Today's health care system has your practice in a financial vise. And with every turn of the handle, the growing pressure makes practice efficiency that much more valuable — and inefficiency that much more painful. Poor management practices that would have gone unpunished in the looser market of even a few years ago now cut right into your bottom line. More, they can cause staff, payer, patient and physician dissatisfaction. They can force you into a reactive posture and deprive you of autonomy.
That's the bad news. The good news is the other side of the same coin: Anything you can do to improve the way your practice runs, however small, can help you breathe easier under the pressure — and retain or regain a measure of control.
Every practice can be improved. You may find that you and your staff expend energies on activities that have little or no value. You may be able to perform some activities more efficiently, allocate work better and eliminate redundancies. Here are several ways, both large and small, that you might go about improving things. Don't feel you have to tackle them all right now. You probably already feel that just one more straw added to your load would be too many. Why not start small? Work on one aspect of your practice — some aspect that seems almost manageable. Remember: The worse things are, the more value there is in making them even a little better.
The greater the market pressure on your practice, the more important practice improvement becomes.
You need to know your practice at least well enough to know whether it is well managed.
The watchword is efficiency. Make sure that systems work smoothly and that you are making optimal use of facilities, staff time — and your time.
As you will see, these recommendations cover a lot of ground — far too much to allow us to go into any of them in depth here. These are directions you might want to head rather than road maps. But maps are available in the literature, and we hope having this broad view will help you prioritize your efforts. [ FPM has published a number of articles offering further help along the lines indicated by the author. See “Selected FPM articles on practice improvement.”
1. Learn to manage. You don't need to become a practice manager, but you need to know your practice well. Learn to read reports and understand data. Allocate time to educating yourself. Talk with your practice manager, your accountant or other consultants.
2. Focus physician time on patient care. To maximize their value to the practice, physicians and other providers should spend at least 37 hours per week on direct patient care. In a group practice, there are better opportunities to realize this goal, with distribution of efforts, but don't give up on it as a solo physician either.
3. Delegate, delegate, delegate. Don't perform tasks that don't require an MD. Ask yourself, “Would I pay another physician to do this task?” Examine your activities frequently, and get staff input about ways to do them more efficiently. Delegate as many administrative tasks as possible without impairing your understanding of how the practice runs. If you're in a small group, and your practice manager or administrator isn't equipped to accept extensive delegation, help him or her develop the needed skills.
4. Improve patient flow. Regardless of the patient mix, the goal is to have an efficient schedule. Focus on providing appropriate care to as large a community of patients as possible. If you feel overloaded seeing a patient every 20 minutes, the process needs reform. Most family physicians can average four visits per hour, when those visits are appropriately scheduled. Avoid schedule gaps, and stay on schedule.
5. Dictate progress notes in the exam room. This takes time getting used to, and it may not always be appropriate. But dictating notes in front of the patient saves time, improves communication, gives the patient a good summary of the visit, helps with coding, and gives you more legible notes without the need to invest dictation time outside the visit.
6. Enhance communication with handouts. You can reduce the number of unnecessary phone calls for simple questions by using brochures and handouts. These can focus on both clinical topics and information about your practice. Using handouts about patients' conditions or treatments can also help focus the visit so that important information is appropriately communicated.
7. Use a good scheduling system. Many practices assign a relatively low-paid employee to schedule appointments manually. Yet the schedule has an enormous impact on productivity and efficiency. Dedicate resources to developing a good scheduling system, hire a top-notch person to run it and ensure that the entire staff understands it. This is especially important for solo practices that are growing into groups. Good scheduling can increase patient flow by two or more patients per day, which is net income to the practice. If you use a manual system, consider computerizing it. Your billing system may have a scheduling module that is adequate for solo and small-group practices. You can buy a more sophisticated system, but don't upgrade until you have established scheduling guidelines and policies.
8. Confirm appointments. This is labor intensive in solo and small-group practices. But even if you don't have the staff to do it for all appointments, you can make it work for you on selected appointments — perhaps those requiring large time blocks, or new-patient appointments. Remember, no-shows are costly. They don't give you 15 “free” minutes to sort through mail or catch up on reading. Instead, they create idle time and waste resources.
9. Schedule by grouping like activities. Doing like tasks together is more efficient. Vaccination clinics are an example. The office can handle 15 patients an hour per provider if they are prescreened as flu-vaccine visits. The patients expect a quick visit, and you're meeting their needs.
10. Build and rely on a budget. A serious effort to build a budget is a good learning experience, and it offers an opportunity to measure performance and progress by analyzing variances during the year. Review published data to help establish budget goals, but remember that service, regional and market differences make such data only a rough guide. After a couple of years, you will have a good basis for a sophisticated approach to budgeting, and the budget will become a valuable tool.
11. Collect co-payments. Collect them before rendering the service, if that's what it takes. It's easy for patients to slip out after the visit, since they are often in a hurry. Remember, under most managed care contracts, collecting the co-pay is obligatory. And co-pays are a serious source of income — as long as you don't have to go to the expense of billing for them. Make it your goal not to have to bill amounts under $10.
