Your SlideShare is downloading. ×
Improving Orthopedic Profitability
Upcoming SlideShare
Loading in...5
×

Thanks for flagging this SlideShare!

Oops! An error has occurred.

×
Saving this for later? Get the SlideShare app to save on your phone or tablet. Read anywhere, anytime – even offline.
Text the download link to your phone
Standard text messaging rates apply

Improving Orthopedic Profitability

684

Published on

Improving Orthopedic Profitability as presented by Dr. Tom Grogran.

Improving Orthopedic Profitability as presented by Dr. Tom Grogran.

Published in: Health & Medicine
0 Comments
0 Likes
Statistics
Notes
  • Be the first to comment

  • Be the first to like this

No Downloads
Views
Total Views
684
On Slideshare
0
From Embeds
0
Number of Embeds
1
Actions
Shares
0
Downloads
24
Comments
0
Likes
0
Embeds 0
No embeds

Report content
Flagged as inappropriate Flag as inappropriate
Flag as inappropriate

Select your reason for flagging this presentation as inappropriate.

Cancel
No notes for slide

Transcript

  • 1. Improving Orthopedic Profitability
  • 2. Profit Not a four letter word
  • 3. General Rules
    • Two approaches to increasing profit
      • Enhance revenue
      • Cut costs
    • Time / work is limited
      • Can only increase own work so much
    • You can only control what you can control
      • Contracts are rarely negotiable
        • Contract leverage is rare
      • Cost containment is difficult
  • 4. Changing Times
    • Employer Sponsored Healthcare (ESHC) is evolving
      • Covering 80.3% of non-elderly adults
      • Down from 85.3% in 1998
    • Total healthcare spending is in excess of $1.8 trillion dollars
    • Within ESHC there is a shift toward the employee paying for more in terms of premiums, deductibles and co-pays
  • 5. Changing Times
    • Insurers continue to try to limit their medical loss ratio
      • Restrictive contracting with “proprietary” fee schedules make contracting difficult to manage
      • ASO contracts are growing
    • Medicare continues to look to limit surgeons fees – joints, hip fractures
    • Medicaid (Medi-Cal) is growing in numbers especially through the SCHIP program
    • Worker’s Comp reforms are tough to manage
      • Surgery Centers took the biggest hit
  • 6. Changing times
    • Patients are being asked to pay more
      • Deductibles, co-pays, exclusions
      • More first dollar costs are being put on to patients
    • Practices need to be prepared to handle these changes
      • Patient Centric care is coming
  • 7. Understanding Our Craft
    • June 2006 Orthopedic Manpower Report
        • 24,015 AAOS members – 13,679 responded
        • 75% of members are fellows
      • Workforce is aging – average 49.8 years
        • 15% under age 40, 5% > age 70
      • Workforce increased by 500 surgeons, but overall density declined
        • California added 113 surgeons
      • Generalist 29%, specialist 39%, mixed 32%
      • Private practice 81%
        • 31% solo practice, 60% group, 9% multi-specialty
        • 42% have academic appointment (74% non-comp)
        • 85% of academicians are specialists
          • 8% of all orthopedists are academicians
  • 8. Understanding Our Craft
    • June 2006 Orthopedic Manpower Report
      • Fellowships – 28% sports medicine
        • Hand 20%, Spine 14%
      • 8% hand CAQ, but 22% list as specialty
      • 1 in 10 received research funding in past 5 years
      • Hours worked
        • Academic 69, HMO 53.9
          • Solo 61.5, group 60.6
        • 2 in 3 take trauma call
          • Only 25% receive compensation
        • Income proportional to hours except in academics
  • 9. Understanding Our Craft
    • June 2006 Orthopedic Manpower Report
      • Payer mix Managed care 32% , Medicare/ Medicaid 33%, Work comp 12%, Private pay 16%, 4% pro-bono
      • Average number of cases per month – 32
        • Arthroscopy of the knee still most common
        • 245 surgeon reported doing at least 4 spinal disc replacements per month
  • 10. Understanding Our Craft
    • June 2006 Orthopedic Manpower report
      • Retirement
        • 10% of respondents retired
        • Mean age 59
        • 12% retired before age 65, 46% retired after age 70
      • 8% expect to retire within 2 years
        • 13% of generalists
  • 11. Benchmarking
    • Data is key in making practice management decisions
      • Need information from outside the practice to decide where to focus energy
      • Not following other examples
        • Rather compare outcomes
          • For example – x-ray revenue / costs: Ankle series
          • Cost fully loaded $6 per film = $18
          • Net revenue $72 per series
          • Profit $54
  • 12. Evaluate New Technologies
    • Cost / Benefit approach to capital investment
      • Need to justify investment – return on investment
    • PACS system
      • Digital based – easy approach to EMR
      • Cost: $50,000 plus $2,000 per quarter or $666 per month
        • Current x-ray - $6 per film
          • Average 80 per day – 1,600 per month = $9,600
          • Tech cost $4,000 per month - so real cost $5,600 per month
        • Save $4,934 per month or $59,208 per year
  • 13. Areas of Financial Impact
    • Revenue Enhancement
    • Contracting, Collections, Credit cards
    • Imaging, Surgery Center, PT
