Practice Management Feature - December 2009
Tex Med. 2009;105(12):41-45.
By Crystal Conde
Roberto Alvarez, MD, a family physician at Northwest Family Practice Associates in Houston; his partner, David Nelson, MD; and their two nurse practitioners were working hard and seeing 125 to 150 patients a day last year. It perplexed them, however, when the money didn't come rolling in.
"We were really busy and not seeing the profits," Dr. Alvarez said.
Not knowing how to remedy the problem and feeling overwhelmed, Dr. Alvarez called Texas Medical Association Practice Consulting for help. TMA Practice Consulting advised Dr. Alvarez that an operations assessment would help him identify improvements that could increase the practice's revenue. (See " Build a Better Practice With TMA Services .")
Laura Palmer, CMPE, TMA practice management consultant, spent three days at the practice offices and found an outdated records management system, delayed payments from insurance companies that cost the physicians money, and staffing issues that hindered them from operating smoothly and profitably.
"Laura interviewed everyone in the office and found where the holes were," Dr. Alvarez said. "She identified our weaknesses and gave us a synopsis of what we needed to do in a matter of days. I was amazed."
Among the practice improvement recommendations made by Ms. Palmer was the implementation of an electronic medical record (EMR) system to replace an outdated paper-based system and streamline records management. She also suggested that the practice begin procedures for collecting from insurance companies within 45 days to hasten the payment process.
Not all of Ms. Palmer's recommendations were easy to execute. The suggested action that made by far the biggest difference in the practice's operations, but perhaps was the most difficult, Dr. Alvarez says, was her recommendation for management changes, starting with moving employees to new job positions in which they'd be most effective.
Among the employees transferred to new roles was the office manager at the time who had to be placed in a position of less authority. Dr. Alvarez explains the office had grown from a two-physician practice in the late 1990s to a four-practitioner operation that needed an office manager with greater expertise. With the increase in staff came an increase in the practice's billing and patient volume.
Other employees had been relegated, as well. Ultimately, Dr. Alvarez says, the former office manager and two other employees left the practice due to dissatisfaction with the new arrangement. Ms. Palmer helped Northwest Family Practice Associates hire a new, more appropriately qualified practice administrator.
"Although some staff left after the assessment, the remaining team is a stronger, more cohesive team under their new manager," Ms. Palmer said. "Dr. Alvarez has reduced his administrative time, and the practice has begun EMR implementation. The group is now able to accommodate more patients, and the staff and patients have reported improved customer service."
With the help of TMA Practice Consulting, Dr. Alvarez says his practice revenue increased at least 20 percent within the first four months after Ms. Palmer's assessment. Today, Dr. Alvarez reports the practice is profitable and operating seamlessly.
For many physicians in Dr. Alvarez's situation, ensuring their practices operate optimally and make money are big management priorities. It's easy, however, for physicians to get bogged down with everyday tasks and lose sight of the big picture.
Dr. Alvarez says Ms. Palmer was invaluable in helping him and Dr. Nelson take control of the practice's business operations.
"Laura opened our eyes to the importance of having a role in the business side of the practice. We as physicians tend to negate the fact that we are businesspeople. This is a business, and we need to be an integral part of it. I've become more in touch with what's going on in the practice since Laura came in," he said.
Dr. Alvarez says that before the TMA operations assessment, he met with the office manager every eight or nine months. Now, based on Ms. Palmer's suggestions, he meets with her more frequently and reviews financial activity reports regularly. (See " Review Reports to Keep Your Practice on Track .")
"Now I meet with the practice administrator quarterly, and she prints weekly reports for me that give me an indication of the practice's patient counts, accounts receivable, collections, and other matters," he said.
Transforming a practice from one that barely breaks even to one that flourishes is no easy task. Dr. Alvarez says physicians who are experiencing operational and financial challenges shouldn't waste time trying to resolve the problems themselves.
"Contracting with TMA Practice Consulting is the best money we've invested," he said. "Working with a consultant pays. I think the beauty of it is when you bring in a TMA practice consultant, you're getting someone who's knowledgeable but objective."
