Adapting to the Changing Healthcare Industry

doctor with a stethoscopeChanges to the healthcare industry in 2014 will cause practices to pull resources away from patient care and dedicate substantial time and attention to adaptation. We will be glad to work with your office to make sure you’re prepared for the many changes coming our way with a minimal interruption to your regular operations. This report is an overview of major changes that will be competing for your attention in the coming months, from outcome-driven reimbursement to ICD-10. In addition to explaining the fundamentals of each change, I’ll also provide a few ideas I’ve picked up in my research. My hope is that this report will help you to be more prepared than your colleagues, well in advance of each change, without having to invest too heavily in outside consulting. I’ve ordered these topics, not in the order I think they should be addressed, but instead with the most comprehensive paradigm-shifting changes first and more routine process changes toward the end.

Value and Outcome-Driven Reimbursement

In an attempt to control the costs involved in healthcare, the Affordable Care Act initiated a shift in the way healthcare providers are paid for treating patients. Historically, the majority of treatments you’ve provided have been billed and paid on a fee-for-service basis, which is to say that you were being paid for a service regardless of whether it improved a patient’s condition. According to the ideology behind the Affordable Care Act, that type of “volume-based medicine” is a significant factor in why healthcare expenses in America seem disproportionately high compared to models in other nations. Within the framework of the quality vs. quantity dichotomy, the idea is that shifting from a “volume-based” model to a “value-based” model will reduce the aggregate total expense for all providers treating any individual patient condition. An argument could be made that this represents an unfair transfer of risk from patients and payers to providers. But, right or wrong, this change is underway and we need to work together to prepare your practice to thrive in new reimbursement models as it has in the fee-for-service model.

In the fee-for-service world, the best opportunity many practices have to influence their profitability is to perform more services and exert as much control as possible over their payer mix. In a value-based model, services that have little benefit to a patient’s outcome will provide little, if any, revenue for a practice. Using an economy of force ideology would be wise when deciding what services are necessary. Seeing more patients will be more beneficial to a practice than providing more services for each patient. In addition, controlling risk in your practice will be even more important than controlling your payer mix.

When insurance companies pay a capped amount for an “episode of care” they shift the risk for patient improvement to providers. This year more than ever, it’s important to use billing and health record data to track and understand the most common problems among your patient population so you can anticipate and balance that risk. Chronically ill patients require more time and resources than other patients, both in your practice and in other practices treating them for the same episode of care. Those two factors make it very likely that treating chronically ill patients will generate little revenue and may be a net loss for your practice. Attention should be given to controlling that mix to the same extent that you may have controlled your payer mix in the past. Obviously you won’t want to turn away patients, but you may need to designate specific times on your schedule to certain types of illnesses so chronic diseases don’t take up an unsustainable percentage of your treatment time in any given period.

Pay close attention to the shared savings and shared risk sections of your insurance contracts. Try to negotiate a 50-50 split of shared savings with each insurance. You are shouldering at least half of the burden for keeping treatment costs low, so it’s only fair that you get half of the reward. But, don’t force a 50-50 split of shared savings if it means you also must accept a 50-50 split of shared risk. For the first few years of risk sharing, try to keep your share of the risk around 25 percent. In the past, insurance companies have absorbed nearly 100 percent of the risk, and they have revenue from healthy patients to offset some of their risk – a luxury you don’t have – so 25 percent is plenty fair for the first few years. When reviewing your contracts, look also for each payer’s definition of an “episode of care.” Try to understand what triggers the start of an episode; what services would be excluded or separate from that episode; and how long that episode will last before services are considered part of a different episode.

It can’t be stressed enough, that you must understand the level of risk being assumed by your practice, both through your new insurance contracts and through your patient population. Determine what percentage of your patients are non-compliant. Studies on non-compliance have shown that 20-30 percent of prescriptions are never filled and 50 percent of medications for chronic diseases are not taken as prescribed. You can’t make patients compliant, but you can control the extent to which you continue treating non-compliant patients.

Competing with Big Clinics and Hospitals for Market Share

Even without incentives from the ACA, the current state of the industry creates significant motivation for practices to merge and for hospital systems to purchase autonomous practices. This rise of vertically integrated super-clinics and multispecialty practices is putting additional strain on independent practices to stay competitive. Big clinics have a variety of advantages; from large-scale name recognition to controlling many of their own referral sources. However, history has demonstrated that the level and quality of service provided by large companies is better in theory than in practice, and that the complexity and bureaucracy involved in administering a large clinic slows progress and frustrates stakeholders. With that in mind, a shift back to smaller privately-owned practices would seem inevitable, especially as those practices integrate better with one another. This means that practices like yours must bring substantial resources to bear on competing with larger clinics and hospital systems, but only until the industry restores an equilibrium in the sea of change toward and away from big clinics.

For the time being, it’s necessary to give an inordinate amount of attention to the business aspects of your practice. I would recommend focusing on patient statistics. In all new payment models, the number of patients you treat will be a key factor in your reimbursement. Find creative ways to better utilize your providers and staff. Even a slight increase in visits per day will result in a significant increase in revenue.

Study trends in your patient demographics to find ways for your practice to see more patients. Compare the zip codes of patients seen in your practice to see if you would benefit from outreaches or a satellite office in distant or underserved areas. Also, switch from tracking your revenue and expense per FTE or RVU to tracking it per patient. The MGMA average total cost per patient is $487.03 per year. Of that, $149.78 goes to support staff and $134.60 goes to general operating costs.

