Archive for July, 2010
5 Ways to Cut Overhead Without Layoffs
Even with the recession winding down, times — and budgets — are tight. If your practice is strapped and you are considering letting staff go to stay in the black, look first at your nonstaff-related overhead. Staff reductions are hard on office morale and make physicians less efficient. Check out our relatively painless and much less disruptive suggestions for lowering your practice overhead.
1. Shop smarter for supplies: Are you keeping close tabs on your supply costs? Buying bulk office and medical supplies can certainly save you money, so take an organized and forward-looking approach to your stock. Shop around for a better deal, and only buy what you need rather than automatically restocking overflowing supply closets. You may also be able to enter a group purchasing agreement with other practices for volume discounts.
2. Scrutinize service contracts: When was the last time you compared cleaning service rates? What about the other laundry companies in town? Check out the competition for services such as phone and Internet, copier maintenance, and even accounting and bookkeeping. There’s a good chance the rival companies will be willing to negotiate lower rates.
3. Outlaw overtime: The staffer who comes in a few minutes early each day and sticks around late could be costing you big. Overtime costs can add up over the year, especially if you have several employees padding their hours. Set a policy that all overtime must be approved by a supervisor. If the job isn’t getting done in the 40-hour week, you may need to take a look at your practice’s work flow to eliminate the need for overtime.
4. Reduce staff work hours: Rarely a staff favorite, it still beats the heck out of losing one’s job. Even moving from a 40-hour to 35-hour work week can save the practice a bundle, while keeping your work force intact. Consider softening the blow of smaller paychecks by offering employees more flexible scheduling. This also allows you to keep the practice open the same business hours despite the reduction in staff hours.
5. Review facility costs and/or rent out extra space: Are you maximizing your office space? Spend a week or two carefully observing whether there are exam rooms going unused or private physician offices standing empty most of the day. If you find you have space to spare, it may be time to downsize to another location or sublet your unused space to another practice or provider.
Read more articles at PhysiciansPractice.
Five Steps to Growing Your Practice: What Works, What Doesn’t
Introduction
With waiting rooms already overflowing and the promise (or threat) of 30 million formerly uninsured patients lining up for appointments thanks to healthcare reform, marketing to build your practice may seem pointless. Most doctors, especially in primary care, already have too many patients and not enough time or resources.
That attitude is shortsighted, say practice management consultants. “Doctors should be on the lookout for new patients,” says Gray Tuttle, a principal with the Rehmann Healthcare Management Advisors in Lansing, Michigan. “People move. They die. People leave areas that are in economic crisis. So even in a mature busy practice, doctors should look to add a patient or 2 per week to replace those who leave.”
More important than simply attracting new patients is the chance to attract desirable patients. Marketing can help practices attract the best patients, whether defined by ability to pay or the kind of conditions you most want to treat.
“I know of many heavily booked practices but most of the patients are on Medicaid,” says Jeffrey J. Denning with Practice Performance Group in La Jolla, California. “The doctors are barely earning a living. They need to market their practices to attract better-paying patients.”
Where your practice is today may not be where you are tomorrow. “That’s why some marketing is beneficial, if only to help brand your practice so you maintain a good reputation,” says Kenneth T. Hertz, a principal for the Medical Group Management Association Health Care Consulting Group based in Pineville, Louisiana.
Some physicians confuse marketing with advertising and think it unseemly. That’s an assumption that can hurt your practice. Marketing is a broader concept that involves determining what you want your practice to be; who you want to attract, and how to target those people through many methods, of which advertising is only one.
“Advertising is just one tool of marketing,” says Jeffrey Denning. “Advertising is where you pay to control the message. Marketing can sometimes get your message out in an unpaid form.”
Marketing may also include some aspects of patient relations. “It’s how your staff answers the phone, how they are dressed. Is your office clean or cluttered? Do staffers apologize to patients when you’re running late?” says Hertz. “It’s the little things that show how you welcome patients or drive them away.”
Step 1: Find the Strategy That’s Right for You
Before embarking on a practice-building campaign, physicians need to decide what they’re trying to achieve. Do you want more patients? What types? How many more can your practice handle efficiently?
