Look inside a patient’s chart and you’ll find a problem list, maybe one like this: Allergic rhinitis. Migraine headaches. Essential hypertension.

Look inside the average physician’s practice and you’ll find problems, if not an actual list: Revenue-itis. Waiting room headaches. Staff tension.

But most problems have solutions, or at least a way to manage the symptoms, and that’s true for practices as well as patients. With that in mind, we’ve assembled a list of some of the most common business challenges that you face and then asked a panel of experts to prescribe solutions. Their brief recommendations are meant as starting points to improve your operations, not a soup-to-nuts solution to every problem.

You’re bound to recognize a few of your own issues in the following questions and answers. Hang in there.

Finance

I’m seeing more patients than ever, but earning less than I did three years ago. What am I doing wrong?

Ah, the gerbil-on-the-wheel problem: You keep going faster but you never seem to get anywhere. Many of you blame third-party payers — and, indeed, they’ve earned some of your wrath, says practice management consultant Greg Mertz, with meager raises that haven’t kept up with escalating business costs. Your first response is to develop a better work flow that will allow you to see more patients in less time while still practicing good medicine.

“Have you adopted technology to perform tasks that people have always done?” asks Mertz. Automated appointment reminders keep employees off the phone. Likewise, sophisticated practice-management systems can check a patient’s insurance eligibility and benefits without someone having to call a payer or visit its Web site.

Also, consider eliminating patient services that you’re currently providing for free. For example, says Mertz, “Employees will make appointments on behalf of patients for specialty consults and testing. Educate patients to take responsibility for their own care.”

All this streamlining may help you see a few more patients per day, boosting revenue. More importantly, says Mertz, it may allow you to trim your staff headcount, or else free up employees to concentrate on revenue-critical tasks, such as contacting insurers about slow pay.

OK, I get that I need to be more efficient. Still, I deserve better pay from insurers. Is there anything I can do to get it?

Yes, you sometimes can wrangle higher fees, says Mertz, and there’s never any harm in requesting higher fees at contract-renewal. But this works best only if you can convince an insurer that it really, really needs you in its network.

“If you’re one of 12 family physicians in town, will an insurer worry about losing you?” asks Mertz. “But let’s say you’re the only family doc who’s open until 8 p.m. Because of the extended hours, your patients visit the ER less, reducing the insurer’s costs. Now you’re valuable.” Physicians also can separate themselves from the pack — and win better reimbursements — by proving with hard data that they’re delivering superior care, whether it’s a higher rate of mammograms for females aged 40 through 69 or a lower complication rate for knee replacements.

True, a giant insurer may brush aside your request for more money, but don’t assume the worst, says Mertz. “A two-doctor practice in rural Virginia was getting sub-Medicare fees from a commercial insurer. They asked for a raise, and without blinking an eye, the insurer said, ‘We’ll give you 110 percent of Medicare.’ If they hadn’t asked, they wouldn’t have gotten the new rate.” Be the squeaky wheel.

We could live with our payment rate if our payers actually paid us at all. Instead, we’re getting killed by denials. How do we fix chronic denials?

First, uncover the source of the problem says consultant Deborah Walker Keegan, coauthor of “The Physician Billing Process: Avoiding Potholes in the Road to Getting Paid.” She recommends keeping a “rejection log” of a week’s worth of denials for each payer, filling in key data points such as the physician, the patient number, the procedure code, the location where the service was provided, the charge, and, most importantly, the reason for the denial cited on the explanation of benefits.

This exercise will identify the major reasons why claims get canned, and who’s responsible for them. Misspelled names, lack of insurance eligibility, or a missing referral usually points to faulty fact-finding at a chaotic front desk, says Keegan. “Practices traditionally have gathered demographic and insurance information when the patient’s in the office, but they should do it before the visit to ensure accuracy.” Denials based on incorrect procedure and diagnostic codes, in contrast, lead back to physicians who need to be better educated about capturing charges.

While it’s best to do a job right the first time, Keegan suggests using claims-scrubbing software — sometimes built into a practice-management system — to detect and correct errors before claims go out the door.

When claims do get approved, some insurers take months to cut a check. How can we speed them up?

The best defense against slow-payers is dogged follow-up, says Keegan. First, generate an “open claim report” with your practice-management system — most systems can do this — to identify those that haven’t been paid or denied yet. Then contact the insurer. Some practices routinely wait 45 days before they prod a tardy payer, but Keegan recommends contacting the payer shortly after its normal turn-around time for reimbursement has passed on a claim. “If a health plan usually pays you within 25 days, call it on day 26.”

