Throughout the country, there is a core of private practices that is simply too strong and too independent to close up the shops they've worked so hard to build.
Has anyone noticed that the rigorous debate over health care reform has been focused mostly on infrastructure, regulations, penalties and insurance rates? True, these are certainly important things to consider as the Patient Protection and Affordable Care Act (aka Obamacare) continues to loom over about 17% of the nation’s Gross National Product.
But as this rhetoric rages on, we seem to be selling short one important element of this entire discussion — the independent medical practices that make up the backbone of our health care system.
It’s not like anyone has to remind these health care professionals of impacts they have already felt and the uncertainty that consumes their thoughts about the future. But these impacts and their inevitable reaction to them seem to be an afterthought in most of the discussion over the health care law.
One of the strengths of our health care system throughout the years has been the diversity in the options our nation’s doctors have had. Independent, entrepreneurial doctors with a high tolerance for risk were able to start and maintain solo practices. Others joined like-minded colleagues to share in expenses and risk and formed group practices. Those with less tolerance for risk who wanted more predictable hours were able to work as salaried employees, join large hospitals or health systems or work in the academic sector.
Even before health care reform was signed into law in March 2010, we saw a trend toward doctors moving away from private practice, primarily because of increasing regulation, declining reimbursements and administrative headaches. Many chose early retirement. Others sold their practices to large health systems. This trend was accelerated after the passage of health care reform.
Throughout the country, there is a core of private practices that is simply too strong and too independent to close up the shops they’ve worked so hard to build. There are others who want to remain independent but fear for the future and what’s to come. In either case, now is the time for complete introspection and action. In order to obtain clarity, I would recommend the following.
Be lean in staffing
Most companies are asking their employees to do more with less. Your practice should be no different. The people you want to retain are those who are flexible and willing to go the extra mile in their duties and development of their skills. Now is the time to make tough decisions and make sure you have the right people as well as the right number of people.
Be lean in costs
There are always opportunities to cut operating costs, but often these take time and effort. Challenge your employees to help find these and work with your key vendors. Be careful not to be fall into the trap of being “penny wise and pound foolish.” One example of this would be not giving a valuable employee a raise and then having to hire someone with little or no experience to help run your practice.
Just as there are ways to minimize costs, there are ways to optimize revenue. Sometimes these solutions are easy, such as an adjustment to your chargemaster. Other times, they are more complex, such as detailed analysis on procedures or billing practices. It’s not good enough to have only an aggregated view of how your revenue cycle is working. You need to be able to dig into the details to see what is really happening and be willing to make key decisions.
Be operationally efficient
Your policies, processes and documentation can make an enormous difference in the profitability of your business. If you don’t have the people and/or resources to make sure your business is running as smoothly as possible, now is the time to make it happen.
Know where you stand and where you want to go
Many private practices don’t have a true accounting of the strength of their organization and a plan for the future. Despite the uncertainty of health care reform, a strategic planning session can be an invaluable exercise.
Make no mistake. These are not easy challenges to tackle. They require a great deal of expertise, business knowledge and resources to attack. But for those practices that want to remain truly independent, I believe it will be worth the effort in the long run.
Brian Bourke, MBA, is manager of health care consulting at Honkamp Krueger & Co., a Top 100 CPA firm (headquartered in Dubuque, Iowa) with offices Cedar Rapids, Clinton and Davenport, Iowa and Madison and Platteville, Wisconsin. To contact Brian for more information about Honkamp Krueger services please email him at email@example.com or call 563-242-6911.
Honkamp Krueger & Co.
is a proud member of the National CPA Health Care Advisors Association (HCAA). HCAA is a nationwide network of CPA firms devoted to serving the health care industry. Members provide proactive solutions to the accounting needs of physicians and physician groups. For more information, contact HCAA at info@HCAA.com.