The Agility to Adapt

Lisa Warren

Predicting what is going to happen next in Washington would put even the shiniest crystal ball into meltdown mode. Even without uncertainties about the ACA and how future changes may affect insurance--or potential shifts in policy related to the FDA and Department of Health--physicians and practice managers have plenty of strategic thinking to do these days


In a consensus of practice managers and consultants interviewed, the most immediate concern for most practices is preparing for MACRA.

"2017 is the first year that physician practices will be reporting data on quality metrics," said Maddox Casey, CPA, of Warren Averett CPA's Health Consulting Group. "Medicare will use that data to build benchmarks that will determine how providers are reimbursed in future years based on quality of care and outcomes rather than payment per procedure."

His associate, Sae Evans, CPA, said, "There are more than 300 metrics that practices can choose for monitoring this year, and it's important to select metrics that fit your specialty and that you can control to some degree. It may require some changes in how your practice is set up.

"Avoiding the need for hospital readmission is one area where physicians can be proactive. For example, an oncologist could target dehydration readmissions by making sure the patient has nausea medications and scheduling staff calls to follow up and encourage patients to stay hydrated."

"Outcomes measures have been moving targets and they can be difficult to obtain," said Lisa Warren, CEO of Andrews Sports Medicine. "It takes sophisticated IT and data analysis to gather the information and know what to do with it. Hospitals have departments working on this. In physician practices, it will likely fall to administrators to figure out the challenges."

Tammie Lunceford

Tammie Lunceford, CPC with Warren Averett, has been leading MACRA conferences across the state to help administrators prepare.

"Unlike some of the changes in health care now being discussed, MACRA is a bipartisan act," Lunceford said. "It isn't going away. I urge practices not to delay in gearing up their quality reporting mechanisms. There will be winners and losers. The winners will be paid more and the losers less. You want to be a winner, so get ready. If you don't have leadership in your practice who is up to speed on this, get advice or check your membership societies to see if they are offering help."

Quality-based reimbursement has already filtered down to commercial insurance, and the trend is likely to grow.

"For years, Blue Cross has had an incentive program, mostly for primary care, ob/gyn and pediatrics," Lunceford said. "The metrics are similar to some of the metrics for MACRA. Practice groups can earn up to 30 percent above the Blue Cross fee schedule. It emphasizes quality preventive care; for example, making sure patients get an annual flu shot and mammogram, a colonoscopy at 50."

Debi Waldrup, administrator for Pulmonary Associates of the Southeast, has spent a good deal of work readying for MACRA.

"As with any program, we have to learn how to get answers to the problems," Waldrup said. "We have to understand how quality standards develop and what quality looks like for us, and we have to communicate it so our physicians and staff understand it. We've always collected data. Now we will be depending on our practice management systems, IT and analytics to collect more and put it in an effective form for reporting."

MACRA is likely to continue evolving, but at least a starting point has been defined. Other changes in legislation, regulations and economics that could affect medical practices in years ahead are still question marks. Rather than worrying about the unknown, a more productive use of energy is focusing on building the agility of your practice so you are in the best position to weather changes when they come.

Agility starts with taking a closer look at profitability from both revenue and cost perspectives. It includes an ongoing process of looking for opportunities to improve productivity and building a culture within the practice that encourages innovation.

Revenue Problems

"On the revenue side, the challenge for many practices is that rising health care and insurance costs have resulted in a shifting of more of the financial responsibility to patients in the form of higher deductibles and copayments," Casey said. "If practices don't have procedures in place to collect the patient's share of payments at the time of service, they are probably looking at a growing and aging accounts receivable."

Evans said, "The burden has shifted to physician practices to collect the amount due. Patients often aren't aware of what changes in their coverage mean until they need it. When appointments are scheduled, the welcome letter to patients should courteously explain that amounts owed by the patient are due at the time of service. It also helps to have mechanisms in place to make it simpler for patients to pay."

Warren said, "The biggest impact we've seen on the revenue side is increasing patient financial responsibility. Last week, a lady came in who had a $15,000 deductible and needed surgery. Half of what we do is treating injuries, and that can include young people who thought a high deductible wouldn't be a problem. Any imaging, labs and surgery have to come out of the deductible first. Many people simply can't come up with that much cash on short notice.

"We have a financial counselor on staff who reviews insurance before a surgery and calls the patient to let them know what their responsibility will be. If the amount is difficult, we have two options to help them have the surgery they need while making it easier for them to pay for it. One is a zero interest credit card they can use for health expenses. We have to pay a fee for them to use it, but on the up side, we get paid and they get their surgery. For patients who don't qualify for the credit card, we have been looking into a health care loan program."