The conversation with the insurer should follow a simple script, says Keegan. “Did you receive this claim? If the answer is no, resubmit it. If the claim was received, ask when the check was cut. If a check wasn’t cut, find out what information the insurer needs to process the claim.”

If need be, remind mulish insurers of your state’s prompt-pay law and its penalties, and your readiness to file a complaint with insurance regulators. Practice-management consultant Elizabeth Woodcock (also a coauthor of “The Physician Billing Process”) has developed a state-by-state list of prompt-pay laws:

My overhead is high, and my efforts to control it haven’t worked. What can I do?

You can’t expect to control costs if you never ask for price breaks — or demand them. Consider office rent. In a soft real-estate market, you might be able to negotiate a dollar off your landlord’s rate per square foot by extending the lease for three years. If the landlord doesn’t budge, turn to “pass-through” expenses such as cleaning and lawn care that are divided up among tenants, says Mertz. “Sometimes there’s no limit on pass-through expenses. Why not ask the landlord to cap increases at 3 percent a year?”

The cost of supplies like exam-table paper and syringes often creeps up over time because an office manager gets chummy with an ingratiating salesperson and “doesn’t want to beat on her friend for a lower price,” says Mertz. Motivate her to haggle by offering her a bonus of 5 percent of whatever she saves, says Mertz. And haggle annually, comparing your vendors’ prices to what competitors advertise.

Yet another approach toward finding the best deals on supplies is group purchasing, sometimes available through your medical society or a local hospital, notes Mertz.

Operations

I’m so buried under the crush of work that I rarely get home for supper anymore. I miss my family.

Falling behind on appointments is one sure way to work late. Another is spending every night playing catch-up on tasks like clinical documentation and phone calls, says practice management consultant Gray Tuttle in Lansing, Mich.

To avoid facing a stack of charts at 5:30 p.m., he suggests documenting each visit as soon as it’s over while the information is fresh in your mind. That’s more efficient than batching charts at day’s end and trying to recall what the 9 a.m. patient said about her gallbladder. Other consultants advocate the “fourth exam room” concept — set aside every fourth appointment slot for charting.

And those sunset phone calls? Too many doctors are ringing patients about negative test results or prescription refills instead of letting a medical assistant do it, says Tuttle. Only make the calls that require a physician’s level of expertise.

Patients often complain about long waits. How can I stay on schedule?

You need to do some investigating to find out exactly what’s clogging up your patient flow, says Tuttle. One common culprit is too few exam rooms: “A primary-care doctor needs at least three.”

Or it may be too few (or poorly trained) medical assistants to room patients, take vital signs, and prep for procedures. A poorly supplied exam room means you’ll be interrupting visits to chase down tongue depressors. Make sure everything you need is in the same place in every exam room.

And schedulers can make you run behind by booking patients into unrealistic appointment slots. “They try to shoehorn a comprehensive new-patient visit that needs 30 minutes into a 20-minute slot,” Tuttle says. The solution? Define three or four standard slots and then give employees written guidelines on what kind of patient is appropriate for each.

Finally, the blame for a restless waiting room may lay with a doctor who doesn’t manage his time well, he adds. “The first patient is scheduled for 8 a.m. and the doctor rolls in at 8:30 a.m.” Not good.

I’ve thought about adding an associate to reduce my workload and increase my earnings, but I worry about losing money on the deal. Any advice?

Yes, you could experience financial pain by hiring another physician, especially if you’re a soloist. You’ll need to subsidize the associate while she ramps up her production. And what if she turns out to be a slowpoke?

An overworked soloist takes less of a risk by hiring a nurse practitioner or physician assistant. “They can do 80 percent of what a physician does, but at half the cost,” says Tuttle. Consequently, they yield a better return on investment, as borne out by data from the Medical Group Management Association. In 2007, physician assistants in primary care received a median $81,052 in compensation and generated $217,584 in collections, while those figures for family physicians who didn’t deliver babies were $173,812 and $363,214, respectively. Think about it this way — two physician assistants cost less than one FP, yet outproduce him.

You can’t add NPs and PAs ad infinitum, especially in states that limit how many you can supervise. But bringing aboard an MD or DO makes more sense, Tuttle says, once you and several midlevels build up your caseload to a high enough level to easily absorb another physician. Another good reason to hire an associate is if you’re looking for someone to eventually buy your practice.

Human relations

How do I hang on to good employees when I can’t afford to pay more? Do I just have to live with high turnover?

Paradoxically, a high-turnover practice can afford to pay its employees more, says practice management consultant Judy Bee.

