South Florida Hospital News
Thursday August 6, 2020

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January 2007 - Volume 3 - Issue 7

Primary Care Practice- Pressures and Possibilities

Twenty seven years ago, when I started in healthcare administration, it was a different world. We took care of patients, we submitted bills for that care and we got paid. I recall the first hospital CFO I worked with complaining when our number one payer wanted a 2% discount from charges as a prompt pay/volume discount. Imagine!

Since that time financial pressures on healthcare providers have steadily accumulated. In no place is that felt more than in primary care practices. The Medical Group Management Association data quantifies the effects of this pressure:

  1. The per cent of revenue going from gross to net has decreased from 88% to 63% over 20 years.
  2. Over the same period overhead rose from 44% of gross revenue to 63%.
  3. Double digit increases in malpractice premiums have raised practice expenses, forced a number of providers (according surveys, 23.9%) to curtail (or cease) performing procedures that used to generate revenue or caused early retirements- contributing to the growing primary care provider shortage.
  4. The number of employees per FTE provider has almost doubled over the past 30 years. The increased acuity of the patients seen in practices has contributed to this as well as administrative issues. Practices are being paid less to see sicker, more resource consuming, patients than we used to.
  5. MGMA estimates "administrative complexity costs" of $25,000 per FTE provider. We are all now forced to be HIPAA, OSHA, TEFRA, FMLA OIG, EMR, etc. experts.
  6. According to a Merritt Hawkins survey done for Physicians Practice, for the period 1995-2003 effective income (compensation impacted by inflation) for all non-healthcare professionals increased by 7%. For primary care physicians effective income decreased 10.2% and for specialists it decreased by 8.2%.
We are not producing enough Medical Assistants. Several years ago the Atlanta Journal Constitution reported that local schools were only producing one half of the number of Medical Assistants needed in that marketplace. Demand outstripping supply leads to salary inflation. I was a witness to yearly MA salary cost increases of about 9%. Over the course of my career, I have seen RN salaries go from $7.00 per hour to today’s levels. Practices are forced to compete with hospitals (and other practices) for the limited supply of RNs.

If you are "mad as heck (my change) and not going to take it any more," here are a few suggestions:

  1. Realize that you are running a business- a very unique business but a business just the same. We always hear of the "mission of healthcare." And it is quite a true statement. However, remember this- "no bottom line, no mission."
  2. Invest in a strong practice administrator and work together with that person to assess your practice and then prioritize and address its weaknesses (and we all have them). Communicate with and support that person as they help your practice. Allow that person the time and funds needed to attend continuing education events. Afterwards, meet to go over what was learned and how to apply it to your practice.
  3. Use benchmarks- MGMA provides very helpful data that allows you to compare your practice to peers along key indicators. The data is not always absolutely transferable but it will show you where you stand out – good or bad. This will help you better focus your limited time and resources to areas where they are the most needed and will have the most effect on operations and the bottom line.
  4. Evaluate adding appropriate ancillary services to increase revenue and potentially separate your practice from others. Realize that it is unlikely that any one service will be the "jackpot." But there are those that can help your bottom line. Add that to these other steps and you will see a positive difference.
  5. Check your fees. Are you "leaving money on the table." No practice can afford to do that! If a payer is paying you 100% of charges you are turning away money that you are rightfully eligible for.
  6. Do not be afraid to code your visits properly. "Undercoding" is as big an OIG issue as is "upcoding." Again, MGMA can provide some peer data to benchmark against.
  7. Join a group purchasing organization (like Physicians’ Alliance) to save you both time and money.
  8. Network with peers. This is true for physicians, midlevel providers, practice managers and other key staff. There are certain things that can’t be talked about. But there are many situations where you can share concerns and questions. At my last practice, I was the Chair of the Practice Administrators Committee for an IPA we were part of. We used those monthly meetings to share problems and possible solutions. Practice managers need and welcome this peer interaction. They are all facing many of the same issues and no one has all the answers and oftentimes a peer (whether an MD, practice manager, business office manager, or otherwise) can bring a fresh perspective to bear on an old problem.
  9. Whenever possible involve your staff. More than likely your staff has worked in other practices and other situations and potentially can provide helpful insight and suggestions. "At XYZ we did such and such and that worked…" (or didn’t). Doing this also increases staff satisfaction. For the surveys I have seen over the past years the number one thing staff wants from their employer is a feeling of satisfaction gained by being an active participant in the workplace and then being appreciated.
  10. Be flexible, proactive and/or responsive. As you well know, the only constant in healthcare is change- good, bad or otherwise. Keep yourself and your practice open to changes and opportunities. Stay flexible enough to be able to adapt to your changing marketplace and customers. Partner with your staff to problem solve and success share. Solicit feedback from your patients and take it to heart. You can survive and thrive- even in difficult times.
Make use of all of the tools available to you- staff, peers, technology, professionals and professional associations.

As the Marine Corps teaches- Improvise, Adapt and Overcome. And they’ve been and in business for 200 years!

Robert Chalmers, Executive Director, Physicians’ Alliance, Inc., can be reached at or 1-866-348-9780.
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