Moving physician practices toward profitability: A case study

Hospitals and health systems are increasingly employing physicians and acquire physician practices in an effort to form an integrated delivery system of care. This strategy can be effective, but hospital and health system leaders need to begin taking an active role in ensuring the profitability of these practices.


At Becker's Hospital Review 6th Annual Meeting, Tom Hood, COO of King's Daughters Medical Center in Brookhaven, Miss., and Robert Teague, MD, vice president of QHR Physician Services Consulting with Quorom Health Resources discussed how they worked together to improve the profitability of KDMC's physician clinics.

KDMC began employing physicians in 2011. The medical center now employs 19 providers in its four clinic locations. The clinics handle 58,000 annual patient visits, have 77 staff members and generate $12 million-plus in annual gross revenue. But in 2013, the clinic's profitability began to suffer. The challenges the clinics faced included declining money, lack of reliable financial information, two different EHRs, an inexperienced director of clinic operations and lack of physician involvement in practice performance.

Mr. Hood and Dr. Teague took a systematic approach to addressing these areas. The key elements of the improvement plan including financial performance, quality, operational performance and management performance. "The first thing you have to do is figure out how to get the data to follow key performance indicators," said Dr. Teague.

The clinics were placed on a single EHR. "Consolidating on a single EHR has created more reliable production data and revenue cycle results," said Mr. Hood. The clinic's financial performance review included:

•    Movement to all billing in real-time
•    Establishing policies for time-of-service collections
•    Reviewing processes for incoming physicians
•    Aligning financial policy with the hospital's policies

Other improvements, completed and ongoing, include:

•    Reviewing staff job responsibilities
•    Creating management tools
•    Scheduling monthly staff meetings
•    Increasing comprehension of financial reports

Since Mr. Hood and Dr. Teague have tackled the issue of physician clinic profitability, several key metrics have dramatically improved. Just a few of the overall improvements include:

•    Net revenue: Up 40 percent
•    Visits: Up 2,500
•    Time-of-service payments: Up 91 percent
•    A/R days more than 90: Down from 46 percent to 18 percent

More articles on physician issues:
Establishing positive physician-hospital alignment: 5 keys to success
4 steps to creating a common culture in a medical group
Patient experience strategies from 3 healthcare executives

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