“What physicians don’t realize is that it costs them between $3,000 and $5,000 every time someone turns over,” says Bee. “There’s a cost to recruiting and training a new employee, not to mention decreased productivity as someone masters a new job. Why not put that money into raises instead?”

So how much money will keep your staff from jumping ship? Depends on what other local practices are paying. But don’t assume that all your employees want is more money. Simply recognizing their good work through verbal praise and inexpensive rewards such as gift cards, has enormous power to help you retain good employees. “People want to be recognized for making a contribution,” says Bee. “A doctor can bestow esteem for free by saying something like, ‘You did a fabulous job with the schedule today; I never thought we’d get through it.’”

I have a staffer whom everyone loves, including patients, and her brownies are to die for. The problem? She’s not very productive, and she makes lots of mistakes. What do I do?

Don’t be so quick to jettison an under performer, advises Bee. “Sometimes a good employee will fail because she’s put in an impossible situation. I see receptionists who are expected to enter patient demographic data into the computer system, but they’re also scanning insurance cards, answering phones, and making appointments. With all these interruptions, is anyone surprised they make data-entry mistakes? Maybe the doctor should assign the data entry to someone else.”

Likewise, talented people stumble when they’ve been poorly trained, and that’s common in physician practices, says Bee. “Veteran employees are too busy to teach new hires the ropes. And they haven’t been trained to train people.”

Finally, physicians sometimes don’t assign the right job to the right person. “A numbers person at the front desk will view patients as a distraction,” says Bee. “Put her in the billing department. And that gregarious person in the billing department who is always getting sidetracked because she’s helping everyone with their problems? She belongs at the front desk.”

All that said, however, there does come a point when you must let someone go for the good of the practice. However charming an employee is, if she continues to do a sub-par job despite your best efforts at training and remediation, you need to let her go. It’s not fair to expect your other employees to carry the underachiever forever just because she’s a favorite.

I have a bully on staff who intimidates everyone, including patients and physicians. Why don’t I just fire her? Because she’s the only one who really understands how to do billing. What do I do?

Tolerating a bully hurts you in the long run by increasing turnover, says Judy Bee. That’s because coworkers won’t tolerate the bully, and they’ll leave for more pleasant pastures. “But good employees are hard to find, so it’s worth the trouble to rehabilitate a bully,” says Bee. If possible.

For starters, tell her how her behavior — sarcastic remarks, profanity, berating coworkers in front of patients — negatively affects the office environment. Use specific examples. “Sometimes people have no idea they’re having that kind of effect on others,” says Bee.

Give the bully a chance to change. “If the bully supervises others, she needs to learn that she can criticize people without wounding them,” says Bee. “There’s training for that.” At the same time, warn the bully that continued fire-breathing puts her job in jeopardy. “Think in terms of three strikes and you’re out,’” says Bee. “This first warning is the first strike.”

Document the conversation and, in particular, the new behavior you want to see. If she makes progress, fine. Otherwise, you’ve laid the groundwork to dismiss her.

Information technology

I’ve been hearing a lot about the new federal stimulus money for buying an EHR. Is this the right time to finally do it?

Given how EHRs can make your practice more efficient, it’s always the right time to buy the technology, says healthcare IT consultant Rosemarie Nelson: “The federal incentives are just icing on the cake.”

Consider the potential for streamlining how you order a lab test and review the results. Filling out a requisition form, receiving the faxed results, pulling the chart, filing the results — all these steps in the paper world run up labor costs. But if you have an EHR that’s connected to the lab’s computer system, you can order a test electronically and review the results on your monitor. In the process, you’ll reduce the administrative costs for this chore by roughly $19, according to a study published in Health Affairs in 2005. Multiply those savings by 20 tests per week over a full year, and you’re talking almost $20,000 worth of efficiency, says Nelson.

E-prescribing is another streamliner. The amount of time that a doctor and his staff spend on the phone with pharmacies on refills, formularies, generic substitutions and the like is worth about $15,000 a year, according to an MGMA study in 2005.

The idea of shopping for an EHR scares me. I’m not very technically savvy, and I’m afraid to spend a fortune on the wrong product. Where do I begin?

“First, nail down what you want your EHR to do,” says Nelson. “Otherwise, you won’t know what features to evaluate. If you want to earn bonuses through a pay-for-performance program or Medicare’s Physician Quality Reporting Initiative, you’ll need to identify a system that can gather patient data — like hemoglobin A1C readings for diabetics — and generate reports. Some EHRs can do this, but some can’t.”

