patient and let all of the other stuff be managed by guests to translate that we have three components of our product, IKS care, which predominantly impacts the exam room and the front office.
And what we're doing through that product is we're enabling physicians and their support teams to spend most of their time on proactive care delivery and to our solutions around clinical data management, clinical documentation, and enhance care delivery. We’re essentially freeing up between two to four hours a day off the physician and their support teams in an economically viable manner.
And then it doesn't matter whether it's a one-room based patient panel or a value based patient panel, more time with the patient will typically translate in better patient satisfaction, better care outcomes, as well as lower cost of care. And so that's our care solution—predominantly focused on the exam room in the front office.
Then we've got our margin solution, which actually takes it from the front office and all the way to the back office, including the middle office. And that solution essentially ensures that there is high integrity between the care that was delivered, and the revenue and the cash recognized and collected from the care that was delivered, which is a very important element because not only is traditionally the cost of that service pretty high when it is done in house, but we've also seen that sometimes it's done pretty inefficiently and leads to things like bad debts that are in the ranges of 3- to- 5%. And so I think it's really our care product impacting physicians and their support teams to deliver patient focused care or margin solution impacting the economics and fundamental economics of the practice delivering between cost savings as well as revenue upsides or collections upsides, anything between five to 7% of revenue.
And then we have a whole practice optimization suite of offerings, which really focuses on all the technology that the practice is running to be successful. How can we make sure that that technology is implemented properly, the change around that is effected, the staff that are using the technology are trained effectively, and eventually that technology is delivering the business outcomes that it needs to deliver? As a result of its deployment, and so it's really if you really think about it, our solution is it continue from scheduling a patient all the way to collecting cash for the services rendered on the patient, as it transcends the various settings within a physician group, specifically as it relates to this pandemic.
You know, I think one of the biggest things that we've been able to rapidly build into our solution is the telemedicine technolgy. But again, how do you make sure that that technology is being used meaningfully not only for the physician patient visits, but for all of the work that needs to happen prior to the visit in preparing the physician for the visit, and then post the visit and making sure that the visit results in the appropriate outcomes for the patient as well as the financial outcomes for the practice?
That's where we've actually already integrated our entire suite of care and margin products into modern telehealth care technology.
I'll give you an example, when you think about a large physician group practice, if in the future 15 to 20% of their volumes were to move to telemedicine, one could argue that they don't need 15 to 20% of the physical infrastructure that they traditionally had to manage their practice effectively. That means, whereas infrastructure, I mean, people processing technology, and so IKS has created a solution where we can virtualize that entire infrastructure associated with telemedicine and what that does is because our virtual infrastructure is much more cost optimized and scalable at variable costs.
Suddenly, the cost given that telemedicine visits are reimbursed at a lower rate than in person visits. Then even if telemedicine visits were to compensate the number of overall visits with the physician or their revenue would decline as a result of the telemedicine mix. By having a support infrastructure that is virtual and cost optimized allows them to absorb to a certain extent the impact of that drop in revenue, because the cost associated with those visits reduces in our model.
And yet, because we're able to handhold the patient, post the visit, through their journey across the continuum of care, it allows for the virtual relationship between the physician and patient to be truly successful as it relates to our quality of care outcomes. So I think that move to telemedicine, as well as the general thesis of our product, which is moving clients infrastructure to a globalized, cost optimized variable cost model, I think positions us really well and positions us as one of the very important solutions that large group practices can leverage to navigate through this pandemic, especially in an environment where even as visit volumes come back, their revenues are likely going to be depressed. relative to people with levels.