Secrets to Success

How Texas Practices Are Staying Healthy

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Cover Story — February 2014

Tex Med. 2014;110(2):16-23. 

By Amy Lynn Sorrel
Associate Editor

Like any physician, San Antonio pediatrician J. Laura Arnold, MD, says providing good patient care is the most important factor in the success of her practice, ABCD Pediatrics. But she also recognizes that medicine is a business and that "you can't provide good medical care if you can't provide medical care. If we can't continue to work in the environment we find ourselves, nobody is going to get our wonderful medical care."

That's why she and her staff remain vigilant in tending to the overall financial health of the practice, from monitoring incoming cash flow and outgoing expenses to incorporating new technology and planning future growth. 

Stephenville obstetrician-gynecologist Janie McMillion, MD, agrees that the viability of her multispecialty practice, Stephenville Medical and Surgical Clinic, hinges on being able to pay the bills, particularly at a time of decreasing payments and increasing regulatory mandates. "The government is cutting reimbursement right and left, so as doctors, we have to figure out ways to be more efficient."

But in a smaller, rural community in particular, success also means having satisfied customers, she says. "We see patients daily outside of the practice, at the grocery store or church, and we have to be accountable to them. To have happy patients, you have to provide the level of care they are expecting. And sometimes in a small town, patients expect a little bit more."

Meeting those expectations often means having the right staff and technology to help a practice run smoothly so physicians can focus on delivering high-quality care, adds John Carmichael, MD, a family physician and president of the Thomas Spann Clinic in Corpus Christi. "I feel like if we can do that and stay abreast of current technology and focus on cost control, we'll be okay." He adds that having a strong financial footing not only means staying viable, but also "it absolutely helps us maintain our independence."

Those are just a few of the strategies practices are putting in place to stay economically viable in today's changing health care environment. The three Texas groups Texas Medicine spoke with are doing that quite successfully, as measured against the Medical Group Management Association's (MGMA's) 2013 report Performance and Practices of Successful Medical Groups.

The national study looks at how practices stack up against benchmarks it considers crucial to the overall financial health of a medical practice, including how well they are able to manage costs (profitability and cost management), how efficiently they use their resources (productivity and staffing), and how well they manage billing and collections (accounts receivable) — in other words, cash. Highlights from the study showed that what MGMA considers to be "better-performing" practices are staying a step ahead of their peers in those areas by:   

  • Keeping revenue up and operating costs down,
  • Collecting on claims quickly,
  • Investing in electronic health record (EHR) technology, and
  • Using patient satisfaction surveys.  

Although the MGMA survey focuses mostly on groups, it includes practices of various sizes, specialties, and settings.

"These are truly key performance indicators that apply across the board," MGMA's Todd Evenson said. He handles practice consulting and research at the organization as vice president of consulting services and data solutions. The report reveals that practices are adapting as the health care system evolves, and it's partly because of those changes that "medical groups' financial viability will be very important and continue to be."

Visit the MGMA website for more information about the study, which is available for purchase. 

Meanwhile, the Texas Medical Association's Physician Services Organization (PSO) is gearing up with products and services to help practices implement the strategies they need to maintain their financial stability and stay in control of their practices in the future health care environment. 

Good Staff: A Good Investment

To help stay viable, the practices Texas Medicine spoke to had one key characteristic in common: They all put many of the details of the day-to-day practice management — scheduling appointments, checking insurance benefits, making sure claims and payments are filed and collected timely — in the hands of a practice manager or other staff. 

As Dr. Carmichael explains, "Part of financial success is hiring good people and getting out of their way." 

Similarly at ABCD Pediatrics, delegation "is intentional," Dr. Arnold added. "We make it so that the insurance requirements are not the first thing the doctor is thinking about when in the room with a patient. The patient's needs are the first thing."

And most of the better-performing practices (72 percent in the MGMA survey) described their practice arrangements as "collaborative," as opposed to physician- or administrator-dominant.

"We want to free up our doctors as much as possible to provide patient care," Stephenville Clinic Practice Administrator Donita Jones said. 

Mr. Evenson recognizes that not all physician practices can afford to hire a robust staff. But he says the MGMA survey shows having a certain number of staff does not matter as much as having the right staff to support physicians and allow them to be as productive as possible. 

Good training and support for staff also should be considered an essential investment, says Donna Kinney, director of health care research and data analysis for TMA's Division of Medical Economics. "Proper training means that practice staff can help physicians solve practice problems." 

Stephenville Clinic, for example, recently adapted to the loss of some employees it could not afford to replace by cross-training existing staff to take on additional roles. "Of course, there is some overhead to pay for the salaries of the people who help you take care of the business. But we accept that as the price of doing business," so the practice runs smoothly and so physicians can put most of their focus on patient care, Dr. McMillion said. 

