Economic Challenges in Practice
The practice of medicine today holds many challenges for physicians, not the least of which are financial. Throughout the work that our consulting group conducts, we see challenges in three main areas.
Challenge 1: The overall revenue cycle for clinics, including how services provided to patients are billed and collected.
Challenge 2: A general trend of flat or declining reimbursement in the insurance market.
Challenge 3: The continued increase in the use—and the cost–of technology.
We are privileged to be invited into many different clinics and medical groups as consultants. Frequently what we find is that the Accounts Receivable is not considered an asset and is not professionally managed. This lack of oversight can cost groups thousands to hundreds of thousands to millions of dollars annually. This is not an exaggeration.
We observe that underqualified and undertrained billing staff are put in charge of multimillion-dollar revenue streams with very little direction or guidance. Given the sophistication of the insurance companies and their myriad payment policies (think roadblocks for your claim on its way to getting paid), the industry now demands very sophisticated billing staff and constant performance measurement so that the Accounts Receivable doesn’t slip and age beyond the point that it’s collectible. We’re also seeing an increase in the number of payers with short filing deadlines, which too often results in physicians not getting paid for the services they have provided for their patients.
As we work with our clients, we can observe that well-run front and business offices can make a world of difference in a clinic‘s financial performance. Highly performing groups utilize Key Performance Indicators to routinely report to physician owners, and the business goals are updated frequently. With good systems and people in place, it is possible to win the reimbursement game!
In reviewing contracts for many of our clients with local payers, we are seeing generally flat or declining reimbursement rates. Beware the contract that looks better than your current one! Given the shifts in the RBRVS values, the new contract that the insurance company is offering may actually be paying you less than what you are making under your existing contract. Understand your volumes and the changes in the RVU values. If you have older contracts (2015 or older), the shift in values may impact your renewal. Be sure to conduct a volume-based analysis of your clinic’s specific coding patterns to understand if the new contract is actually a better deal. This one follows the old adage, “If it looks too good to be true, it probably is.”
As we review many contracts, we are also seeing more CPT codes being bundled, more services being subject to a global period following a surgery, and a general increase in administrative hassle, including requests for chart notes and blanket denials of claims where specific modifiers are used. These are areas where every clinic can utilize some focus. Be sure to ascertain that your business office personnel have the appropriate levels of expertise to respond accordingly. These roadblocks need not keep you from getting paid.
As a third trend, we continue to see a rise in the use of technology in practices. This comes with the corresponding increase in cost to implement and maintain new software. Most software vendors are moving to cloud-based, subscription model pricing, which keeps implementation costs low, but creates a monthly charge for the software. In effect, this trend means you are renting the software. As the technology is quickly moving to smart phones and other devices, there are many new apps and programs that attempt to make things easier for the patient.
Whatever technology you implement should be optimized for use on the small screen, and implementation is key. We are seeing the gap widening between practices who have not utilized much technology (perhaps only an EMR) and those who have truly embraced it, utilizing their EMR, patient portals, texting apps, advanced payment tools, e-statements, estimators, etc.
We also see several clinics that are utilizing technology to achieve Tier 4 or Tier 5 status within the PCPCH models, thereby increasing their reimbursement. These groups understand that an investment in technology will have positive returns. Lastly, we see groups who are implementing operational supports that interface with their software (voice recognition, medical scribes) to increase the efficiency of the physician, and therefore increase throughput and revenue. These groups are making the best use of their technology, proving it can be an investment with a positive return.
In conclusion, the well-run clinic can – and should – take advantage of advances in revenue cycle management, and can negotiate contracts in a savvy way. Groups can also make wise use of technology that is available for minimal start up costs in order to engage patients, speed collections, and make physicians’ lives easier. It’s true: the practice of medicine can still be both financially viable and joyful.