Help From the Beginning
When she decided to leave her role as medical director of the family medicine clinic at Baylor College of Medicine in Houston to become a solo practitioner, Lizabeth Riley, MD, didn't have time to figure out how to set up a practice through trial and error. It was 2006, and she needed expert guidance to get up and running.
"When you start a practice on your own, you're trying to figure out finances, and you're applying for loans. TMA Practice Consulting can help you put together a pro forma and tune into how to make it work financially. Those are the hardest parts of starting a practice," Dr. Riley said.
A pro forma is a financial business plan typically developed for new practices that identifies all associated costs, monthly operating expenses, and cash-flow projections for loan procurement.
In addition to crafting a pro forma, when working to set up a new practice, TMA Practice Consulting:
- Determines setup costs and expenses;
- Helps physicians purchase practice management software, EMR systems, equipment, telephone systems, and insurance;
- Identifies and recruits qualified personnel;
- Trains employees in practice policies and procedures; and
- Provides resources for professional services, such as banks, attorneys, and accountants specializing in health care.
Heather Bettridge, CPC, CPMA, TMA practice management consultant, assisted Dr. Riley with all the financial matters inherent in starting a medical practice.
"I had a few loan offers that were horrible early on," Dr. Riley said. "Heather kept working with me to hone in on what I'd be paying day to day and month to month and to secure a loan I could live with. That's a reality check. When you have to pay for supplies, payroll, insurance, and pay back loans, it's tough."
Since 2006, Dr. Riley has seen her practice grow to five employees. TMA Practice Consulting recently helped her hire a physician assistant to meet the needs of her increasing patient load.
"TMA Practice Consulting really helped me with determining an appropriate salary range and benefits to provide a physician assistant in my area. They also did a background check," Dr. Riley said.
Today, Dr. Riley happily reports that her practice is profitable due to the addition of the physician assistant. She adds that her professional relationship with Ms. Bettridge and TMA Practice Consulting is ongoing and that she feels comfortable calling any time she needs advice or has questions about her practice's operations.
"A physician's relationship with TMA Practice Consulting is not one with an expiration date," Ms. Bettridge said. "We support our physicians throughout their careers by providing tools and resources, answering general questions, and engaging in various practice management projects when appropriate. Once Dr. Riley's practice was set up, we continued to help the practice with staff recruitment."
Operations in Check
Last year, Joseph Hong, MD, a Seguin pulmonary critical care physician, was approaching the end of a two-year "incubator" phase of an income guarantee provided by Guadalupe Regional Medical Center (GRMC).
During the first year, GRMC guaranteed Dr. Hong's income and practice expenses, leased him an office, and provided staff.
Dr. Hong says he had trouble managing his practice's finances and wanted to address problems and concerns before the incubator period ended in April 2009.
He contracted with TMA Practice Consulting to perform a billing and collections assessment. After reviewing the practice's operations, Mark Steiger, CMM, TMA practice management consultant, recommended a number of strategies for improving the practice's operations, financial management, information management, and human resources.
Mr. Steiger recommended Dr. Hong use his office space more efficiently. Dr. Hong purchased an office in June. He says owning an office space helps keep monthly expenses down.
TMA Practice Consulting discovered patients' insurance eligibility and benefits weren't verified before their office visits. Mr. Steiger recommended Dr. Hong hire a full-time receptionist.
"Adding a full-time receptionist allows us to verify insurance prior to patients coming in, as well as increasing up-front collections," Dr. Hong said. "Now we also monitor new patient referrals and productivity by facility."
Dr. Hong sees patients in seven medical facilities surrounding Seguin.
Mr. Steiger also suggested Dr. Hong have his staff generate monthly reports that examine the previous month's accounts receivable, collections, and productivity. Connie Bryan, Dr. Hong's office manager, also looks over charges and payments daily with Dr. Hong, before sending claims.
"These measures are beneficial because they enable me to know exactly where our productivity and collections are for the month," Dr. Hong said.
