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Debt crisis…how could this impact your pediatric practice?

March 15, 2012 in Blog by support Team  |  Comments Off on Debt crisis…how could this impact your pediatric practice?

The United States has over $15 trillion dollars in debt with an annual budget deficit over $1 trillion dollars
for 2012. Let’s look at this if this was 30 year mortgage: at a low interest rate, the US would need to
repay $500 billion a year and not incur any debt moving forward to pay off the debt in 30 years. This
would mean that the US would need to double the current taxes on businesses and individuals as well as
cut the budget so we do not continue to spend $1 trillion a year more than the country receives in taxes.

Let’s link the size of the government debt to a Pediatric practice. Imagine if your Pediatric practice had a
debt load of 6-7x the revenue…..this is the level of debt the country has compared to tax revenue
received. If your two provider practice averages $800k in revenue a year, 6-7x would be $4.8M to $5.6 M
in debt. This level of debt would bankrupt the Pediatric group. This level of debt would cause a practice
prior to going bankrupt to make difficult cost cutting choices to avoid going bankrupt.

These numbers show that, more than likely, the US will increase taxes and cut spending. When you look
at the major expenditures on health care (potentially approaching 20% of gross domestic product), the
government leaders are likely to cut costs and will need to identify cost cuts in healthcare.

Where does the country cut costs in healthcare? This is a difficult question. From the pure perspective of
long term tax revenues, it makes sense for the government to invest in healthcare for children and
encourage more children in the country to replace all the aging baby boomers. These children grow up,
obtain jobs and pay taxes. There will likely be much discussion on difficult topics including how much
medical care the government should cover for an aging adult. Since the majority of healthcare is spent in
the last six months of life, is spending on procedures and treatments that initially extend life a good
decision for our future as country since we cannot afford our healthcare bills? About 5% of the country spend 60%
of the healthcare cost while most of the economic burden is placed on the other 95% of the country….will this continue in the future or will changes in policy/structure of our healthcare system bend this curve?

The healthcare system financially rewards physicians for choosing other fields of medicine other than
Pediatrics. Medical students, in many cases need a strong income to repay the student loans. Physicians
have families with financial needs and if the income is not sufficient, physicians might remove themselves
at a higher rate from clinical medicine and move into industry or other areas. How do health plans, the
government and employers align incentives to patients whom take accountability for their health via diet
and exercise? The responsibility of good health is dependent on the patient being compliant to a treatment
and being proactive in their health. A patient, whom smokes, is obese and does not exercise increases the
burden on the healthcare system. A patient whom does not smoke, exercises and controls their weight
provides on average, less of a strain on the Healthcare System. Should patients whom optimize their health see lower co-pays or lower monthly health premiums? Currently, most employer plans charge
the same per employee, some would argue that the system does not optimally align the behavior of patients with incentives. Incentives as well as costs are being evaluated in the Healthcare system. The recent change in Healthcare law decreased the co-pay for well checks for many pediatric patients to $0. This aligns the incentive with preventive care which, in my opinion, is a good change.

So how could this debt crises impact your pediatric practice? The Independent Payment Advisory Board (IPAB) is a new federal entity comprised of 15 unelected individuals with the authority to cut Medicare Spending if the program’s costs exceed specified targets. Although Pediatricians do not receive payment from Medicare, many of the insurance carriers based their reimbursements on Medicare Policies. We are overspending and there will be some difficult choices. Some recommendations to IPAB and other providers of healthcare include they should continue
the no co-pay policy for well visits (this lowers barriers to parents) and look to decrease costs via higher burden on patients for ER visits and hospitalizations. Policy makers might see the need to increase drug co-pays for non-preferred medications to help improve the adherence to a selected formulary.

Using electronic health records that provide the formulary advice will help providers prescribe the best cost
medication option to the patient. Pediatric offices will need to further train and monitor their internal staff
as well as leverage companies that specialize in pediatric medical billing to insure they optimize the
revenue cycle. I believe general Pediatrics to be the best investment in our healthcare dollar. Hopefully
our leaders that shape healthcare policy and determine healthcare cost cuts will come to the same
conclusion.

