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< Back To News What You Can Do About Continuing Changes in Medicine By Craig Heiser

The economics of medicine have changed dramatically in the past five years. All indicators point to the rate of change increasing in the next five years, not decreasing. This change is being driven by four major factors which have broad base support. They are:

  1. A majority of Americans believe that all citizens should have some form of basic health care coverage;
  2. Employers want their employees to take more responsibility for their health and the cost of obtaining the excellent health care then consider to be a minimum right of birth;
  3. Everyone agrees that the total spending on health care requires too great a percentage of the country's annual production;
  4. All of us want continued improvement in health care technology to extend and improve life;

...and all of them exert continued pressure on the cost of health care.

Those who have studied the past 100 year of our country's exceptional growth have identified a recurring theme. Those industries that have harnessed the advantages of size have been the most successful. They cite automobiles, food production, telephone, retail, computers, and others. All were able to control cost by size, specialization, and encouraging creativity.

The beginnings of this trend are becoming apparent as consolidation occurs in hospitals, health care insurers, pharmaceutical companies, and medical practices. All are centered on improving the use of existing resources such as buildings, equipment, systems, people, etc.

How will it affect me?

One of these emerging trends is the creating of physician practice management companies (PPMC). Their objective is to reduce the cost of providing physician services by providing equipment, skilled management, proven systems, and efficient administrative services to physicians. The most effective and successful approach has not yet been identified but many have received funding from investors looking for superior returns. These new companies with names like Phycor, Mulikan/Med Partners, Coastal, InPhyNet, etc. are interested in your practice.

Do you want to change?

Should you be interested in them? How should you decide if you are interested? If you are interested, how should you proceed?

The answers to these questions are available if you can answer other more basic questions. There is no significant difference if you are a solo practitioner or an owner of a group practice. If doesn't matter if you are a primary care to specialist physician.

Your practice style is the most critical area for self-examination. Do you enjoy the business side of medical practice? Are you as comfortable making a decision about raises for employees or a new provider contract as you are in arriving at a diagnosis? If you don't enjoy the business aspects, it probably indicates you should consider relegating this element of your practice to others.

Of equal importance is how long do you want to practice and when can you afford to reduce your efforts while maintaining a reasonable standard of living. how do you want your long-time patients, loyal staff, and trusted associates to be treated when you implement your retirement program? If you believe that a long-range plan is needed, you again should consider the alternatives others have used successfully.

Finally, there is the issue of control to be evaluated. Does continuing effort on your strategy have more appeal than analyzing, then choosing, which of someone else's alternatives is acceptable? Is proactive a better process for you than reactive? Positive answers to these questions again reinforces a decision to start the process now. It may also indicate that you should review what new organizations are proposing.

What should be changed?

In anticipation of the starting a dialog with one or more of the PPMC's active in Phoenix market, you should prepare yourself and your practice. There are a variety of areas you should review. Your "practice physical" will focus on patient satisfaction and office efficiency. This concentration is consistent with what the PPMC's look for in a practice.

First is a patient feedback system – a simple survey of what patients liked and didn't like about the visit. This survey should cover every element form "were you treated courteously and promptly when you arrived?" to "what length of time did you have to wait?" for a total of 25—30 questions. In addition, ask for their suggestions for improvements. Have your receptionist give one to each patient for two weeks with an envelope to maintain confidentiality. Repeat the process once each quarter. Tabulate the results paying close attention to repeated unfavorable replies and then take action to improve or correct. Retain survey results as a historic measure on improvement.

Concurrently develop a revenue growth plan. This process should include a review of your fee schedule and comparison to Medicare. It should also include an evaluation of your appointment scheduling process. Ask the staff involved for their suggestions on how to add one patient each day to the schedule. Implementing an improved process can add significant revenue to the practice, the majority of which will increase net income.

In addition, prepare to apply to new plans to secure additional patient volume if their fee schedule is reasonable. The time you invest will probably result in a return in a relatively short time.

Another consideration is to evaluate new memberships in groups (MSO, PHO, IPA, etc.) if they provide specific results at a reasonable cost. Be careful of larget—payment—first—with—results—to—follow programs. A shared risk, pay for results program is superior even if it is more costly in the long run.

Finally, compare key expenses of your practice: wages, rent, office cost, etc. to the local market. There are many sources for comparative data such as medical societies, professional organizations, boards of medical specialists, AMA, etc. If the result is unfavorable, investigate the cause by analyzing the payments made for a period.

The critical element is to not accept the historic normal as an unchangeable condition. If change is the norm, an affixed standard is dangerous.

What should you expect?

If you initiate a proactive program based on knowledge of your practice, you can expect a response from the market. Your personal goals will determine if this reply is adequate and acceptable. The trusted advisors you work with will provide good information to help you make the decisions necessary to have continued change work for you. most important, remember this is a process and not an episode.

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