Healthcare provider reimbursement continues to decline and costs continue to increase, eating away at net income.
It’s easy to lose sight of the basics when immersed in the day-to-day operation of your practice. Remember, it’s not how much you make that counts; it’s how much you keep! It won’t do your patients any good if you become insolvent.
Here are some ways to increase the net income of your practice during the next year.
- Take an ICD/CPT coding class. There are often some year-end changes, and the new coding classes often start appearing in December. Under coding is the number one reason I find that physician practices lose money. Better coding results in nearly pure profit, since overhead has been paid, and increased reimbursement falls straight to profit. You should get proficient enough to teach coding in your specialty. As an aside, I suggest not worrying about ICD-10 until September 2015 to see if its delayed again or even dropped. If it’s going to go live, there will be oodles of classes in September.
- Work in at least one more patient per day. The reimbursement is again almost pure profit, since most expenses have been paid. Check your performance against the benchmark reports offered by MGMA.com and NSCHBC.org. Try to achieve at least the 75th percentile productivity. The 50th percentile wasn’t a passing grade in school that allowed you to become a physician; and it’s not a passing grade in modern medicine.
- If your community is underserved in your specialty and you are overwhelmed with patients, or you are closed to new patients more than 50 percent of the time, drop your worst reimbursing insurance plan. Do it again monthly until your patient appointment wait list is down under 2 weeks, so that you can adequately service the patients you can handle. Your patients with dropped plans can still choose to see you “out of network,” paying at time of service, at which point they become your best paying patients. Give them a claim form to submit to their plan for reimbursement. With 1,000 out-of-network patients paying just an extra $20 copay per visit, at two visits per year puts $40,000 in profit in your practice (minus a few expenses). You can identify poor paying plans using your billing software to compare average annual reimbursement by plan as compared to Medicare as a benchmark. Consultants commonly audit practices considering dropping Medicare, and find they have plans that pay as little as 65 percent of Medicare!
- If you regularly have patient wait lists over two weeks, add a non-physician-provider like a nurse practitioner or physician assistant. They generally get reimbursed the same as a physician, at half the cost or less. You’ll typically profit by at least $50,000 per year if you can keep them busy. Expand hours to accommodate them if needed. As a specialist, consider using a primary care physician as a “super-midlevel,” not subject to “incident-to” reimbursement cuts.
- Slip an extra $20 bill into the cash drawer. If it doesn’t show up in reconciliation, investigate that employee for embezzlement. If it does show up, give it to the employee as a bonus for causing them grief in not being able to balance the drawer. They will spread the word through the office that you are watching the money, and dissuade others from theft.
- Add an ancillary service that you commonly refer out. For example, I’ve found that adding ECHO to a two-provider internal medicine or family practice can increase annual profits by up to $100,000.
- Move supply purchasing online. Not only are supplies often cheaper, it takes less staff labor to process and item selection ($0.25 vs $5.00 pens for example) is easier to control. Those friendly vendors who come in and stock your shelves are not inexpensive. How do you think they can afford to bring all those doughnuts and pizzas for the staff? Many medical associations offer a group purchasing or discount program with major vendors, which can save thousands of dollars per year.
- Minimize staff overtime and pay. Require staff get daily pre-approval for overtime. If you are regularly paying overtime, you are understaffed and wasting 50 percent of wages on the overage. Multiple loyal staff often stick around to be supportive to the team, when in actuality you only need one to stay late.
- Delegate, delegate, delegate. I find that the most productive, most profitable physicians often have higher-than-average staff counts. Those physicians know how to delegate everything that doesn’t require a medical license. With any activity, consider whether you would pay another physician to do it. If you are opening your own mail or doing your own bookkeeping or filing stop!
- Consider hiring a consultant to perform a head-to-toe exam of your practice administration every year or two. Don’t be surprised if they recommend further specialist evaluations based on findings (like coding, billing or HR).
Keith Borglum is a medical practice management consultant, appraiser and broker for Professional Management and Marketing, as well as a member of The National Society of Certified Healthcare Business Consultants (NSCHBC).