Next, check out the EHR resources of organized medicine, particularly your specialty society, says Nelson. “Many of them have already done the legwork of identifying the top EHRs that support their specialty. Some EHRs catering to OB/GYNs, for example, incorporate the antepartum record from the American College of Obstetricians and Gynecologists.”

Once you’ve focused your search, visit the Web sites of EHR vendors, try out online demos, and visit practices that use the technology, says Nelson. Rankings from companies such as KLAS (www.klasresearch.com) and AC Group (www.acgroup.org) will help you narrow down the list.

Economy

The recession has started to hit us pretty hard, so I’d like to start an ancillary service like bone-density testing to boost revenue. But how can I finance the necessary equipment during this credit crunch? I can’t win.

Your situation isn’t as gloomy as it might appear, says practice management consultant Michael LaPenna. Medical equipment makers invariably offer some kind of leasing option. However, it’s just like leasing a car — you pay more in the long run than if you buy it outright.

The less expensive route is borrowing money from a bank. “Avoid the big chains and go to a local bank that probably isn’t as saddled with toxic assets,” says LaPenna. “It will be more aggressive about lending.”

Banks once required only a doctor’s signature to make a loan, but nowadays, expect to put up collateral such as accounts receivable or bank deposits, says LaPenna. “You shouldn’t have to put up your house, however.”

You’re likely to receive better terms and jump through fewer hoops if you borrow from a bank that’s handling all your banking business — the practice checking account, credit-card processing, a lockbox account for insurance checks, a line of credit, personal checking, the home mortgage. It’s called relationship banking, but what matters most to a gimlet-eyed banker is getting a complete picture of your finances, says LaPenna. “He can see the flow of funds.”

More patients are becoming self-pay due to job losses. It’s always been harder to collect from them than from health plans — and now that people aren’t working, it’s even harder. How do I improve my collections process?

The growing number of uninsured patients — as well as patients with high-deductible plans who are virtual self-payers — makes it even more important to collect what’s owed at the time of service, says Keegan. Simply dunning these patients after the visit lessens your chances of collecting what they owe. A MasterCard bill has a way of trumping a doctor’s bill.

Some vigilant practices, Keegan says, collect twice in the office — a deposit on an anticipated service when the patient checks in and the balance of the charge at check out. Are you still refusing to accept credit cards? It’s cheaper to swipe plastic than it is to mail out three or four paper statements.

But some of my laid-off patients are canceling appointments, or not making them in the first place. That’s not good for their health, or my practice. What can I do?

You can accommodate patients who’ve lost health coverage by letting them make monthly payments, but not for more than three to six months, says Keegan. “You don’t want someone paying $5 a month year after year.” Discounting your fees is another option, but do so only in cases of documented financial hardship, lest third-party payers get the impression that these reduced charges are customary charges, and demand the same deal. Draft a written policy for such hardship discounts and follow it. Otherwise you’ll have staff and physicians making their own individual decisions about who the tough-luck cases are — a nightmare for many reasons.

Steer uninsured patients to state or local programs that can foot the bill for visiting you, adds LaPenna. One example in New York State is Family Health Plus, a public insurance program for adults under 65 who aren’t poor enough to qualify for Medicaid. “Physicians need to know about plans like this in their area and play a social-work role for patients,” says LaPenna.

If hard-luck patients are staying away from your office and jeopardizing their health in the process, send them a postcard stating that they’re overdue for a visit to check on their diabetes, or renew their prescriptions, he says. It’s not only the Hippocratic thing to do, it’s the smart business thing to do.

“Most people who lose their job eventually find work again, and they get back to paying their bills,” says LaPenna. “You want to retain their loyalty.”

Robert Lowes is an award-winning journalist based in St. Louis who has covered the healthcare industry for 21 years. He can be reached via physicianspractice@cmpmedica.com.

Read more articles at PhysiciansPractice.com.

Do you enjoy the daily business of medicine? Not the world of patients and symptoms, but the domain of claims, collections, receipts, and reports, for which there is woefully little training in the medical school curriculum.

If you don’t, you are not alone. Thousands of practices have effectively delegated their entire financial operations to third parties. Should you? Let’s take a look at the pros and cons.

First a quick description. The in-vogue name for these financial third parties is “revenue cycle outsourcers,” also known as billing services. Instead of hiring staff to do your billing, you delegate it to the revenue cycle outsourcing firm who manages the entire operation, including coding and review, electronic claims submissions, collections, and financial reporting. The revenue cycle outsourcer’s fees are based on a percent of collected receipts. The more you make, the more they make.

