This document provides 10 ways for physicians to ensure optimal management of their medical practice. It discusses the importance of: 1) Billing, collecting, and managing accounts receivable efficiently by billing daily, using electronic filing, and auditing claims. 2) Proactively managing relationships with insurance payers by organizing contracts, monitoring payer performance, and negotiating renewals in advance. 3) Investing in staff by providing training, clear job descriptions, and collaboration to improve performance and patient experience.

1. Practice Management
10 Ways to Ensure Optimal
Management of Your Practice
By Rick E. Weymier, MBA, FACMPE
more than 48 hours between the time the patient is seen
and the claim is submitted to the insurance carrier.
Physicians today face significant challenges in attempt-
Additionally, the practice should aggressively collect
ing to run a successful practice. Pressures come from
patient balances at the time of service.
lower reimbursement, staffing shortages and turnover,
Practices that perform at a high level tend to collect
difficult receivables management, increasing expenses,
something from the patient 80 percent to 90 percent of
more intrusive government regulation, cost of main-
the time and virtually 100 percent for copayments.
taining up-to-date information systems and the advent
Implement procedures so that you collect 100 percent of
of increasing consumerism.
payments from payers within 45 days and pursue collec-
Physicians are especially feeling the impact of the
tion efforts for patient balances within 60 days.
cost of running a practice on their ability to generate an
acceptable level of operating margin. According to
Medical Group Management Association survey results,
the median operating cost in a multispecialty practice was
$154,884 per physician in 1986.
In 2001, this increased to $314,808. Had medical 2. Proactively manage
costs increased at the rate of inflation, the cost in 2001
payer relationships
would have been $249,708 per physician.
Make sure all of your payer
In 1965, a multispecialty practice had 2.85 staff mem-
contracts are filed, accessi-
bers per physician. By 2001, this increased to 5.19.
ble and organized. Go
During the same period, practice overhead increased
through each of your payer contracts and create a grid
from 44.34 percent to 63.60 percent.
that summarizes the key components. Post copies of the
According to Regina Herlinger, Harvard Business
grid at the front desk and other areas throughout the
School and author of Market Driven Healthcare, “An
practice to be used as a reference in answering patient
earthquake is transforming our health care system. As it
questions and keeping the staff informed of major con-
rumbles, a new landscape is emerging. If you can’t sense
tract terms.
it, wake up—this quake is for real. It is caused by primal
There is a wealth of information in the practice’s
forces—powerful changes in socio-demographic charac-
information system. Take the time to evaluate each
teristics, medical technology and organization structures.”
payer’s performance and be prepared to show documen-
What is a physician to do?
tation of poor performance at the time of contract negoti-
In spite of the challenges facing the physician, there
ations. Information that is readily available includes time
continue to be many successful practices that focus on
between filing and date of service, payer mix, claims
their customers (payers, employers & patients), are disci-
denials (timely filing, authorization), requests for addition-
plined in their approach to operating their business and
al information, average time for payer to pay claim and
are acutely aware of all of the financial and operational
coding and/or fee changes.
statistics.
And finally, meet with your major payers at least
Let’s look at 10 ways that a practice can operate at
quarterly and begin the negotiation process three to four
an optimal level.
months before the renewal date. Do your homework, and
by providing performance documentation, you will be in
1. Billing, collections & accounts receivable a better negotiating position.
The key to successful performance in this area is to bill
every day, take advantage of electronic filing and audit-
ing and do it right the first time. There should be no
56 SEPTEMBER•OCTOBER 2003 THE PHYSICIAN EXECUTIVE