The importance of appropriately managing expenses in a Pediatric Medical Practice

February 3, 2012 in Blog by support Team  |  1 Comments

A simple evaluation of a practice is Profit = Revenue – Expenses. The ‘old’ days of practicing Medicine there was more forgiveness in managing expenses. This was due to higher margins in the business. Also, with well-designed practice processes, procedures and computer systems, there is a need for less space today than yesterday. If your Pediatric Practice allows patients/parents for walk ins, then you will need to establish your space differently than if all appointments are scheduled via phone and/or the web. Let’s take a look at some considerations on appropriate space planning:

1) If your practice schedules all appointments, evaluate the rate per hour. For example, if you see 4 per hour (25-35 per day), many offices can manage well with 2 exam rooms per provider.

2) If the practice allows walk-ins, evaluate the number of patients seen during the walk-in time during both the busy and slow days to evaluate the range of walk-ins. Determine the number of exam rooms for walk-in over flow based on these extra patients and apply a factor (since the exam room can be shared other times). This might move the number of exam rooms by provider to 3 or a different number.

3) If there are multiple providers in the practice, evaluate the number of providers during any four hour period and evaluate the load (# patients an hour or day) during this period. Although the practice might be open from 8 am – 8 pm with five full time Pediatricians, there might only be 3 providers working at any one time. Using the 2 exam rooms per provider example, the practice would need 6 exam rooms plus waiting room, front desk area, lab area, bathroom(s) and shared offices.

Interesting that walk-in “Minute Clinics” and similar type areas manage their clinics with one room per provider. Interesting that many Pediatric practices built on the ‘old’ model are grossly oversized. This leads to extra cost for Rent, Common Area Maintenance, utilities as well as extra management time. Other areas of business evaluate their sales and expenses on a square foot basis (e.g. Retail segment), I believe the Medical professional should embrace this factor as well. More efficient practices provide a means to drive down health care costs while providing the Pediatricians a good income to support their family. The evaluation of square footage needed for the practice requires a different mind-set and a willingness to change by all involved in the practice. The leadership for the change needs to come from the Physician Partners. The physician partners should consider leveraging Pediatric practice consultants to help them with this evaluation.

Why Payers should update their reimbursement model for Pediatricians

January 27, 2012 in Blog by support Team  |  Comments Off on Why Payers should update their reimbursement model for Pediatricians

For the last 20 years, Healthcare costs increase at a rate higher than inflation. Why? I would argue that the alignment of incentives in the current Healthcare system rewards use of the high cost treatments. If we look at the 2010 Medicare Spending (provided by Avalere Health and the centers for Medicare and Medicaid Services), 59% is spent on Hospitals and Long Term Care, 20% on specialists and other clinical services, 12% on prescription drugs and only 2.8% on Primary Care Doctors. This information was published the Wall Street Journal today in an article titled “An Rx? Pay more to Family Doctors”. After reading this article, I began thinking about how patients use our healthcare system as well as the non-alignment of incentives in the system.

Let’s look at some of the current incentives:

• Incentive to add more specialists: Many specialists make 2x per year than a Primary care Physician. It is interesting how the US has twice as many Medical Specialists per population as other developed countries (Seems that when specialists are paid so much more, so many more individuals practice as a specialist).

• Incentive to treat Symptoms & not Align Care: Pharmacies that add treatment clinics with NP and PA which ‘patch up’ a patient by prescribing an antibiotic when it is not needed. Although a Rx at the Pharmacy as well as a patient purchasing OTC drugs and other products at the chain pharmacy brings additional revenue to the pharmacy, this type of treatment can cost the system more overall. This pharmacy care is ‘non coordinated patient care’ in the system that benefits pharmacies. This lack of coordination causes some patients to over use the ER as well as specialists that drive more procedures because an issue was not identified appropriately by a Pediatrician.

• Incentive to Pay for Size vs. Quality: Payer incentives that allow health systems with larger power and size to be paid more for the same procedure without any proof in decrease in cost or improvement in quality to the healthcare system. The large systems add layers of management, personnel, expensive buildings and pay for these upgrades by increasing their size so they can negotiate a higher rate from the payers.

• Incentive to Payers for making reimbursement ‘Difficult’: Complicated payer systems and processes for which the ‘average’ provider is only being collecting 95% of the contract amount (managed care keeps 5% of the missed opportunities – this leads to an incentive system for Managed Care to make more $ by denying payment).

