My own experience as a medical practice consultant confirms this finding. However, hospital-owned practices don’t have to be less productive. In fact, they can be as productive as independent ones if they avoid three major pitfalls.
Choosing low performers. Higher-performing practices do not see a need to become part of a hospital system. Therefore, it has historically been the lower performers, lacking the know-how to be profitable, that have turned to the hospitals for support. This trend will probably continue.The challenge to the hospitals is to improve these low performers.
Centralization of billing and collections. A New England hospital brought in varied practices, eventually totaling 82 physicians. The hospital decided to centralize the billing operations and put these activities under the control of the hospital’s vice president of finance. Fifteen months later, the net collections for these physicians had dropped by an average of 18 percent. The result: These once-profitable practices were now losing money, and the physician’s salaries were threatened.
This same scenario occurred with an Oklahoma hospital that had acquired the practices of 24 physicians.
The drop in net collections were due in part to the fact that hospital financial executives knew little about medical practice billing. The practices, prior to being acquired, were doing a creditable job. At the individual practice, it is the symbiotic relationship between the front-desk staff and the billing staff, which makes the difference. If the front-desk staff does not do an effective job of gathering and updating the patients’ demographic data, plus collecting required co-payments and deductibles, then the tasks of the billing staff become formidable. At this stage, the billing staff and/or the practice manager step in to show front desk staff what is needed to cut down on unnecessary billing and collections work. With centralized billing, there is no such connection between front-desk staff at the practices and the more remote centralized billing staff. And there is no data that supports the effectiveness of centralized billing. It may appear to more efficient, but usually is not as effective.
Loss of physician control and involvement. When a practice lacks billing and collections staff, then physicians recognize that they have no control over the financial performance of their group. This loss of control results in the physicians being less involved in the oversight of their individual practices. And it is further manifested when physicians are no longer responsible for correctly documenting their codes and now leave this for the central billing staff. Yet, our studies show that when physicians code and document their services, optimum billing and collections result. No one is better able to document and determine the correct codes than the involved physician.
The second fallout from this scenario is that, since the physicians are really not in control of their practices and their financial performance, they feel more like employees, which they have, in fact, become.
Recommendations
1. Bring billing and collections back to the practice level. Billing staff will feel more involved, being in the presence of the physicians, mid-levels, and other staff members, rather than in the more remote central billing office.
2. Make physicians responsible for the financial performance of their practices. This includes encouraging physicians to do their own coding and documentation.
3. Set up an incentive system that rewards physicians for the financial results of their practices.
4. Have coding consultants conduct coding and documentation workshops at your hospitals. These can be attended by physicians, mid-level providers and billing staff. Prior to the workshops have the coding consultants perform coding and documentation audits. These audits will allow the consultants to tailor their workshops to the audits, resulting in more personalized training.
George Conomikes heads the nationally-recognized medical practice consulting firm, based in San Diego. He can be reached at conomikesg@conomikes.com.
More Articles From George Conomikes:
5 Tips to Ensure Your Physician-Compensation Plan Doesn’t Fail
How to Avoid RAC Red Flags for Hospital-Owned Physician Practices