In addition, TMA Practice Consulting identified that credentialing delays reduced reimbursements in Dr. Hong's office. When Ms. Bryan started working with Dr. Hong, he didn't have contracts with Medicare, Medicaid, or Blue Cross and Blue Shield.
With TMA's help, Ms. Bryan says she was able to contact the federal programs and health care payment plan and file claims to recover as much of the accounts receivable as possible. She now concentrates on quick claims recovery to ensure payments come in within 90 days or sooner.
Dr. Hong says working with a TMA practice consultant is worthwhile.
"They are so knowledgeable. You can count on them when you have an issue, question, or problem with your practice. They always have an answer or suggestion or are able to refer you to someone who will be able to help. It is very reassuring knowing I can call TMA," he said.
TMA Practice Consulting services are available for a fee. To schedule an operations assessment, billing and collections assessment, or other service, call (800) 523-8776 or e-mail TMA Practice Consulting . Additional information is available on the TMA Web site , consulting.texmed.org.
Crystal Conde can be reached by telephone at (800) 880-1300, ext. 1385, or (512) 370-1385; by fax at (512) 370-1629; or by-email at Crystal Conde .
Build a Better Practice With TMA Services
Among the many services available through TMA Practice Consulting is an operations assessment in which a TMA consultant performs a comprehensive diagnostic review of the medical practice on site. Consultants interview the physicians and staff, observe work and patient flow, and collect information and reports relevant to daily operations.
The assessment includes:
- Accounts receivable analysis;
- Review of billing and collections processes;
- Patient flow analysis;
- Internal controls review;
- Managed care process analysis;
- Review of medical records systems;
- Review of practice management software;
- Overhead analysis;
- Human resources and personnel concerns; and
- Clinical staff operations.
Upon completing the assessment, the consultant presents a brief summary of the findings. Within 30 days, the practice receives a written report, complete with a full analysis and specific recommendations.
In addition, the TMA billing and collections assessment can help a medical practice improve cash flow, collection rates, and staff efficiency. A TMA consultant evaluates a practice's business office operations and reviews billing and collections procedures, front office processes, staff competencies, workflow, and financial reports.
TMA Practice Consulting offers up to 20 continuing medical education credits per physician when performing an operations assessment or billing and collections assessment for a practice.
Heather Bettridge, CPC, CPMA, TMA practice management consultant, says TMA consultants involve physicians in practice management decisions and ensure that they're more successful in running the office on their own once a project is complete.
TMA Practice Consulting services are available for a fee. To schedule an operations assessment, billing and collections assessment, or other service, call (800) 523-8776 or e-mail TMA Practice Consulting . Additional information is available on the TMA Web site .
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Review Reports to Keep Your Practice on Track
TMA Practice Consulting recommends physicians review these reports on a monthly basis:
- Accounts receivable aging report;
- Collection analysis and unpaid insurance claims;
- Summary of charges and collections; and
- Write-offs, adjustments, and credits.
In addition, consultants advise paying careful attention to these practice areas:
- Compare this year to the previous year's charges, payments, contractual adjustments, and bad-debt write-offs. Analyze previous year and current year reports to identify any significant changes. Pay careful attention to any increases in contractual adjustments. If adjustments increase, review the payer mix for changes.
- Observe any drop in collections from one month to the next or one year to the next. This drop could indicate a change in reimbursement patterns, such as a decrease in the number of cases, increased payer adjustments, or a problem with the billing and collections processes.
- Review the gross and net collection percentages and accounts receivable aging ratios to determine if these are reasonable. Compare the previous year to the current year to detect any significant changes. An analysis should be done to determine the cause of any significant changes.
- Review contractual adjustments by insurance carrier. By monitoring adjustments, the practice will be able to determine the impact of a particular carrier on practice revenues. The impact of a single carrier could put the practice at financial risk if the plan were to adjust rates.
- Monitor production for overall consistency. Unless the physician has been out of the office for an extended period, such as vacation, production shouldn't vary greatly from month to month. A drop in production may signal failure to bill on a timely basis or a decline in patient volume.
To find out more about TMA Practice Consulting services, call (800) 523-8776, e-mail TMA Practice Consulting or log on to the TMA Web site .
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