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The phrase "work smarter, not harder" has been tossed around for several years, but in today’s health care environment, it just doesn’t seem possible. That’s why Physician’s Managed Care Report is devoting this issue to ways that you can increase your efficiency and stay profitable. In this issue, you’ll learn how some of your fellow practitioners maintain their profitability and income in these days of declining reimbursements. We’ll show you how to reduce the paperwork hassle for physicians, what kind of technology might help ease your office logjam, and how a business plan can give your practice a road map to success.
David Gans, MSHA, CMPE, knows a successful medical practice when he sees one. As director of survey operations for the Medical Group Management Association (MGMA), in Englewood, CO, Gans spearheads the organization’s annual survey of medical groups and produces an annual report describing the characteristics of the top-performing groups. The MGMA’s Performance and Practices of Successful Medical Groups for 2000 is based on 1999 data. Of about 1,100 organizations responding to the MGMA survey, only 10% to 15% met the MGMA criteria for successful medical groups, Gans says.
"We know that we can identify organizations that are meeting higher standards, and once we’ve identified those organizations we can find out what they are doing that enables them to achieve their high level of performance," Gans says.
The study examined the performance and practices of eight types of medical groups: multispecialty groups, multispecialty with primary care only, family practice, cardiology, orthopedic surgery, primary care single-specialty aggregate, medicine single-specialty aggregate, and surgical single-specialty aggregate. The report utilizes the MGMA cost survey, an extensive assessment of expenses, revenue, and staff data. The report compares practices against their peers. For instance, multispecialty groups are compared to other multispecialty groups.
The report examines performances in four areas:
Key Profitability and Cost Management Indicators
All Multispecialty Groups
|Total gross charges per FTE physician||$811,238||$672,272|
|Total medical revenue per FTE physician||$561,361||$479,657|
|Revenue after operating costs per FTE physician||$259,700||$194,772|
|Total operating costs as a % of total medical revenue||52.35%||58.20%|
|Operating cost per medical procedure/service inside the practice||$23.30||$29.67|
|Source: Performance and Practices of Successful Medical Groups 2000. Reprinted with permission from the Medical Group Management Association, 104 Inverness Terrace East, Englewood, Colorado 80112-5306. Telephone: (303) 799-1111. Web site: www.mgma.com. © 2000.|
"We also recognize the need for quality of care. Patient satisfaction is one measure that identifies quality," Gans says. According to Gans, the No. 1 priority for top-performing medical groups is performance measurement and benchmarking. "If you cannot measure your performance, you cannot manage your performance, either," Gans says. Performance measures allow you to track your results over time and benchmark to known standards, Gans points out. "If you know what is surrounding you and where your benchmarks are, you can measure them against accepted standards developed in the industry and see what steps you need to take," Gans says.
Benchmarking helps a practice identify its weak areas, strong points, and where its efforts to make improvements should be focused. "If practices know their own internal data, they can compare themselves to external benchmarks and change the things that should be changed while retaining the elements that should be retained," Gans says. However, Gans warns, rather than rushing to measure every little aspect of your practice, you should be selective. "Managerially, a practice can’t measure everything but should concentrate its initial efforts where they can obtain the greatest benefit. They can improve one area and then move on," Gans says.
Here are some of the characteristics of best-performing practices that show up over and over in the annual survey:
• Communication and teamwork.
"There is respect, cooperation, and good communication among the clinical staff, the administrative staff, and the physicians in the practice," Gans says. For instance, on a scale of 1 to 5, with 1 being very low, the better performers rated their communication between physicians and staff an average of 3.48 while the others in the survey rated their practice a 3.42. Rating on effectiveness of the physician-administrator team were more dramatic, with better performers achieving a 3.86 rating compared to 3.69 for others.
• Relative stability of staff.
"In the better performers, the chief administrative officer and physician president or chief executive officer have been in their positions longer, and the staff has too," Gans says. For example, in better performers, the chief administrative officer had been on the job for 8.25 years compared for 6.89 years for other practices. The professional staff turnover rate was 2.21% annually for better performers and 4.7% for others.
The best-performing practices took steps to retain their staff. Health insurance and retirement plans are standard for better performers but they also offer educational expenses and percent-of-profit bonuses for administrators in their benefits packages. Although staff costs are a medical practice’s biggest expenditure, the cost of personnel for the better performers is above average. For instance, among all multispecialty groups, the better performers had an average cost of $153,875 for support staff, compared to $148,710 for all respondents to the survey.
• Written policies and procedures.
"If you have written policies and procedures, your probability of doing what you need to do is much greater," Gans says. He adds that the better-performing practices also make it a point to educate the staff about written policies. For instance, collecting co-payments at the time of service and validating insurance coverage are vital for a practice to maintain a good cash flow.
According to the MGMA survey, 93.55% of better performers have written policies for collection co-payment at the time of service, compared to 71% of others. Among better performers, 74.19% have written policies to verify insurance prior to service while only 57% of others have the policies.
• Electronic claims submission.
The better performers submit the majority of their claims electronically, Gans says. "If you bill electronically, you get cleaner claims and higher collection rates. You get immediate feedback if there are technical problems with the claim," he says. For instance, if your claim has an invalid CPT code or is missing a key variable, the rejection comes immediately on your computer screen, rather than three weeks later by mail.
• Patient satisfaction focus.
"During our site visits and telephone encounters with our better performers, every time we talked about what the practice did financially, they also brought up quality of care and what they are doing to get feedback on patient satisfaction," Gans says. More than 70% of better performers routinely measure patient satisfaction, compared with 57.78% of others. "In almost every case, we see that the better performers use the data they get from patient satisfaction surveys to evaluate their internal operations and make changes," he says.
• A compensation plan that rewards physician productivity.
Well over half of the better-performing practices have a compensation methodology for physicians that bases at least half of compensation on physician productivity.