That does not mean individual physicians aren't involved in or aware of the practice's overall financial health and goals. For example, ABCD Pediatrics, Thomas Spann, and Stephenville Clinic conduct regular meetings with physicians to review financial data and make decisions on larger purchases or long-term planning. 

Physicians also can join staff on committees to address specific practice needs they are interested in, such as ICD-10 or EHR updates. 

"That keeps physician engagement in the practice and allows for everyone to know what the practice pressures are and what long-term plans are being made to address those," Dr. McMillion said. 

Cash Is King

One of those pressures is making sure practices have adequate cash flow to keep their doors open, which means getting claims out in a timely manner and following up on collections. That process has become more important as practices report having to cope with an increase in high-deductible health plans and brace for unexpected recoupments by insurance companies — two trends that are likely to continue with the launch of the federal health insurance exchanges. (See "Untested Waters," December 2013 Texas Medicine, pages 37-42.) 

The MGMA survey showed that among the better-performing practices, most payments were collected within 30 days; only 9 percent to 14 percent of claims were outstanding for more than 120 days; and only 3 percent were denied on the first submission. Nearly all of the practices — 95 percent — billed claims electronically.

At ABCD, "we do a good job of getting our claims out the door within 24 hours of service and getting our cash in sometimes in a week," Practice Administrator Victoria Waltemath said. In the past, claims filing had lagged by as much as two weeks, "and we can see by the quicker turnaround that we can increase income by about 20 percent. So practices don't have to do anything other than get things done in a timely manner because the later claims go out, the later payment comes in."

Making sure claims go out correctly also is key to a quick turnaround on claims. 

As a first step, Thomas Spann staff and physicians work as a team to make sure everyone is educated on correctly coding claims. Chief Financial Officer (CFO) Belinda Chism says a good practice management system also comes in handy, which "allows us to 'scrub' claims for inaccuracies before they reach the clearinghouse and payers." As another level of protection, the clearinghouse Thomas Spann uses scrubs the claims a second time for more-detailed items like new drug codes or updates to existing ones.

"Our claims are not sent to payers until they are corrected, so the denials we get are true denials and not for minor items like missing a number. It keeps cash flow up, and our mailbox is no longer full of minor denials, which are very time-consuming," she said. 

All three practices Texas Medicine spoke to said they've seen an uptick in high-deductible plans in recent years. That means patients must pay a certain amount out of their own pocket before their insurance kicks in, an amount that physician practices must collect up front in order to get paid. Those deductibles can be as much as $2,500, which patients often assume are covered by their insurance. 

In response, practices began educating physicians, staff, and patients about patients' obligations to pay their deductibles. Staff also focus on collecting those payments within the first few months of the patient's plan year. 

Ms. Jones says that whenever possible, Stephenville Clinic works with patients on payment options to accommodate their care. "But we try to help our patients understand that we have to collect to pay our bills." 

Ms. Waltemath added that the prompt pay legislation TMA won in 2003 has improved the cash flow at ABCD Pediatrics by allowing the practice to pursue payers that don't pay claims on time and to recoup penalties and interest in addition to what they are owed for physicians' services. The pediatric practice also is looking forward to keeping more dollars in physicians' pockets thanks to 2013 legislation TMA fought for that allows practices who pay Texas' franchise tax to deduct the cost of vaccines they stock, no small amount of money for a pediatric practice. 

That's money that also helps the practice grow, whether adding a location, hiring another physician, providing new services, or taking on additional patients. But ABCD does not make those decisions rashly. 

"We put a lot of effort into making sure we make the right decision at the right time and being clear on what the need is for our patients," Dr. Arnold said. 

For example, the clinic puts some restrictions on taking new patients in winter at the height of flu season, when practices often find themselves short on staff and vaccines to keep up with the demand. "We want to keep it manageable and be comfortable that we can get through the flu season, and that's not the time to focus on bringing in new patients," Ms. Waltemath added.  

Technology Counts

On the other hand, better-performing practices say that now is the time to adopt the technology they will need to ensure their long-term sustainability, an investment Mr. Evenson says is becoming more critical as the health care system shifts to so-called value-based delivery and payment models driven not by the number of services performed, but by patients' overall health. "Successful groups continue to invest in technology, recognizing that having sound, quality information to make business and clinical decisions is becoming increasingly important." 

Some of the characteristics of EHR systems that better-performing practices use include the ability to integrate with billing systems, support medication orders, maintain up-to-date lists of patients' diagnoses, track physician compliance with specialty rules, and report quality measures to payers. And most physicians in those practices reported using such features. (See "Not Just Any EHR.")

Seventy-five percent of better-performing practices are gearing up for Stage 2 of the federal government's meaningful use incentive program to encourage EHR adoption. (See "Meaningful Deadlines," December 2013 Texas Medicine, pages 45-79. As this article went to press, Stage 2 deadlines were extended to 2016.)