2. staff to maintain a high skill level.
The practice should provide
each physician with a coding profile
on a monthly basis comparing cod-
ing performance to industry aver-
ages and peers within the practice.
Physicians should meet on a month-
ly basis to review charts and discuss
3. Invest in your staff coding options based on actual 6. Reliability
Staffing expense generally con- patient cases.
sumes between 20 percent and 30 To ensure quicker and more Providing a safe and secure
percent of all operating costs of a accurate claims payment, many range of health care services is
physician practice. Your staff has a practices proactively review coding absolutely critical in today’s envi-
major impact on how your patients prior to submitting claims. ronment of increased scrutiny and
view the practice and on how well accelerating cost of malpractice
normal everyday tasks are performed. insurance. Physicians should take
According to MGMA survey the time to profile their patient base
results, better performing practices and compare how they are each
have more staff and higher operat- taking care of patients in the major
ing costs and better performers get disease and surgical categories.
a higher return on their human Consensus amongst the physi-
resources. For minimal costs of as cians in a group on how to manage
low as $200 per employee per year, their patient population will con-
practices can find many local and tribute to a more consistent and
regional educational opportunities safer patient environment.
that will provide a multiple return 5. Access Practices should require partici-
on this small investment. pation in risk management pro-
The health care industry is grams, discuss the introduction of
Every position must have a becoming more consumer-driven and
detailed job description that not new technology, track each physi-
many patients are beginning to expect cian’s continuing education focus,
only clearly outlines specific goals physician practices to mirror the serv-
and objectives, but also encourages be able to document patient out-
ice standards of other industries. comes and ensure that all patients’
collaboration with other staff mem- As the financial responsibility of
bers. Practices of all sizes should preventive medicine requirements
paying for health care services shifts are met and documented. It is not
discuss performance with staff on a to the patients, they will become
monthly basis and have formal enough to wait for illnesses to
more demanding and evaluate the occur, as physician practices will be
annual evaluations. value they receive based on the
Regular communication and expected to anticipate patient needs
cost. The days of the simple $10 in the future.
involving your staff in decision copayment are going by the way-
making will yield substantially more side. Patients will expect to have
favorable results than operating in better access to their provider of
a dictatorial manner. Use mistakes choice, not have to wait a long time
as learning experiences and let for an appointment and be offered
them have fun doing their jobs. more flexibility in office hours.
The practice should look internal-
4. Coding ly to determine if its operating proce-
dures are hindering or helping patient
In my experience profiling
access. Areas to evaluate include the
physician practices, I found that a 7. Patient interaction
scheduling structure, triage, telephone
majority of physicians tend to under-
access, patient-to-provider continuity There is a direct correlation
code, resulting in lost opportunity of
and hours of operation that match between patient satisfaction and
10 percent to 15 percent of net rev-
patient preference. how the patient perceives the quali-
enues. Some of this is due to conser-
vatism and the rest is due to poor or ty of medicine that is delivered in
untimely documentation practices. the health care setting. Practices that
Each practice should have at appreciate their patient by project-
least one certified coder and pro- ing respect, being attentive to their
vide adequate funds for training needs and valuing their time will
and updates to allow the coding
THE PHYSICIAN EXECUTIVE SEPTEMBER•OCTOBER 2003 57

3. engender a high degree of patient
loyalty and compliance with treat-
ment plans.
In addition to focusing on satis-
fying the patient, the practice
should operate smoothly with mem-
bers of the medical group practice
by communicating freely and show-
ing respect for each other. 9. Information systems 10. Compliance & risk
Each member of the team has a
role and the ability to contribute in a Physician practices should care- management
positive manner or have a negative fully evaluate the functionality of In recent times, most practices
impact on patient perception. Patients their current system to ensure that it focused on the issues related to
have an acute sense of the environ- is being optimally used and that all Health Insurance Portability and
ment and operating like a dysfunc- staff are thoroughly trained on its Accountability Act readiness and
tional family does not contribute to capabilities. implementation. There are numer-
positive patient relationships. Although many groups are ous businesses, consultants and oth-
moving to more advanced informa- ers that developed a wide range of
8. Financial focus tion systems, information contained products to assist practices in com-
in traditional systems is often under- plying with this regulation at an
No matter how small the prac- utilized. Practice management sys- affordable price.
tice, it is essential to prepare an tems contain a plethora of informa- In addition to HIPAA, practices
annual budget with regular and time- tion on patient demographics, cod- need to continue to focus on other
ly monthly financial reports and vari- ing patterns, disease categories, compliance and risk management
ance analyses. Each physician in the payer performance and other finan- issues. An emphasis should be
practice should be acutely aware of cial and operational benchmarks. placed on providing a safe environ-
the numbers and be able to modify Eventually, all practices will be ment for patients and staff, falling
practice performance in the event forced to move to more sophisticat- under the purview of Occupational
that improvement is required. ed electronic functionality. The Safety and Health Administration
Many physician practices focus practice should carefully review regulations and Workers’
extensively on costs. About 80 per- product offerings and take the time Compensation.
cent of the costs in a practice are to visit organizations that have suc- Staff, physicians and other
virtually fixed, so a practice that cessfully converted to the next gen- providers need to maintain their
focuses on optimizing its return on eration of systems. licensures and attend appropriate
its fixed costs by generating addi- A key factor to success is to continuing education courses. It is
tional revenue will be more suc- negotiate vendor performance stan- essential that the practice keep
cessful. A practice needs people, dards with strict measurement criteria, informed and up to date on Medicare
space and supplies to allow for a that include penalties for non-per- fraud and abuse regulations.
high level of patient throughput. formance. As a transition strategy, And finally, hiring practices,
And finally, “cash is king.” practices should look at hand-held infection control, narcotics control
Every member of the practice, devices that can assist the physician and other safety issues need to follow
including clinical staff, should con- in coding, documentation, hospital local, state and federal regulations.
tribute to ensuring maximum collec- census, prescriptions and medical
tions for services rendered. Health information.
care seems to have a tendency to Rick E.Weymier, MBA, FACMPE, is
feel bad about collecting, but every director of clinical consulting and
other business requires payment for physician services at VHA, Inc., a
services rendered and goods sold. nationwide network of community-
owned health care organizations and
physicians. He is based in Irving,
Texas and can be reached at 972-
830-0298 or at rweymier@vha.com.
58 SEPTEMBER•OCTOBER 2003 THE PHYSICIAN EXECUTIVE