• FEBRUARY 2008 FEATURE ARTICLES •
Physicians Practice Management: Case History
From the Ground Up
This family practice's preopening installation of an integrated PM/EMR streamlined billing and increased profitability.
By Tiffany M. Nelson, M.D.
Starting a physician practice from scratch provides an extraordinary opportunity to build a highly efficient and patient-focused environment from the ground up. Additionally, practices avoid the headaches of transitioning staff from paper to electronic processes. Instead, they can implement new systems and procedures before physicians and support personnel have had the chance to settle into individual workflow patterns.
Founded in 2004, Phoenix-based Desert Ridge Family Physicians opened its doors with two physicians and two staff members. Today, the practice has three full-time physicians, eight administrative staff and more than 6,000 patients. Much of Desert Ridge's success is attributed to its reliance on technology to maximize efficiency. Today's physician practices on average maintain 3.16 FTE support staff for each full-time physician, according to a Medical Group Management Association (MGMA) 2007 Cost Survey report. In contrast, Desert Ridge maintains 2.66 FTE support employees per physician, saving more than $50,000 per year.
Problem
From the onset, we realized the value that technology could bring to our new practice. But we also recognized how important it was to implement the right technology. We would need a system that was reliable, easy to use and could meet changing needs as we grow.
We also wanted to ensure that we avoided the pitfalls that plague many practices, specifically as they relate to ineffectual billing practices that lead to long collections cycles and loss of productivity resulting from a reliance on paper processes. In the paper world, it takes hours or even days to follow a task to completion. In the electronic world, the same task may take only minutes or even seconds.
With this in mind, we laid groundwork to create the most efficient processes possible, and launched the search for a robust practice management (PM) system to support our priorities. During these early planning stages, it became clear that we could optimize results by simultaneously adopting an electronic medical record (EMR) system. Integration would ensure comprehensive charge capture; extend the benefits of a paperless environment to the clinical side of the operation; and, most importantly, support physicians in delivering excellent patient care.
Solution
As the founder of Desert Ridge, I had several goals in mind as the search was initiated. I wanted to complete billing in-house and extensive reporting functionality, so that we could better oversee cash flow and rectify bottlenecks or problems. In addition, the PM system I sought would need to readily support "same day/next day" (open access) scheduling. I was committed to adopting this particular model because it would allow all providers and staff to be more responsive to patients.
I began the selection process by conducting research online, participating in Web-based discussion groups and reviewing evaluations of PM systems posted by professional societies like the American Academy of Family Physicians. Based on this preliminary research, I contacted seven vendors, however, (surprisingly) only four responded.
Each of them conducted onsite demonstrations, but only two came close to providing the range of functionality we sought. In fact, one system was so unworkable I ended the demonstration at midpoint. Ultimately, I decided upon the NextGen Enterprise Practice Management system. It was intuitive and easy to use, and would enable us to customize features as needed, such as appointment scheduling and reports. The system also offered electronic remittance and fund transfers to enhance cash flow. The icing on the cake was the system's automated work tasking capabilities, which would allow us to manage ongoing tasks, such as monitoring the status of outstanding insurance claims or contacting patients about past-due balances. In addition, NextGen offered an integrated and customizable EMR. Data would flow between the two systems, to streamline billing and shorten our revenue cycle.
Implementation
While implementations are usually disruptive to a practice, we avoided most potential problems because we didn't begin seeing patients until after the system was in place.
Since our office was so small, all staff members were trained on the PM system prior to our targeted go-live date. These sessions took place offsite and were scheduled over a 2-week period. The first week focused on set up, while the second covered how to use the technology in day-to-day operations.
Following the training phase, the vendor worked with our physicians and staff on system configurations, such as establishing schedule preferences and customizing report templates. Trainers were onsite for two days during go-live and then available via phone to answer questions. They also visited our practice five times for additional training and support during the first year.
Results
The integrated PM/EMR system enables us to customize the scheduling feature to accommodate our preferred "same day/next day" model. Our patients have been highly appreciative of this approach because they know they can get in to see us when necessary.
