How to Thrive Just Not Survive

1. How to Thrive Just Not Survive In a changing healthcare environment

2. How to Thrive • Get Back to Basics – The Old Fashioned Practice Assessment • No such thing as the “perfect” medical practice • Strategic Planning – The Key to Future Success • Have an Integration Strategy • Small Medical Practices • Large Medical Practices • Have a Contracting Strategy • Third Party Payers • ACO Contracting

3. Practice Assessment • Review the Numbers • Gross Collection Percentage • Net Collection Percentage • Days in A/R • A/R Ratio • A/R in excess of 90 days old • This year better than last year? • Clinical/Procedure/Ancillary Encounters • Provider Work RVUs

4. Practice Assessment • Review the Numbers • Charges by Payor   • Collections by Payor • Payor Collections by Physician • Referring Physician by Physician • Don’t forget the bottom portion of the report • E/M coding comparisons • New to Established Patient Ratio • Closer to zero means you rely on established patients for revenue • Prepare for practice and for each provider • Increase marketing efforts to improve the ratio

5. Practice Assessment • Review the Numbers • Average Wait Time in Reception Area • Sidebar: Customer Service!!! • Revenue Cycle • Front desk collection success • Copayments • Patients with A/R balances • How quickly visits/procedures are billed • How long does it take to get paid by payors • Percent of scheduled patients vs. available visit/surgery/procedure appointment times • Percent of insurance eligibility verifications vs. total scheduled patients • Recall visits vs. recalls available

6. Practice Assessment • Review the Numbers • Revenue Cycle • Average number of missing charges vs. services rendered (actual & CPT mistakes) • Percent of denied/rejected claims vs. total claims filed • Percent of denied/rejected claims appealed successfully vs. total denial/rejections • Average days between receipt of payment and payment posted • Average number of unpaid claims resolved by day per collector • Analyze Overhead • Compare to prior year • Compare to industry benchmarks

7. Practice Assessment • Review the Numbers • Managed Care • Review charges/collections by payor • Payor assessment • Gross collection percentage • Days in A/R • A/R aging • Analyze reimbursement rates • Compare rates to Medicare rates (what % Medicare) • Compare rates to other payor rates • Perform a cost accounting analysis

8. Practice Assessment • Improve Profitability by Improving Processes • Elements of Process Improvement • Recognize the current state of the practice • Define what plans must be in place to improve each state • Measure the systems that support the plans • Analyze gaps (variance) in system performance benchmarks • Improve system elements to achieve benchmarks • Control system-level characteristics critical to improvement • Standardize the systems that prove to be best in class • Integrate these systems into the business framework

9. Practice Assessment • Improve Profitability by Improving Processes • Potential Areas for Process Improvement • Revenue cycle analysis • Patient throughput analysis • Denial analysis • Cost accounting • Code and modifier analysis • Reimbursement analysis • Patient Satisfaction (complaints) • Compliance risk analysis • Physician productivity analysis • Clinical outcomes

10. Strategic Planning • IT MUST BE DONE! – By All Practices, All Sizes • Experience Indicates • Many are dedicated to a strong future • Only the bold make their future happen • Too many allow their future to be dictated to them and not by them • No one plans to fail – but too many fail to plan – and many more fail to act • Strategic Planning is NOT • Sitting in a circle singing Camp Fire Songs expressing Love and Harmony • Spending Hours on a Vision and Mission Statement • Creating a BIG BOOK that sits on a shelf collecting dust. • Making endless lists of “to do’s” – that will not be accomplished

11. Strategic Planning is All About • Taking Control of Your Future • Engaging the Universe in which Medical Practice Participates • External • Internal • Leveraging Strengths to Advantage • Crafting a Future consistent with all stakeholders and shareholders needs/expectations (professionally and personally)

12. Strategic Planning is All About • Crafting a Future consistent with defined market realities – opportunities and risks • Developing Specific Actions, with accountability for achievement, by a certain date, that will support Owners’ Goals and Objectives considering the realities of the Universe in which you elect to engage. THIS IS HARD – BUT IMPORTANT WORK

13. Strategic Planning Meeting Objectives Arrive at Consensus Regarding: Member and Practice Needs; External And Internal Forces To Engage Opportunities to Seize Address Current Issues and Concerns - Develop Action Plan to GET THEM OFF THE TABLE. Develop an Accountable Action Plan

14. Have an Integration Strategy • Merge with Other Medical Practices (Small Practice Strategy) • Roll Up/In Smaller Medical Practices (Large Practice Strategy) • Should Practice Sell Out to a Hospital or Other Third Party • “You’ve got to pick a team”

15. Driving Forces Behind Consolidation • Reimbursement • Ability to add Revenue Sources • Increasing Overhead • Declining Physician Incomes • Practice Management • Recruitment • Increasing Competition • Healthcare Reform • Transition (Practice Succession)

16. Advantages of Consolidation • Increased Revenues From Same Practice Production • Reduced Overhead • Managed Care Contracting • Technology Upgrade Capability • New Revenue Streams • Call Coverage • Clinical Staff Leverage • Reduced Competition • Access to Capital • Real Estate • Enhance Human Capital

17. Hospital Acquisition • The Strategic Question • What can the hospital do for you that you can’t do for yourself? • Physician Due Diligence Issues • What will stay the same with our office and what will not? • Who will do the billing/credentialing? • Termination clauses/Guarantee period • Malpractice tail cost • Employment agreement • Length & compensation • Work RVUs or Total RVUs • Professional services v. ancillary services

18. Hospital Acquisition • Physician Due Diligence Issues • Potential impact on referral patterns • How to get practice back and what are details of doing so? • Potential impact on practice employees • Human resource policies (hospital) • Benefits • Comp structure • Spouse employment ongoing • Moving employees around

19. Hospital Acquisition • Physician Due Diligence Issues • Office Location Issues • Lease & leasehold improvements – What happens? • Lease assumptions • Getting physician’s name off the lease • Is lease transferable? • Tax issue – capital lease of fixed assets • What happens when lease expires? • What if doctor owns building? • What assets will be purchased and related tax consequences

20. Have a Contracting Strategy • Where are We Headed • New Value Based Financing Methods • Global budgets, global payments • Bundled Payments • Episodes of Care • “Accountable Care”: Clinical Integration as Foundation • Limited (narrow) and Exclusive (closed) Networks • Capitation?

21. Have a Contracting Strategy • Managed Care • Find Your Leverage Points • Track Quality/Outcome Measures • Find out what the payer wants and deliver it (i.e. what are the cost drivers for the practice’s specialty) • Get a utilization report card from the payer if you can • Engage the Payors - Be Proactive • Negotiate Rates • Negotiate a New Relationship

22. Have a Contracting Strategy • ACOs • Independent Physician ACO Concerns • Reduced utilization of services • The future of bundled payment structures • Commercial health plans adopting the ACO shared savings format • Increased acquisition of physician practices creating competition for the independent physician • Contracting Concerns

23. Questions and Answers Reed Tinsley, CPA, CVA, CFP, CHBC www.rtacpa.com