Practice management solutions can bolster group operations and enhance long-term stability

In today's healthcare environment, managing a hospital-based physician practice and achieving increased effectiveness and improved productivity for business survival is no easy task. While strong revenue cycle management strategies can amplify the billing and accounts receivable results, incorporating practice management services can also support future growth and sustainability for a physician practice.

In order to sustain a successful practice, physicians really need to look at the health of the business overall, in addition to running its RCM program efficiently. Both sides have to be strong, and while RCM brings the money in the door, practice management is what you do with it after it is in the bank. 

Executing strategies
Before the Deficit Reduction Act of 2005, a successful practice was measured by the quantity of its monthly deposits and its metrics of patient satisfaction. Today, a successful practice is measured by how strong its relationships are, its ability to compete and the financial strength of the organization, among other elements. Practice management is about having a strategy and executing it effectively, which requires more sophisticated management expertise than ever before.

Practice management services should offer the consultative or staffing support needed to provide strategic advice, whether it is for general business services, mergers and acquisitions, or hospital or carrier contract negotiations. Customizing these solutions to fit the needs of each individual practice, practice managers can and should work directly with the group administration, or even serve a role as the administration, if need be, to provide customized practice management solutions.

RCM analytics also carry over into practice management. With the use of practice management data, physician groups can benchmark their practice against similar practices across the country.
The best way to benchmark progress is against your own practice, but it's extremely helpful to see how other groups operate. What are other groups paying shareholders versus non-shareholders? How much vacation do other practices offer? Ideally, a group would aggregate and survey that data for maximum transparency and benefits. Similarly, if a practice uses it in tandem with RCM services, it gets the best of both types of analytics — reporting based on practice data, as well as financial modeling.

The services are truly symbiotic. Better RCM is served with information, data and experience that are built into the practice management solutions, and vice versa.

Identifying services
While basic functions such as human resources, payroll and accounting may be easier to hire or replace, other business functions may require more sophisticated expertise usually held by more experienced and higher-salaried professionals. There's nothing too general about business services for a physician practice. For instance, practices might consider creating new by-laws or amendments and creating retirement plans whereby all physicians in the group feel their needs are being met, both those contemplating retirement and those just coming in to the practice. Another area might involve renegotiating medical malpractice coverage for the group. Consulting with an expert who may have developed models that were successful in previous engagements may offer a practice an alternative that may be successful for them.

Ensuring growth
Physician practices are interested in protecting their current business and ensuring future growth. There are different paths that can be taken to achieve that goal. Asking the right questions is critical to that growth. It could be a matter of developing a new practice model, one based on productivity and reimbursement, replacing the long standing lump and divide model. It could also mean strategic growth through a merger or acquisition.

Mergers and acquisitions should be pursued only with ideal partners, with opportunities that are both appropriate and strategic. Evaluating potential partners is a complex process, but culture, by far, should be a key consideration.

Demonstrating value
Consolidation alone, however, is not enough to meet the increasing demands and expectations of health systems. Practices should always strive to maintain or re-establish their positions as product and service leaders. They must become valuable information providers, helping the hospital by referring physicians and helping patients become better medical decision makers.

One way hospital-based physician groups can demonstrate value is to consistently work with the hospital, not just during the negotiation period, to fully understand what is important to the hospital and work to align their goals. This type of collaboration and continuously evidencing the contribution to hospital care initiatives serves to ensure practice sustainability, profitability and ultimate success.

Neal Peterson is a director of business development with Zotec Partners, a medical billing and practice management company focused on hospital-based practices.