Start with what you know about your current patients. “Check out all the demographics: age, household income, geography, payer mix, services desired,” says Kenneth Hertz. “Then do a gap analysis. What do we want? So if insurance company A pays more and faster than insurer B, how do you get more As? Who are their employers?”
For example, if you know who the employers are, you can target that employer or focus your efforts geographically around the employer’s location. You can try to develop a relationship with the employer and offer to give talks at the company, adjust your hours to promote that you have good access, tell patients of that company to tell their friends and relatives about you.
Sometimes, marketing strategy means turning away patients who don’t help you achieve your goals. “We had an ophthalmologist client who was always overbooked,” says Denning. “But he wasn’t seeing enough patients with the kinds of conditions he really enjoyed working on. We had him train his appointment schedulers on how to spot the patients he wanted and discourage those he didn’t.”
“Saying yes to all patients just clogs the schedule. This can be done tactfully, such as, ‘gee, I’m awfully sorry but the doctor is fully booked up for the next 3 months. Let me give you the number of another physician who can see you earlier.’” You may feel conflicted or uncomfortable about turning down patients because of their insurance or financial status, but many practices find this is the only way they can survive.
Step 2: Practice-Building Activities That Pay Off
Giving informal talks to civic, school, and other local organizations isn’t a new idea, but it’s always been an effective practice-builder. The same applies to volunteering for health screenings and fairs where patients can see you in action.
“Making yourself available to local reporters as a health expert is even better,” says Hertz. “Appearing on the 6 o’clock news as the expert on influenza, poison ivy, whatever, has far greater impact than a paid ad in a newspaper. If you can establish yourself as an authority on a health topic, it adds great credibility.”
Sending out press releases can get your practice known. Major broadcast networks are rarely interested, but local media such as weekly community newspapers and radio stations are receptive to short stories about you adding an associate with particular expertise or hiring nurse practitioners or physician assistants. These news organizations are eager for simple human interest stories, such as an employee who is retiring after 30 years in your practice or how your staffers participate in a charity race, says Hertz. One physician who rode his bike across the country was featured on the front page of his town newspaper.
If your practice offers nutritional counseling or an illness support group, a press release can drive patients to you. “Educational stories and heart-warming anecdotes about patients do well,” says Susan Raef, of WordPower Communications in Chicago. Be careful about patient privacy; always get signed permission to use any patient’s name publicly. “You can send them out on PRWeb, or PRNewswire and even have them go to a bilingual market. With some outlets, you can get feedback statistics in real time of how many people are getting your message. We did one for a plastic surgeon a few years ago about smart liposuction tips. We’re still getting inquiries from that release.”
Writing a column on a health issue for a local newspaper also is an effective way to reach new patients.
Make sure you let everyone know about your practice strengths. For example, in primary care, one area to promote is availability. How easy or difficult it is for patients to get a quick appointment can mean the difference between a successful practice and one that is leaking patients.
“Urgent care centers do an incredible amount of advertising, and that’s direct competition to primary care,” says Gray Tuttle. “Letting it be known that patients can get in to see you without much delay is important.”
The way you describe your availability is crucial. “If I put up a sign, or take out an ad that says ‘no appointment necessary,’ it sounds a bit like a barber shop and the patient may think I’m not a very good doctor,” says Hertz. “But if the message says ‘same-day appointments available,’ it has a more professional tone.”
Step 3: Word of Mouth Is Powerful
“The best thing any practice can do is to exceed a patient’s expectations,” says Hertz. “There is nothing more powerful than a patient who is impressed by the care she received and tells her friends about it.”
A personal touch impresses patients. Having the physician call the patient after surgery or a severe illness to inquire about how he or she is feeling builds tremendous rapport.
Encouraging referrals from satisfied patients should be part of the practice routine. Simply asking them to tell friends and family that you’re expanding your practice and would welcome new patients is effective. One Michigan family practice has a sign that says, “The highest compliment our patients can give us is the referral of their friends and family. Thank you for your trust.”