Same day/next day scheduling has enabled us to eliminate costs and staffing resources that would otherwise be dedicated to sending patients appointment reminders via phone or mail. In addition, our no-show rate is less than 2 percent, which is substantially lower than the 15 to 22 percent rate most practices experience. This allows us to schedule the appropriate number of visits each day, rather than overbooking to account for anticipated no-shows. As a result, our practice stays on schedule, minimizes wait times and ensures that physicians spend more time on direct care, all of which enhance patient satisfaction.
We also increased the efficiency and effectiveness of the billing process. Because charges automatically flow from the clinical EMR system into the PM system, our physicians essentially do their own coding. When we opened the office, we did not create a paper superbill, since automation ensures that all charges are captured. For instance, in-house lab tests and vaccinations are automatically added to the bill when performed.
Electronic billing further increases accuracy by scrubbing claims for errors, allowing our front-office staff to make corrections prior to submission. Our rejection rates are lower, and claims are processed and paid faster.
Billing has been improved in other ways, as well. We are able to load individual fee schedules from private payers into the system, so that we know up front what reimbursement we can expect on each claim. This cuts the time staffers spend making adjustments when payments are posted and greatly increases our A/R accuracy. In addition, we can easily identify outstanding balances that need to be collected (e.g., copays, deductibles). Staff can likewise compare actual payments to negotiated rates, so we can identify outliers and contact the insurer about discrepancies.
Various task-management capabilities further increase the efficiency of the billing and collections processes. Upon login, staff review an on-screen list of open and overdue tasks, such as contacting insurers to collect payments. Tasks are automatically closed upon completion. For example, a user may have an open task to call a patient about an outstanding balance. When the patient says that a check has been mailed, the user can create a reminder to see if the check has been received as promised. When payment is posted, the task is automatically closed and disappears from the staffer's work queue.
We've also reduced A/R days. Our average A/R rate is 12.6 days, compared to the national average of 39.01 days. Less than 5 percent of our accounts receivable is older than 60 days, with the national average being more than 29 percent. The system supports electronic remittance advice, which allows for fast and accurate processing of insurance payments and, when combined with electronic funds transfer, allows us to often receive reimbursement within five to 10 days of the patient visit.
A Significant Return
Purchasing this technology represented a significant investment for our small practice. But, without a doubt, the PM system is a bargain when we consider the increased efficiencies and cost savings that we have achieved. Simultaneously, we also increased patient satisfaction and improved staff moral. Automation also has reduced stress and enabled employees to be more efficient, which means fewer overtime hours for both physicians and staff.
Reporting Improves Performance
Reporting capabilities enable us to monitor and measure practice performance. Along with the preconfigured report templates, users can quickly create custom reports, such as:
Coding variations–Upon reviewing a routine report evaluating revenue generated by a physician, our practice administrator noticed that one doctor was billing less than other physicians for similar cases. After evaluating these coding variations, we found the physician was under-coding many encounters. This triggered an evaluation into all coding patterns and we uncovered other problem areas as well. We remedied the situation with additional coding education and revenue ultimately increased 15 percent.
Physician productivity–Reports also evaluate physician productivity, based on Relative Value Units (RVU). This is a much more precise assessment of a physician's contribution to the bottom line, compared with simply measuring gross billings. This, in turn, provides an equitable approach for dividing overhead costs among physicians.
Profitability per procedure–Reporting functionality allows us to assess profitability for specific services. For instance, it is commonly assumed that vaccinations are unprofitable. We created a report and discovered that, based on actual costs and payments, we make a profit between 5 and 9 percent on vaccines.
Patient balances–We generate lists each morning of scheduled patients who have outstanding balances. Upon check-in, the front-office staff collects payment.
Tiffany M. Nelson, M.D., is the founder of Desert Ridge Family Physicians. Contact her at
Dr.TiffanyNelson@DesertRidgeFP.com.