    • Cost Control
    • Rent, Personnel, Soft goods, Insurance
    • Wealth Preservation
    • Pension, Tax strategy, Retirement planning
  • 14. Key: Practice Specific Data
    • Financial variables must be measured
      • Practice overhead
      • How many employees
        • Benefits, 401K, Pension, PTO
      • Fully loaded cost per office visit
      • X-rays costs including cost per click
      • Collections percentage – payer specific
        • Credit card utilization
      • Contract revenue per work RVU
      • Insurance
        • Medical Malpractice, Office liability, Worker’s comp
      • Soft goods, disposables, braces
  • 15. Key: Practice specific Data
    • Measure work RVUs
    • Understand your revenue per wRVU, cost per wRVU
      • Compare your data to other similar practices
      • Understand what you need to focus on
    • Do not copy other practice styles, refine your practice by comparing data metrics with other similar practices
  • 16. Work RVU Data
    • National Data - 2006
      • By specialty : # Docs Median wRVU
        • Spine 77 9,716
        • Pediatrics 60 7,533
        • Sports 81 8,299
        • Foot / Ankle 42 7,649
        • General 37 5,910
        • Hand 66 8,571
        • Trauma 73 7,891
        • Shoulder 23 8,608
        • Joints 69 8,480
  • 17. Focus on Marketing
    • Focus on what you can control
      • Determine what area of practice you want to grow or expand
      • Identify your marketing target
      • Goal oriented approach
    • Measure impact of marketing
      • Number of patients
      • Improved W2
  • 18. Goal
    • The Goal of successful Marketing is to have the ability to increase both practice efficiency and profitability without having to increase the amount of work performed
  • 19. Approach to Marketing
    • Understand your particular type of practice
      • Academic, Group, HMO, Solo
    • Determine what makes money for your practice and what does not
      • Define Profit Centers
    • Focus approach to enhance those profit centers
      • Determine target for marketing those profit centers
      • Detail a marketing game plan to enhance profit centers
  • 20. Practice Specific
    • Need to understand type of practice
    • Need to define goals
    • Need a general game plan
    • Execute the game plan
  • 21. Type of Practice
    • Academic
    • Integrated Group Model
    • Large Group Practice
    • Small Group Practice
    • Solo Practice
  • 22. Academic Practice
    • Clinical work, teaching, research
    • Revenue models
      • Salary
      • Salary plus production
      • Private practice with “Dean’s” tax
    • Alternative Revenue
      • University stipend, pension
  • 23. Integrated Group
    • Large Multispecialty
      • Kaiser, Hill Physicians
    • Revenue
      • Salary
      • Salary plus bonus
      • Partnership
    • Alternative Revenue
      • Limited to bonus calculations
  • 24. Large Group Practice
    • Greater than 12 Docs
      • SCOI for example
    • Revenue
      • Partnership based / tiered
      • Production based minus expenses
      • Production minus expenses minus partner “tax”
    • Alternative Revenue
      • Surgery Center, Imaging Center, PT
      • Physician Extenders – Fellows, PA, NP
  • 25. Small Group Practice
    • More than 1 but <12 Docs
      • Most less than 6 Docs
      • Office manager not CEO approach
    • Revenue
      • Production based – may be shared equally
      • Shared expenses
    • Alternative Revenue
      • Surgery Center, Imaging Center, PT
  • 26. Solo Practice
    • 31% of all Orthopedic Surgeons Nationally
    • Revenue
      • Production minus expenses
    • Alternative Revenue
      • Surgery Center, MRI partnership, PT partnership
  • 27. Revenue - Contracts
    • Academic
      • Medicare, Medicaid, HMO, PPO, capitation
    • Integrated
      • HMO, capitation, Medicare, Medicaid, Work comp
    • Large Group
      • Medicare, HMO, PPO, Indemnity, Work comp
    • Small Group
      • Medicare, PPO, Indemnity, Work Comp, Private FFS
    • Solo
      • Private FFS, may or may not contract
  • 28. Marketing Focus
    • Practice Specific
      • Academic
        • Rely upon host institution
        • Develop research ties - consulting
        • All contracts, all comers
      • Integrated group
        • Define subspecialty niche
        • Establish research ties – consulting if possible
  • 29. Marketing Focus
    • Practice Specific
      • Large group
        • Develop “Brand” approach to marketing
        • Surgery Center, PT, Imaging Center
        • Direct mail, E mail, Referring provider letters
      • Small group
        • Individual marketing to patients / providers
        • Surgery Center, Imaging, PT participation
        • Referring provider letters, web site
  • 30. Marketing Focus
    • Practice Specific
      • Solo practice
        • Develop patient to patient network
        • Personal interactive web site
        • Marketing to sub-specialty niche
          • Worker’s Comp
        • Contract only when necessary
  • 31. Conclusions
    • Need to understand where your practice stands
      • Need data to compare practice profile against similar practices
    • Identify areas to improve financial health
      • Fix what you can fix
      • Market to your practice style
  • 32. Thank You

×