Hospitals have been on a buying spree to own large physician networks that increase their revenue in two ways: referrals to the hospital and organization size to force managed care to pay higher reimbursements. What has been happening is that many of the payers are paying for more and more services in specialists and the hospital. It is difficult for the independent Pediatric Office (non-owned by a hospital or multi-specialty large integrated health system) to stay independent. Many payers have been short sighted and provide minimal rate for services for Primary Care providers as well as minimal increases to these rates (unless the Pediatrician is in a large health system). One representative from a health plan explained a year ago to me that their standard increase was 0% due to increase cost in the system. During the discussion, I pointed out to this representative that their rates were in the lower 25% of all payers, their company increased their profits by over 25% and their CEO made approximately $20M in the previous year. The payers seem to be able to benefit from the current model

Many payers have been under paying the total costs of vaccines to the independent practices while paying larger systems more money. The payment difference is not due to better quality outcomes but due to many of the smaller offices not being able to identify the issue with their ‘dated’ systems, people, processes as well as the payers taking advantage of the Pediatric practice that is 1-5 physicians.

What can Pediatricians do in this environment?

1. Utilize up to date systems that update coding and payment rules continuously versus just one update a year – this points to why using cloud computing is an advantage.

2. Identify all the costs in your practice and establish a minimum rate of reimbursement that will be rejected from payers.

3. Analyze the payers in your practice at least 2x per year.

4. Evaluate if there is a payer that is below the minimum and speak with this payer. If they do not meet the minimal payer mix, discharge the insurance from the practice. The patients can either see your providers as out of network or cash.

5. Evaluate the total compensation for well and sick visits in your practice. Identify the payers that reject paying for nights and weekends. Call the representative and explain the extra costs for after hours and that the insurance company has established 9-5 as routine hours (the hours that they are available).

These are just a few recommendations on how to operate in today’s healthcare system.

10 Ways to Improve the Bottom Line of Your Pediatric Practice

January 3, 2012 in Blog by support Team  |  Comments Off on 10 Ways to Improve the Bottom Line of Your Pediatric Practice

Managing a Pediatric Medical Practice is full of opportunities and challenges today. In the ‘old’ days managed care plans had minimal influence on the bottom line of your practice, Malpractice rates we’re relatively inexpensive and patients were flexible to meet 9-5 office hours. Today, much has changed in society as well as in managing a Pediatric Medical Practice. Other ‘conservative’ services such as banking have changed drastically in the last 15 years. Look how easy it is to gain access to your bank/bank account today versus 15 years ago. You can be successful in Pediatric Medicine today by understanding how to meet the needs of Patients and Managed Care Plans. Patients want good access to a good Pediatrician while Managed Care Plans know that seeing a Pediatrician is more economical then using the ER or Urgent Care Centers. Also, many Pediatricians act like a Medical Home that provides continuity of Care. Managing a pediatric practice needs to be done in an objective manner by providing goals while measuring and monitoring success toward these goals. Here are 10 suggestions to improve the bottom line of a Pediatric Practice:

1. Optimize New Patient Additions: how many patients are in your Pediatric Practice? What are the ages of these patients? What is the average # of New Patients joining your practice per month? How do your hours, location(s), facilities, and staff compared to other choices for Parents? The more practices in the same location, the stronger the value proposition needed for your practice to be successful. Patients choose a Pediatrician to obtain good advice and treatment. They need to feel heard, have their questions managed and feel that your practice provides the best options. If a provider is not meeting these needs, the practice manager/physician Partner needs to discuss the importance of service. Suggested reading, although in the Hospital Segment, includes “If Disney Ran You Hospital, 9 ½ things you would do differently”. http://www.amazon.com/Disney-Ran-Your-Hospital-Differently/dp/0974386014

2. Provide and Measure Quality Care/Patient Satisfaction: Quality Care is important in any Pediatric Practice. How do you measure “Quality” in your practice? You should be able to set up reports in your E.H.R. system to measure HEDIS measures such as the % of patients that were vaccinated per a pre-determined vaccine schedule. The patient and parent have an opinion of the care in your Pediatric Practice. If you provide them an option on each visit to provide feedback either via a ‘Feedback Box’ or an online link, you have a great opportunity to see trends in the perception of the care provided by your practice. If the patient survey is created and implemented correctly, you will also be able to use the tool to view feedback per provider. This can be used as a tool to constantly improve care and/or the perception of care. To receive continuous improvement in your practice, you need the feedback and the providers need to choose to change based on the feedback.

