Managing in Hard Times


While always uncertain, the future seems more so in economic hard times. How can you know how best to respond to changes in patient volume or reimbursement?

Roger Frank, MHA, practice administrator, Gastroenterology Associates of N. MS, Oxford, MS; and David Harano, MBA, MHA, executive director, Gastroenterology Center of the Midsouth, Memphis, TN.

After pointing out that managing in hard times is an easy topic to discuss—“just describe your last week,” he says—David Harano opened this session by asking the audience what challenges they face in these hard economic times. Answers included patient visit cancelations (no-shows), selecting an EHR, and big deductibles; the biggest deductible seen among participants was $5,000, but Harano said he’d seen one for $25,000. “That’s reinsurance, not insurance,” he remarked, adding that deductible like that should be for something along the lines of “getting hit by a big truck.”

Factors that come to life in our currently bad economy, and which affect the ROI of physician practices, are patients who are unemployed and uninsured, higher deductibles (as noted above), and reduced benefit offerings says Harano. “I had a call with a lady who needed a screening colonoscopy. United Healthcare told her ‘It’s all free.’ But when a polyp was found that wasn’t cancerous, United considered it diagnostic and so they’re not paying for it.”

Regulatory issues also play a role, continued Harano, including all the extra headaches and expenses that come with OSHA and HIPAA security officers, as well as compliance officers.

Competition is another issue; most audience members, by show of hands, showed that they have to deal with competing practices in their specialty and geographic areas. Plus, competition comes from hospitals that say “let’s employ docs.” Most are hiring primary care physicians, says Harano, and then all the patients go there. Yet another source of competition is technological advancements. Disruptive technology, like robot pills that replace colonoscopy, can take away business from a GI practice unless the practice is willing to embrace it. Additionally, government brings on competition in the form of declining reimbursement and healthcare rationing.

Other competition comes from RAC audits; nobody in the presentation room is prepared for them. Harano’s practice had a consultant come into their practice to talk about it, and even with the training, come testing time, he was still “biting the pencil” with anxiety. Cost of living adjustments also play a roll when paying staff more even though revenue isn’t increasing “You’ve got shrinkage,” says Harano. Accreditation requirements, PQRI, e-prescribing (get the learning curve done now before money is taken away from, say Harano), and EMRs because of IT support staff present other chances for lost revenue. But be careful when letting an IT support staff person go, warned Harano. “I know of an IT person who was let go and made the practice’s default password ‘I’m a bitch,’ so the staff had to type that in every time.”

There are two main components to profit, says Harano: increase revenue and decrease expenses. But there is a third: do nothing. “Tell physicians in the practice they’re going to make less, need to sell their house and get a smaller one, and buy a Ford Focus. You can send them to a resume building site!”

So, how can practices make more money? Don’t put all your eggs in one basket, advises Harano. Using gastroenterology practices as an example, he said other revenue sources include pathology, Remicade, adding an endoscopy center, research, real estate, capsule endoscopy, in-house pharmacy, anesthesia, ultrasound, breath testing, barryx, banding, endoscopy ultrasound, IRC hemorrhoid treatments, impedance testing, hypnotherapy, colonix, argon lasers, using an in-house dietitian, weight loss program, becoming a multispecialty practice, and hiring a colorectal surgeon.

One needs to consider before diversifying whether their practice can support it? For example, CT costs include salary benefits, supplies, building expenses, CT leasing and repair expenses, and outside professional fees (eg, radiologist to look at the scans). Harano has experienced increases of about $1 million per year by adding a CT scan. “it’s a win, win, win,” he says “The copay is lower for the patient, the insurance company gets more money because we charge less than the hospital, and you get paid.”

Other ways to increase revenue, adds Harano, include negotiating higher rates, increasing charges, seeing more patients, marketing, recruiting physicians, utilizing mid-level providers, chart mining, coding appropriately (down-coding gets you less, obviously, and it’s illegal), managing appointment schedules (overbook 10% if you average a 10% no-show), decreasing room turnover time, extending hours, and collecting more money.

Ways to decrease expenses, according to Harano, include letting duplicate staff go, buying groups, increasing efficiency, decreasing staff benefits, merging to save overhead, consolidating offices, doing RFPs for EVERYTING, using refurbished equipment (you can find it on eBay, says Harano), eliminating services that operate at a loss, and implementing an EMR system. Adding an EMR decreases staff time looking for charts, eliminates transcription, and significantly decreases use of folders, papers, and stickers.

Roger Frank, MHA, followed Harano, stating that because of the economy, many people can’t make it to sessions like these. So, “how do we get more money in the pot and reduce costs?” he asked. Benchmarking is key.

“If you can talk to colleagues and ask what their expenses are like, that’s benchmarking, he noted. “You don’t know if revenue or costs are high until you compare them with others.”

If participating in benchmarking studies, one should look for the following, according to Frank:

• An MGMA cost survey



• Consortiums of group practices that come together to develop best practices, and compare costs and quality measures

Opportunities for benchmarking, noted Frank, include:


• State ambulatory surgery center associations

• APQC (

• Member-driven communities

• Yourself (you are a benchmark; look at your average day in accounts receivable)

“Why benchmark,” asked Frank. Because doing so allows you to develop and implement strategic goals, focus on short- and long-term improvement efforts, and establish realistic, actionable objectives.

There are four categories of metrics, explained Frank. These include:

• Cost effectiveness ($ per unit for new patient, revisits) “Don’t ask if you have time to do something, but if you have time to NOT do it,” says Frank.

• Staff productivity (units per full time equivalent; know these measurements per staff vs. per doctor)

• Process efficiency (percent error/success rate)

• Cycle time (processing time)—how fast can you get someone in and out of practice

Frank explains that ways to drive success include sharing information with employees so they can discuss how they can affect results, setting goals, and considering adding incentives to help drive costs down. When looting at incentives, one should, according to Frank, look at a minimum of a 12-month history, inspect data and adjust accordingly, average the data by looking at the top 3 months (this provides a threshold), and set the goal to surpass the threshold. “Once the threshold is past, then give incremental reward,” says Frank.

Issues to consider when providing rewards include determining the frequency, projecting the financial impact, and not paying for “maintenance” by providing rewards to those who meet but don’t exceed the threshold. Also consider providing rewards on a group versus individual basis (keeping in mind that group rewards help establish a team environment), whether to offer a percentage of one’s compensation versus a fixed amount (if the former, staff tend to expect it as part of their normal compensation, warns Frank), and providing cash versus non-cash rewards (Frank explains that cash rewards can be forgotten by being used to pay a gas bill, whereas non-cash reward, such as a Marriot Rewards card, can go toward an unforgettable vacation.)

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