If a patient refers a friend or relative to you, it’s important to promptly thank that patient with a handwritten note, says Jeffrey Denning. “Thanks so much for referring Ken as a patient and for having confidence in our practice. If there is any way we can be of assistance to you, please don’t hesitate to call.”
Ask every new patient how he or she learned of the practice. Registration forms can ask, “How did you hear about us?” or “Who can we thank for this referral?” If the answers are nonspecific such “a friend” or “I saw your name in the newspaper,” a staff member should follow up to get more details.
Step 4: Pay Key Attention to Referral Sources
Practices that depend on referrals need to keep track of which physicians are sending them patients — and which ones have stopped.
“With computerized billing systems, it’s easy to identify the sources of your referrals,” says Gray Tuttle. “Look for trends, especially any reduction in the volume of referrals. Are big primary practices absent from the list? Ask yourself why. Ask them why. Often, the issue is how long the patient has to wait before he or she can be seen.”
Specialists used to bump into their referral sources at the hospital, but with the advent of so many hospitalists, that’s less likely. Physicians may see each other at social functions or medical society events. “That can trigger a follow-up phone call,” says Tuttle. “You might say, ‘I enjoyed seeing you again at the benefit last night. Can I talk to you about referrals? I’ve noticed they’ve declined lately. Is there anything we can do to change that?’”
Sending out a survey of referral sources is a great reminder about your practice and a subtle message that you’re looking for more work. You can also learn of deficiencies in your practice that stop primary care doctors from referring to you, he says. Even if your practice is busy, you can let referring doctors know that you can always squeeze in a patient if they let you know about the person.
Kenneth Hertz recalls a cardiology practice that was concerned because referrals had dropped off. “I asked when was the last time they’d spoken to the other doctors. They said they hadn’t in years because they were busy enough and didn’t see the need to. So I encouraged the cardiologists to take their referral sources to lunch every few months,” he said. “They learned things, such as their nurse almost always said they were unavailable to talk on the phone, or that reports didn’t get back to the other doctors in a timely fashion. Then they were able to fix those problems.”
When sending out a report to the referring doctor, ask how he or she wants to receive the information, says Gray Tuttle. “Sending voluminous reports [the physician] doesn’t want isn’t helpful. Asking if [the physician would] like to receive the information via fax, email, snail mail, or phone shows respect for the doctor’s time.”
In addition to the report, send a quick handwritten thank you note as well, says Denning. “Little things make an impression.”
Step 5: What Doesn’t Work
Some marketing methods have outlived their usefulness and may be counterproductive, say the consultants we interviewed.
If you send emails to patients, always ask for permission before adding them to an email list, says Hertz. Otherwise, they could find it intrusive or consider it spam.
Marketing tricks like raffles, giveaways, and free first visits aren’t seen as professional. “Novelties like refrigerator magnets, mugs, and pens are too common to be effective and I don’t think they’re dignified enough for medical practices,” says Jeffrey Denning. “Image is important. Dentists may have a happy tooth at their reception area, but physicians don’t want to cheapen their product that way.”
Lavish open houses sponsored by specialists to attract referral sources “have served their day in the past but aren’t effective anymore,” says Gray Tuttle. “They just don’t drive a lot of business.”
Every consultant we spoke with said a professional Website is practically standard for any medical practice these days. Medscape will discuss Websites, along with whether it pays to advertise, in our next installment.
Read more articles at Medscape.com.
Why the Medicare Fee Schedule and RVUs Matter to Employed Family Physicians
When Medicare payments are cut, everybody loses, not just self-employed physicians. As I write this, the 2010 Medicare physician fee schedule is in stable condition, but the long-term prognosis is uncertain.1 This is of keen concern to many family physicians. However, the prevailing sentiment among physicians who are employed by hospitals, health systems and large medical groups seems to be one of frustration with Congress but general lack of interest. There is an apparent disconnect between the potential 21-percent reduction in Medicare fees and their compensation, which is usually based on a guaranteed contract tied to relative value units (RVUs). The reality is that what happens to the Medicare fee schedule and the RVUs on which it is based does have an impact on employed family physicians.