3. Leverage the “Right” Technology: Patients and parents are use to convenience via their smart phones and home computers (look at the dramatic increase in on-line sales in 2011 versus 2010 as an indicator). Does your Electronic Health Record System have the ability for parents to schedule appointments, view select information through a patient portal (determined by the Pediatrician), and pay bills on-line? If you are not sure, ask your E.H.R. vendor what options they have the cost for the options. Also inquire if you and the providers on call can view all your patient records via a smart phone. The system used on a smart phone should be configured for a smart phone.

4. Managed the Fee Schedule: I am surprised at the number of practices that have established their fee schedule significantly below appropriate levels established by consultants in the field of Medical Practice Management as well as recommended levels provided in practice management courses through the Medical Group Management Association (MGMA). Generally, the billed rate per CPT code should be 2-3x the Medicare reimbursed amount for that code. The practice needs a consistent and well thought out fee schedule that is reviewed at least 1x per year. If you are unsure how to establish appropriate fees, contract with an organization that manages Pediatric Offices or does consulting for Pediatric Offices. This is not a task for companies that primarily sell software and have services as an afterthought. If you want to learn on your own, recommend attend courses provided by MGMA.

5. Review Contract Rates with Plans: The fee schedule is one component, what the actual contract rate with each insurance company is an important component to improve the bottom line of your pediatric practice. The fee schedule should be re-visited each year. Look at the difference between your fee schedule and the contract rate for each of the top 8-10 plans. There will be a few plans that will try to not give an increase in their rates. There were two plans I worked with for a Pediatric Practice that try to sell in ‘no increase’ from the previous year while the plans increased their profitability by 15-20% year versus year and the CEO’s of the plans made millions in salary and bonus. Remember, that Pediatricians are usually the lowest paid specialty in Primary Care and Pediatricians help the managed care plans reduce ER visits, Urgent Care centers as well as inappropriate use of the health care system. No increase in a fee schedule is a decrease in your salary since the costs associated with Rent, Employees, taxes, insurances, supplies and vaccines increase each year. You might need to cap or discharge a particular ‘poor’ performing insurance from the practice. Many of the patients from a particular plan will stay with your practice. Obtain good advice and use appropriate consultants that understand contracting.

6. Evaluate Payer Mix: What is the payer mix of your practice? Some practices have minimal patients that utilize Medicaid and/or Managed Medicaid Insurance while other Pediatric Practices are >75% Medicaid. Understanding the geography and plan mix will help you make informed decisions. You should become with some of the reimbursement and desires of the plans that comprise greater than 80% of the revenue for your practice. Analyze the capitation rate per patient per month for each of the insurance companies as well as the facility usage rate for the average capitated patient. Does your practice management system track the monthly capitation payments? What % of your monthly revenue is from the capitation checks? If you added a new provider or have a new practice, you should be more flexible on the insurances that you accept as well as the ‘cut off’ for contract rate. If you are unsure how to evaluate the payer mix, seek advice from your billing team (if you use a vendor that specializes in Pediatric Billing) or a Pediatric Practice Consultant. Recommend evaluating the payer mix at least 1x per year to determine what changes are needed.

7. Monitor Collection Rate: Net collection rate is the % collected versus the contract amount. For example, if your fee schedule for 99214 is $145 and the contract amount for the fee schedule is $100, a 99% Net collection rate means that $99 was collected of the $100 contract amount. The contract amount could be broken into three areas: co-pay collected at front desk, amount paid by insurance and amount due by patient. Let’s do an example with the $100 for a 99214 (assuming this was the only code for the visit). Let’s say the patient had a $20 co-pay and $50 paid by the Insurance per the Explanation of Benefits and another $30 due by the patient. The back-end billing team needs to bill the patient for the remaining $30. MGMA benchmarks show that the average collection rate for charges >120 days aged is approximately 95%. MGMA establishes a goal of 97% of Net collections. What is the Net Collection rate for your practice? Do you monitor this monthly? Do not settle until the collection rate is above 99%….when contracting a vendor; ask for their range in collection rates for the Pediatric Practices that they manage. When you use your own internal billing team, make sure and monitor multiple patients per week to insure that billing and write offs are appropriate per the protocols of the practice. Any person can upload charges to a clearing house, but not all practices have systems that manage the entire Pediatric Revenue cycle. An average collection rate can cost a practice thousands of dollars in lost revenue.