It might be worthwhile to engage a data aggregation service to analyze the demographics of your patient population and help you identify good-fit patients and attract them to your practice. To the extent that you don’t already do so, you might want to use your existing infrastructure and staff to be more proactive about getting patients to make appointments when follow up care is due. Reach out to patients through recalls, follow up calls from providers, and community outreach programs rather than waiting for the patients to contact you. The same is true of other providers. It would be wise to cultivate ongoing personal and public relations with them to assure that the integration you currently enjoy will be ongoing.

Create Happy Patients

Patient satisfaction is important for any business, but its importance to medical practices is much more significant. Not only will it drive a patient’s decision to choose your practice over another, but it will also be factored into reimbursement in new payment models. Payers, including Medicare, will weigh the results of patient satisfaction surveys into their performance measures for your practice, which will influence how much they pay. I recommend utilizing your own patient satisfaction surveys to gain understanding of, and control over, the aspects of the patient experience in your practice that influence their happiness. It would be a good idea to review survey findings with your staff and post your satisfaction scores somewhere conspicuous to reinforce their importance. Consider filling out a survey yourself, as a patient. Track the patient experience from start to finish. What would make the visit more pleasant and satisfying from a patient’s perspective? Think of the patient as a guest, and fill patient-facing staff positions with people who have innate charm, a positive attitude, exceptional presentation, and professionalism.

There are numerous strategies that have proved effective at improving patient satisfaction. Two common complaints patients have with their providers are long wait times for appointments and the amount of time they are in the waiting room before they’re seen. It’s very common for patients to be frustrated about efficiency and access to care. Finding a way to see patients sooner will improve satisfaction. Other ways to improve accessibility and efficiency include patient portals, telemedicine, house calls, and physician follow-up calls. Many practices have also had good results from making a nurse or physician assistant available to answer patient questions by phone a few hours each day.

Customizing care to patient needs is essential in the new healthcare climate. Time constraints and technological changes in medicine have instilled a sense in patients that care is impersonal. The solutions to that problem may seem a little “touchy-feely” but that may be what is necessary to keep patient satisfaction scores high. For instance, in addition to noting chief complaints for patient visits, it’s an endearing practice to also inquire about their fears, values, dreams, and goals and how their illness factors into those. That’s the framework in which they understand their illness, so insight can be gained from understanding it. Ask probing questions to find out what patients aren’t telling you. Patients come in with an average of three concerns that weren’t mentioned when scheduling the appointment, some of which may provide insight into improving their outcomes and satisfaction. Digging deeper will allow you to provide a more complete treatment and improve patient education, thereby reducing recidivism.

Lastly, improve the delivery of information. According to the Centers for Disease Control, 9 out of 10 patients struggle with routine medical advice because it isn’t understandable in the format being presented. Furthermore, the Journal of the Royal Society of Medicine reports that between 40 and 80 percent of medical information provided during a visit is forgotten immediately. Even small improvements in those statistics within your practice will improve outcomes and patient satisfaction. Begin by sending pre-visit information packets to new patients at least a week before their visit, helping them plan ahead and be adequately prepared. Talk with your patients to find out how they prefer to receive information and what they respond best to. Make sure after-visit instructions, education forms, and follow-up plans are understandable, and develop a teach-back technique to verify their understanding. Part of the education a patient should always leave with is an awareness of how their behaviors affect their health. They should be encouraged to take responsibility for their health and be informed on effective ways to do so. Those are major themes in the legislation driving industry change this year.

Training

Providers and all support staff will need to be aware of the evolving healthcare culture and how it affects their routines. It’s important to begin training right away for the transition from ICD-9 to ICD-10 diagnosis codes. Support staff should begin including that extra detail and ICD-10 codes in their correspondence with insurance companies, physician offices, hospitals and labs. Any communications that currently involve ICD-9 codes or diagnosis descriptions (such as referrals and preauthorizations) should be modified to include ICD-10-level detail.

There isn’t a specific deadline for improving patient satisfaction. Still, it would be a good idea to begin training staff on any additional communication, surveys, or sensitivity improvements involved in your efforts to control patient satisfaction survey results. All of the staff who come in contact with the patient will need to embody your passion for providing the best care and patient experience. They will need to anticipate and exceed patient expectations from the first contact through follow up. There is a wealth of information available on the best practices for achieving patient satisfaction, but each clinic will need to tailor their training to the specific needs and goals of their providers and patients.

Conclusion

There is a lot to be done this year in order to stay ahead of industry changes. MBA will be by your side throughout the struggle and we’ll do as much as we can to keep changes from impacting your practice. But, many of the challenges ahead are related to the way care is delivered, which is largely outside of our control. The ideas and suggestions in this report represent ways other practices are confronting the same challenges you face. We hope some of them are beneficial to you and we look forward to helping you in any way we can. Contact MBA Medical Business Associates today to request a consultation. Call us at 866-622-2455, or locally at 360-687-5221.

Guide: Accountable Care Organizations

Click here to download our Guide: "How Independent Practices Can Succeed in a Healthcare Industry Shaped by ACO Programs". If you would like more information you can Request a consultation.

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Guide: Accountable Care Organizations

Click here to download our Guide: "How Independent Practices Can Succeed in a Healthcare Industry Shaped by ACO Programs". If you would like more information you can Request a consultation.

Practice Management

  • Anesthesia Billing
  • Full-service medical billing
  • Patient account management
  • Encounter form design
  • Patient balance collections
  • Learn More

MBA In The News

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