That doesn't mean there aren't frustrations. 

Stephenville Clinic switched to an EHR system two years ago and still has growing pains. With each update, physician productivity drops because it slows physicians down, Dr. McMillion says. Ms. Jones adds that whatever money the practice might have saved on medical records staff has been spent on information technology staff. Despite the financial bonuses from the federal government, "there is no cost savings. We're just spending in other areas."

On the other hand, Thomas Spann's five-year experience with an EHR system suggests that result could change over the long haul. "You have got to embrace it, or you will be a dinosaur real quick," Dr. Carmichael said, adding that Medicare also will start dinging payments to physicians not using an EHR system. 

The clinic's CFO Ms. Chism said that "technology plays a huge role in the management of accounts receivable. Physicians may not be aware of this benefit immediately because of the difficulties in switching to an EHR system. However, along with a knowledgeable staff, I see technology as a positive change that has allowed us to be more efficient." 

The practice integrates its billing system with its EHR system, and the latter allows Ms. Chism to set rules on specific items. If a physician enters a certain diagnosis code but the lab test he or she orders is not covered under that diagnosis, the system raises a flag before a claim goes out and signals the staff to research it. 

ABCD has used an EHR system since 2003, which also enhances patient convenience and practice workflow, Ms. Waltemath added. Parents can access their children's medical files via a web-based patient portal, print immunization records to take to school, and schedule flu shots and appointments, saving staff precious time. 

"Patients appreciate what these technologies can do to help them in their busy lives. There is a cost to this, but we feel like it pays off," Ms. Waltemath said.

Dr. Arnold said that from a documentation standpoint, EHRs "are becoming more of a burden" for ABCD physicians. "But we understand [the technology] is part of the way medicine is going." 

Tracking Patient Satisfaction

Nearly 80 percent of the better-performing practices surveyed by MGMA are also looking ahead by assessing patient satisfaction, another emerging focus of value-based care. Medicare, for example, will begin penalizing physicians who do not report certain quality data, including patient satisfaction measures, under the Physician Quality Reporting System. (See "Penalties Add Up," May 2013 Texas Medicine, pages 35-39.) Patients and the public also will be able to access the information through the Medicare Physician Compare website. 

The practices MGMA surveyed use assessment tools to gauge patients' overall experience and perceptions of staff professionalism, appointment availability, and quality of care, among other things. (See "Happy Patients Mean Healthy Practices.") More than half said they used surveys to evaluate and improve practice operations and educate staff and physicians about behavior. About 10 percent of the practices said the survey results factored into physician compensation, according to MGMA.

TMA Council on Health Care Quality member Cliff Fullerton, MD, is not surprised by the findings. "It is becoming more important, and patients are expecting more. Patients are attracted to places that have better service, and those will be more successful." 

While patient satisfaction is most associated with the quality of care delivered, and rightly so, it can also be an indicator of a healthy bottom line, he added. "Quality pays."

If patients are satisfied, physicians are likely to be more satisfied knowing they are doing a good job; staff turnover is lower; and patients who trust their physicians and staff are more likely to follow instructions, which lessens the practice's workload. And patients who are satisfied with their care are more trusting of their physicians' recommendations, which can help improve quality and productivity. "If I only have to recommend to a patient once to take a particular medication for his or her cholesterol, versus 20 times, then I have saved myself and my staff a lot of time, which can allow us to manage more patients. If a patient with diabetes has a good experience and comes back as requested, then my no-show rate is lower, and that makes money," he said.

There is a modest cost associated with evaluating patient satisfaction, Dr. Fullerton added, but it's a worthwhile one. "A small expense measuring patient satisfaction can prevent potential Medicare penalties. That's cheap."

ABCD Pediatrics uses a patient satisfaction tool provided by MGMA, which is based on the Agency for Healthcare Research and Quality's Consumer Assessment of Healthcare Providers and Systems survey. The tool, used by Medicare, is quickly becoming the industry standard. Find this and other patient experience resources on TMA's website

ABCD sends out surveys often, for example, any time a new provider comes on board and periodically to assess all of the practice's physicians. The surveys also target the administrative side of the practice, like the front desk and insurance department, even the quality of the restroom. The physicians and the staff get the feedback, both the negative and the positive, and "we use those tools to help make improvements," Ms. Waltemath said. "That's how your practice grows. If you have unhappy patients, they are not going to refer others to you."

The practice also uses many of the meaningful use features of its certified EHR, recognizing that patient satisfaction will soon become part of those and other measures, she says. "Doctors will soon be graded on this. It's going to become more important to practices than in the past." 

Stephenville Clinic pulled together a patient satisfaction tool that looks at care delivery, wait times, and physician- and staff-friendliness. The practice recently conducted a study of patients' transit time through an entire office visit to find out where it could improve, including how long it takes to sign in, to get roomed by a nurse, to wait for and then visit with a physician, and then to get dismissed. 