8. Monitor AR Days: Accounts Receivable days or AR days is a simple formula of taking the total $ in Accounts Receivable and dividing this by the averaged $ generated per day. Again, benchmarks are important to monitor on a monthly basis. The MGMA averages are between 42 and 50 with

9. Evaluate Front Desk & Providers: Both the Front Desk team as well as the providers in a Pediatric Office have a significant impact on the Revenue Cycle. The front desk team needs to verify the insurance, scan the insurance card, and collect the co-pay as well as any outstanding balance on a patient account. The Pediatric E.H.R./Practice Management system should have a system for the Practice Administrators/Physician Partners to monitor/audit the collection of co-pays. Note that some resources report that approximately 70% of practices have theft at the front desk. If you have a strong audit system that verifies the amount each day (like a bank teller) you can avoid revenue being taken from your practice. The providers have a responsibility in the revenue cycle to make sure they capture the work/advice they provided to the practice. Strong Pediatric Practice management systems should be able to simplify the choices so the providers just select from one of the most common Diagnosis codes and CPT codes.

10. Review E&M Coding: The “bell” shaped curve is the ‘ideal’ for Pediatric Practices. Some high quality based might have a curve that has slightly to the right. Some practices either under or over code. This either reduces the appropriate level of revenue for the practice or places the practice at an audit risk for which they could owe revenue back to the insurance company. The E&M coding should be reviewed by provider and practice at least 1x/quarter. If there is a provider that is ‘under’ or ‘over’ coding, consider enrolling in an on-line course provided by either MGMA or the American Academy of Pediatrics.By implementing these 10 suggestions early in 2012, your Pediatric Practice can benefit from appropriate changes for the entire year. A well-managed Pediatric practice leads to happy providers, staff members, and patients.

Why Pediatric Patients should not obtain Routine Medical Care at Pharmacy Clinics like The Minute Clinic (CVS), Take Care Health (Walgreens), and other walk-in clinics.

December 9, 2011 in Blog by support Team  |  Comments Off on Why Pediatric Patients should not obtain Routine Medical Care at Pharmacy Clinics like The Minute Clinic (CVS), Take Care Health (Walgreens), and other walk-in clinics.

There has been an evolution of the services provided in Pharmacies over the past few decades. Pharmacies started as a local pharmacist that spent time teaching their clients, families and providing extra counseling care. Pharmacies also had some over the counter (OTC) medications available for patients. The pharmacy evolved into a “mini-grocery store” driven by high volumes of Prescriptions. Counseling at the Pharmacy changed today to providing more patient handouts to a point that most patients pick up their medications without speaking to a pharmacist. No physician would ever sell or consider selling tobacco products at or close to a Medical Facility. Pharmacies sell tobacco products including cigarettes. How can a pharmacy try to be a medical facility and/or treat patients? Here are some conflicts that Walk-in clinics found in Pharmacies have with good Pediatric Care:
1. Obtaining care at a walk-in clinic disrupts the continuity of care provided in the Pediatric Medical Home. Solid Pediatric Management principles minimize the chance that Patients over use Emergency Rooms, Medications (such as anti-biotics) as well received duplicate care.
2. The Pediatrician insures that the patient is up to date on their vaccines and does not receive duplicate vaccinations. Some continuity of care issues can occur with walk-in clinics including: the clinic providing an additional vaccine that the patient received on their last visit to the Pediatrician, disruptions in flow of information – the walk in clinic forgets to identify the primary care practice or the patient does not provide this information so the information is not in the medical record.
3. The Nurse Practitioner (NP) usually has a broad knowledge but limited knowledge in Pediatrics. The NP might not have the skill to identify a significant health issue that appears during an encounter in the pharmacy. She/he does have training and oversight by a Pediatrician in a Pediatric office. They might be performing this work as weekend work.
4. The walk in clinic does not know the history of the patient to provide optimal treatments. For instance, the NP at the clinic would not be aware of the number of visits to an Allergist for a patient’s asthma and if a patient has the tendency to move from mild coughing to severe asthma. The NP might in this case only provide a beta agonist and cough syrup vs. an anti-inflammatory Medication.
5. The Walk-in clinic might over prescribe certain Medications (like antibiotics) which are not necessarily in the best interest of the patient (good for a pharmacy though).
When a patient is on vacation outside of their home town is probably an appropriate example of when a patient might need to leverage a walk-in clinic. If a walk-in clinic is a health care facility, then they should accept all insurances including Medical Assistance as well as not be located in a pharmacy that sells tobacco products. As large institutions test and try to make money with walk in clinics, it is unclear on the future these pharmacy clinics have in the health care system.