Impact of Medicare fees
A change in Medicare fees may not directly impact employed family physicians’ income, at least for the term of their guaranteed contracts. But what happens to those fees will have a direct impact on these physicians’ employers, who bill Medicare for their services, and ultimately on the physicians themselves. For instance, if Medicare fees decreased 21 percent, a family physician’s employer would face a potentially significant decrease in revenue, depending on the percent of their business that comes from Medicare and the extent to which private payers follow suit, as they often do. These employers, whether for-profit or not-for-profit, must also decrease costs to maintain financial viability.
This is where employed family physicians start to feel the cuts. For example, there may be fewer ancillary staff to support the physicians or fewer physician colleagues with whom to share the workload. And when these employed physicians’ contracts come up for renewal, there may be a more direct impact, as the employer must determine whether to renew their contracts and at what compensation level.
Impact of RVUs
Many employed family physicians have contracts that measure productivity in terms of RVUs. The advantage of using RVUs is that they are not affected by the limitations associated with measuring charges or collections. Two physicians providing the same service will generate the same RVUs, regardless of the patients’ insurance or the physicians’ respective charge schedules. RVUs also reflect the fact that not all encounters or hours spent in patient care are the same. An office visit for treating tinea pedis with topical therapy would generate different RVUs than an office visit evaluating and managing a patient’s complaint of chest pain, assuming the visits reflected different CPT codes.
That said, RVUs are not a perfect measure of physician productivity. Although the medical profession has input into the RVUs, the Centers for Medicare & Medicaid Services (CMS), the federal agency that administers the Medicare program, ultimately decides what the RVUs for a given CPT code will be. Thus, universal consensus does not exist for all of the work RVUs for all of the CPT codes that make up the resource-based relative value scale (RBRVS, the basis for the Medicare fee schedule). Another limitation is that RVUs depend on appropriate CPT coding, so employed physicians who don’t code correctly (perhaps because they think it doesn’t matter in their situation) may be paid based on a false sense of their productivity.
How employed physicians’ contracts define RVUs and how they are used can have a direct impact on their income. For instance, the total RVUs for a service include RVUs for physician work, practice expense and malpractice expense. Some employers measure physician productivity based on total RVUs, and some measure it based only on physician work RVUs. If the employer is measuring only physician work RVUs and comparing those to benchmarks based on total RVUs, an employed family physician’s productivity can look very poor.
Also, the number of RVUs assigned to CPT codes changes from year to year. If the contract does not specify what year’s RVU schedule is to be used, employed family physicians cannot know whether they are being appropriately compensated.
Worse yet, depending on what year their contracts specify, employed physicians may find themselves under-compensated relative to the current year’s RVUs. For instance, between 2006 and 2010, the total RVUs for 99213, one of the most common services provided by family physicians, increased 31 percent. If the employed family physician’s contract specifies 2006 RVUs, he or she is at a disadvantage compared to someone whose contract specifies 2010 RVUs.
Of course, RVUs are only part of the equation. The compensation per RVU (sometimes referred to as the conversion factor) also deserves attention. If the employer moves from 2006 RVUs to 2010 RVUs but reduces the level of dollars it pays per RVU, its employed physicians won’t benefit.
So what?
What are employed family physicians to do with this information? First, they should shed any apathy they may have about what is happening in Washington relative to the Medicare physician fee schedule. What happens to Medicare fees will likely have an impact on employed physicians, just as it does on their self-employed colleagues. The impact may be indirect initially, but eventually it will catch up with them.
Second, employed physicians should pay attention to the terms of their employment contracts to ensure that they understand the mechanism for measuring their productivity and compensating them for their work. What year’s RVUs are specified in the contract? How many RVUs must the physician generate to achieve a given level of compensation (i.e., what’s the benchmark)? What types of RVUs (e.g., “work” or “total”) are being used? How does the compensation per RVU change as the RVUs change?
Finally, employed family physicians should pay attention to their coding. RVUs generated depends on CPT codes reported. Thus, if RVUs are an important part of the contract, so is appropriate coding.
It would seem easy, as an employed family physician with a guaranteed contract, to remain unconcerned with what happens to the Medicare physician fee schedule and the RVUs on which it is based. However, as my grandmother used to say, what is easy isn’t always what is best.