If a patient's insurance requires that in-network labs, imaging and specialists be used to secure full payment, it's also important to have procedures in place to avoid oversights that result in the patient getting a bill they shouldn't have to pay.

"It's essential to make sure patients understand their benefits and what they owe," Waldrup said. "Our practice management system batches eligibility and benefits the night before appointments so we can tell patients up front what is covered and what they owe. No surprises."

Managing Overhead

On the overhead side of profitability, two big ticket items are insurance and salaries.

"Benefits are important for retaining good staff," Casey said. "In the past, many physician practices have covered 100 percent of insurance premiums. With the increases in premiums in recent years, that adds up to a major increase in overhead. Practices are now doing more shopping around for coverage and some practice managers have come up with some wonderful ideas for containing costs."Warren was one of these administrators who used creative thinking to hold costs down.

"By going to a higher deductible and adding a gap policy that pays all but the first $500 of the deductible, we were able to save enough to hold costs about where they were, and our employees don't have to worry about having to pay such a high deductible out of pocket," she said.

Since health care is very much a person to person business, salary and other forms of compensation are a major part of overhead.

"Across the board raises and automatic annual bonuses don't make sense anymore," Evans said. "To encourage people to pull together and be more productive, we suggest that our clients go to incentive plans that reward employees when the practice is profitable. This isn't always popular at first, but after employees see quarterly incentives when the practice is profitable and have an understanding of what they can do to make that happen, they become much more invested in seeing the practice succeed."

"Merit-based raises also reward innovation and encourage employees to take the initiative," Casey said. "It's also important to make sure you have the right person doing the right job. For example, an RN shouldn't be doing a job an LPN can do. That makes the cost of that work higher. An RN should be doing higher value tasks that require an RN."

Warren said, "It's important to hire good people and train them well. Here, every new employee spends half a day in each department, so they get a clear sense of the big picture. We follow that up with every employee spending half a day at least once a year in another department. Letting them walk in someone else's shoes helps them understand why people do things the way they do. It also helps to build better working relationships. Some of the stories we hear are hysterical. One person said, 'we see 30 patients a day, but I have a whole new appreciation for the front desk when I realized they see 300.'

"I'm also working on an innovation committee, and I plan to put some of our new people on it. Those of us who have been here for years don't always see the dust bunnies, but new people have fresh eyes. I always ask them what they see that doesn't make sense to them, or what they have seen done a better way."

Lunceford said, "Having the right person in the right job is an important aspect in maximizing productivity. We do personality profile testing here, which helps in matching jobs to work styles. People who are timid could be great in IT, but they aren't likely to be very effective at collections.

Waldup said, "I believe there are two sides to every equation--in this case, cost and revenue. Once a year I go through all contracts, look at what could be rebid or renegotiated and whether we're getting good value. In hiring, I look for a degree of knowledge and someone who can quickly adjust to a quality driven environment. One person trains everyone, so everyone is getting the same information. If there are questions, they ask either their trainer or their supervisor so they don't get derailed by misinformation. Hiring the right physicians is also important to the revenue side. You need doctors who can manage their time and be productive."

In smaller practices, managers and staff tend to wear multiple hats. Having a full time person to oversee MACRA development, IT or marketing is a luxury many smaller practices can't afford. The increase in the volume of details that have to be handled has been a driver for mergers, joint ventures and other structural changes where combined resources allow more focused staffing.

Joint ventures between physician practices and hospitals can benefit both while improving overall care and reducing costs.

"Hospitals and physicians can partner on many things. We're seeing more comanagement agreements, especially in delivery rooms and in cardiac cath labs," Lunceford said. "When hospitals look for partners, they want high quality, innovative physicians and practices that are managed with the kind of strategic thought and agility we've been discussing."

By the end of 2017, physician practices will have taken their first step toward MACRA. What changes lie ahead are still unknown. However, those who take steps now to be in a better position to respond are the most likely to succeed.


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Andrews Sports Medicine & Orthopaedic Center, comanagement agreement, Debi Waldrup, gap insurance, high copayment, high deductible, incentives, Lisa Warren, MACRA, Maddox Casey CPA, practice management, Pulmonary Associates of the Southeast PC, quality metrics, Sae Evans CPA, Tammie Lunceford CPC, Warren Averett


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