12. Watch those salaries. A common mistake is to control costs by being tight on salaries. To attract and retain good people, you must pay well, but pay should be for skills and performance, not longevity. Be prepared to pay above market value for exceptional staff, but make sure they are exceptional. In some cases, a highly skilled back-office person can increase patient flow and enhance patient communications, thus saving the doctor's time. Be assured of the benefit before you reward it.
13. Establish an incentive system. Make it worth your employees' while to meet ambitious production goals. It helps to make staff feel vested in the outcome. A good incentive system improves teamwork, outcomes and efficiency. And, you can keep it fairly simple. Communicate your expectations, provide needed training, establish fair salaries and reward performance.
14. Eliminate overtime. There is no reason to have routine overtime. In fact, it often results from the staff's poor organization or performance — or from a disorganized physician. Examine the reasons for overtime. You might find that it is really for convenience, not necessity, and can be eliminated by reassigning duties. Don't get to the point where employees expect overtime as part of their regular compensation.
15. Use midlevel providers wisely. Expanding provider staff by employing a nurse practitioner or physician assistant can be financially beneficial in group situations, but the decision is not a slam dunk. In markets where physicians are in oversupply, the economics may not pass the test. Do a careful assessment, including financial projections.
16. Make full use of facilities. Managing the work load and provider schedule can significantly reduce facility cost as a percentage of collections. Yet too often we see groups with minimal coverage on Wednesdays while the staff and facilities are taxed on the other days. Develop an efficient office schedule, and spread out days off. This may mean expanding your daily office hours, which can also be favorable for patients and providers.
17. Use a staffing strategy. Spot excess staff capacity, and grow volume to absorb it. Routinely analyze work allocation and work flow. Make sure that your processes continue to make sense. Make sure each staff member has an appropriate mix of skills to manage his or her responsibilities and relieve providers of work.
18. Be prudent when hiring. Troublesome staffers are easier to find than to get rid of. A problem staff person increases stress, work load and cost, while increasing your risk of a wrongful termination action. Establish skill requirements and expectations before hiring, and ensure that an appropriate hiring process is followed. To help ensure that you hire the right person, measure candidates' skills; objective tests can provide valuable information. Communicate expectations to each new hire and hold him or her accountable.
19. Make sure your systems and procedures work well. Eliminate redundant, non-contributory functions. Get professional help if necessary to identify them, but be careful. Many practice management consultants are process-oriented and don't focus enough on outcome. Using forms for histories, physicals and progress notes should reduce documentation time. Use check-off forms where practical to avoid writing — for instance a well-designed prescription form for your 15 most frequently prescribed medications, if that makes sense for your practice.
20. Critically evaluate new services and equipment. Don't start a new service or buy a major equipment item without a cost-benefit analysis. You'll need to make assumptions about anticipated volume and the cost of delivering the service, but don't shy away from the work. These investments can produce poor results and can occasion disputes among the practice owners, so make sure you know what you are getting into before you make the leap.
21. Be cautious with small payer groups. Some health plans and IPAs may not be adequately capitalized, and their administrative burden is often heavy. If they only have a few patients for you, make them convince you that the contract is worth the trouble —and don't be easily convinced. We often find practices with dozens of contracts producing little volume but bringing with them the same credentialing hassles and other administrative chores as big contracts.
22. Form a group. Or, if you don't want to form one, join one. A well-organized and well-managed group provides the greatest probability of effective management. A well-managed group will produce higher physician incomes for the same amount of business. Expenses may increase, but resource utilization should improve. An efficient group should have at least six or seven physicians or have the potential to grow to that size in the near term. A group of six or seven can afford better infrastructure, technology and facilities, and it can offer increased leverage in negotiating with health plans. Some of the savings come from consolidation of practice sites, which also helps the group provide office hours in keeping with community expectations. Groups without walls tend to be poorly conceived and generally produce disappointing results. If you can't bring yourself to consolidate into a true group, you might just as well stay solo.
The bottom line
Chances are good that your practice expenses are higher than they need to be and your revenues lower than they could be. The potential might be there for as much as a 20-percent increase in net income. Taking action can enhance the bottom line, and that becomes increasingly important as managed care penetrates your market. If you manage your resources effectively, you will be better positioned to manage risks as risk-sharing opportunities come up. Knowing your costs, taking action to improve your effectiveness and making the best use of your staff will make your practice more rewarding — and not just economically. But economically, it will help you generate a better bottom line and make you more attractive to newer patients and health plans.
Certainly, some of the ideas we have advanced here won't be practicable in some settings. But if you intend to practice for more than three to five more years, we strongly recommend that you take a hard look at the market and what will be required to sustain financial viability.
Change will occur in the health care marketplace whether you take the initiative or not, but taking the initiative to position your practice pays dividends. We believe that the best practice organizations are physician-driven. If you agree, we urge you to make changes in anticipation of the evolving market, not in reaction. Do it and you will be rewarded.