In the previous article, I offered four ways (other than growth) a practice can compensate for declining reimbursements: improve efficiency, boost collection ratio, increase productivity, and consider a practice merger. As promised, here are four more.
Stay focused.
Focused strategies lead to better outcomes and lower costs. It is no accident that the best outcomes and lowest price for open-heart surgery are achieved where the highest volume of these is performed. Dr. Denton Cooley of Houston reduced the cost of coronary artery bypass surgery decades ago from a national average of $43,370 to $27,040 and still had impressive outcomes. The higher the volume of similar procedures, the more skilled the doctors become at performing them, and unit costs decline as more procedures are spread over existing fixed costs. Some doctors enjoy treating certain conditions more than others, and narrowing the focus may revitalize a burned-out practitioner.
Renegotiate contracts.
Contract terms can be improved even when doctors have little control over price. You can present that information during negotiation if you have collected patient satisfaction data. If patients are satisfied, the insurance companies want to retain that good physician. A small change in a contract can significantly impact your profit. Good patient data can justify an increased fee for procedures—especially ones that can keep management within the practice. Other doctor-friendly changes are increasing the co-pay or reducing paperwork. When renegotiating contracts, you have more leverage than you think.
Provide supplies and products.
Some doctors still feel that “selling” retail products in their practices is unprofessional. But it is often a valuable service and leads to better patient care. For example, if a mother can obtain antibiotics at a pediatrician’s office rather than driving with a crying baby to a pharmacy, she will probably appreciate the convenience and pay a small premium for the time saved. This growing, acceptable practice provides better care—and many patients even expect it!
Collaborate with peers.
Still in its infancy, peer collaboration represents one of the best potential sources of future nonpatient care income—especially if it improves patient care to reduce the total cost for payers. Group purchasing gives each doctor better prices from vendors. Some doctors are expanding into ancillary areas, such as specialty ambulatory surgery centers, driving surgery costs substantially lower than in a multi-specialty ambulatory surgical facility and certainly less expensive than the hospital. Quality increases, and costs decrease with higher volumes of patients, benefiting doctors, patients, and payers. Previously, doctors in academic health care centers and hospitals have had administrative and clinical duties. Doctors in private practice who enjoy management duties will have similar administrative opportunities as collaboration leads to larger physician groups and networks.
Bottom line: While patient “growth opportunities” are usually a mainstay in offsetting diminishing reimbursements, multiple opportunities exist for improving practices without increasing patient volumes beyond the point that leads to poor patient care. These strategies and better financial planning enable a practice to make it through this challenging period.
Neil Baum is a urologist.