None of the practices Texas Medicine interviewed saw patient satisfaction factoring into physician payments or compensation. But it does factor into the bottom line, Dr. McMillion says. "Patients nowadays have a choice of where to go, so if you provide good service, and they really believe you care about them, they will choose to come to you and others in your group, and that's a big part of a practice's success." 

Preserving Independence

Such strategies not only help practices stay financially competitive, but also help them stay independent. 

"That's the goal," Dr. Arnold said. Meeting that goal also involves looking to the future. For example, ABCD Pediatrics is exploring what steps it can take to become a medical home.  

Similarly, Thomas Spann's financial stability has helped it recruit new physicians and also band with other practices to form an independent practice association and to pursue participation in a local accountable care organization while remaining autonomous. 

Being further removed from an urban center, however, Stephenville Clinic does not have the option of joining an accountable care-type organization, making its financial viability even more important to its ability to remain an independent clinic, Dr. McMillion says.

Regardless of a practice's style or circumstance, TMA's PSO is poised to help physicians with the strategies they need to maintain their financial viability and prepare for what the future health care environment holds. The PSO will offer products and services to enable practices to improve their performance; streamline and improve administrative functions and technologies; and return physicians' primary focus where it belongs: patient care. 

TMA's PSOs team identified four categories of products and services to meet practices' varying goals and levels of sophistication. They are:   

  • Practice transformation: tools and services to strengthen practice viability and prepare practices for new payment models, including optimizing staff workflow, strengthening billing and collections processes, and making use of new technologies to improve patient care and compliance.
  • Clinical integration: services and technologies for physician network development, network administration, and contracting that provide administrative support to existing physician networks and help for independent practices that want to collaborate for contracting and managing population health.
  • Value-based care models: technology, strategies, and staffing to help practices secure value-based contracts or meet requirements for incentive payments, including case management; care management; population, quality, and utilization analytics; and patient engagement. 
  • Enterprise solutions for physician networks and groups, including payer functions for those that negotiate direct contracts with employers and other payers, and technologies that enable health information exchange among the health community. 

The PSO is expected to launch this year.  

Dr. Arnold says that staying ahead of today's practice pressures is key. "We know that there are going to be increasing pressures on us in light of new [health reform] legislation, changes in coding with ICD-10, you name it. So we are making sure we stay viable as a company, as well as provide good medical care, and we intend to be ahead of the game. We don't want to be playing catch-up."

Amy Lynn Sorrel can be reached by telephone at (800) 880-1300, ext. 1392, or (512) 370-1392; by fax at (512) 370-1629; or by email.


Not Just Any EHR

One key to medical practices' success is that they are not only implementing robust electronic health record (EHR) systems, but also are using them, according to the Medical Group Management Association's (MGMA's) 2013 report Performance and Practices of Successful Medical Groups. Below are some features of the systems used by what MGMA considers "better-performing practices."

Their EHRs can:    


  • Support medication orders and maintain active medication lists;
  • Support e-prescribing;
  • Record and store patient demographics;
  • Maintain an up-to-date problem list of current and active diagnoses;
  • Record and chart changes in patient vital signs;
  • Record patients' smoking status;
  • Implement clinical decision support rules relevant to the practice's specialties and track compliance;
  • Report ambulatory clinical quality measures to state and federal quality programs;
  • Provide patients with an electronic copy of their health information upon request; and
  • Integrate with practice billing/claims systems.   


TMA has tools and resources to help physicians implement EHRs and achieve meaningful use. The EHR Implementation Guide, EHR Product Comparison Tool (TMA member login required), Medicare and Medicaid EHR Incentive Comparison, EHR Incentive Program Eligibility Tool, and Medicare and Medicaid incentive program instructions are available on the HIT section of the TMA website. You also can contact TMA's HIT Help Line at (800) 880-5720, or by email




Happy Patients Mean Healthy Practices

Nearly 80 percent of the better-performing practices surveyed by MGMA assess patient satisfaction. Some did so once a year, some monthly. But most of the surveys looked at various practice elements, including:  


  • Professionalism of the staff,
  • Overall experience,
  • Appointment availability,
  • Quality of care,
  • Recommendation of practice to others, and
  • Bedside manner. 


Practices also put the survey results to use, primarily to educate physicians and staff about behavior and to evaluate and improve practice operations.

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TMA's Practice Checkup

TMA Practice Consulting can help you perform a comprehensive diagnostic review of your medical practice. The assessment includes an analysis of accounts receivable; billing and collections processes; patient flow; internal controls; managed care processes; medical record systems; practice management software; overhead; human resources and personnel issues; and clinical staff operations. 

TMA Practice Consulting services are available for a fee. For more information, contact TMA Practice Consulting at (800) 523-8776 or by email.  


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