The pros of outsourcing

What’s the case for revenue cycle outsourcing? Here is what the outsourcers would say:

• Medical billing is complex and best handled by experts. Most offices have to deal with multiple plans and therefore multiple payment schedules, different benefits, and variable rules. Medical billing is also a moving target — plan rules change frequently and even CPT codes are updated annually. It’s hard to keep up. The implications of doing this job poorly are significant. Over-coding (or coding at a higher level than the documentation supports) is a polite term for fraud. Under-coding (or what some docs will call defensive coding) can cost practices millions of dollars in lost reimbursements that they have legitimately earned. There is also the time consuming rework required for claims that are denied because your billing clerk made a mistake on the original claim. A core benefit to outsourcing is that you are dealing with a bank of professionally managed experts who are focused solely on billing. Because billing services are paid on a percentage of collections, they are strongly incentivized to perform well.
• In-house billing is time consuming for physicians and clinical staff. Dealing with insurance companies takes both physician and other clinical staff time. According to a study by Lawrence P. Casalino, MD, PhD, of Weill Cornell Medical College, physicians spend three hours a week or nearly three weeks per year on these activities, while nursing staff spend more than 23 weeks per physician per year. There also appears to be a disproportionate burden of these tasks on the smaller practice. The same study noted physicians in solo or two-physician practices (particularly primary care) spent “significantly more hours interacting with health plans than physicians in practices with 10 or more physicians.” Moving to a billing service won’t eliminate practice interaction with health plans — but it should significantly reduce physician time spent on haggling over unpaid claims.
• Managing internal billing operations is a pain in the neck. The care and feeding of an in-house billing staff is not trivial. In addition to salary and benefits, a billing staff requires oversight to insure that they are performing optimally. They will also be prone to any of the normal unspoken overhead of employees — illness, variable job satisfaction, hiring and firing, and ability to mesh with other staff members.

Now for the cons

So what are the downsides of outsourcing your billing?

• It’s not free. As noted above, revenue cycle outsourcers — quite cleverly — typically bill as a percentage of receipts collected. For high reimbursement specialties such as cardiology, billing services will typically charge in the 4 percent to 5 percent range; for primary care, percentages may bump up to the 8 percent to 10 percent level. The billing service’s fees typically are inclusive and incorporate any claims-clearinghouse fees that you might pay if you were doing it yourself.
• You don’t have total control. Transferring your billing operation to a third party may be uncomfortable for some physicians who revel in the smell of superbills. Some physicians simply prefer to have tighter control over their finances. And while a large number of billing services are local mom and pop operations that allow you to connect in person, increasingly the service is being offered by large corporations serving a nationwide clientele — which makes face time less likely. Do you feel comfortable with delegating your daily financial operations to someone you are likely never to meet in person? If the answer is no, outsourcing may not be a good fit.

Weigh the options

We’ve established the pros and cons. Now, how do you decide? Here are some guidelines:

• Compare hard costs. This is a pretty straightforward exercise; calculate the expense of doing it yourself (salary and overhead of your billing staff, amount of time you are spending on billing, third party fees for claims clearinghouses, billing related supplies such as claim forms) versus the revenue cycle fees. According to the recent survey of the American Academy of Professional Coders, the average salary in 2009 for certified coders was $44,750, which varied depending on location and experience level. Add 20 percent for benefits and overhead and you have a cost of $53,700.
• Compare soft costs and intangibles. This represents elements such as the hassle factor of hiring and managing staff to do your billing versus the loss of daily oversight. You should also assess your overall comfort level and expertise with medical billing. It is hard to be an effective manager of an in-house billing operation if you don’t understand what you are managing. There is also a labor pool issue. Is it difficult to find competent billing staff in your location? You may have a brilliant financial manager now, but if she decided to move on, would you be able to easily replace her?
• Compare effectiveness. This is a little trickier, because it involves making a judgment call regarding your own operation, as well assessing the potential effectiveness of a third party with whom you have not used. In terms of assessing your own operation, here’s simple question: Are you receiving reports on a regular basis? Along with having reports on gross charges, write-offs, bad debt, and refunds, you should know the relative age of your accounts receivable, the average time it takes from patient visit to filed claim, your denial rate for claims, plus checks and balance reports that reconcile payments received with payment entry and daily receipts.

All of these will give some indication of the effectiveness of your billing staff. Armed with this data, you can benchmark your practice against the revenue cycle firm of your choice. They should be able to provide some their performance data on practices like yours. This will allow to you compare effectiveness — and help you make the final decision.

Bruce Kleaveland is president of Kleaveland Consulting, a management consulting firm focused on healthcare IT. He can be reached via physicianspractice@cmpmedica.com.

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