American College of Physicians: Internal Medicine — Doctors for Adults ®

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Keeping your practice healthy in a managed care world

From the July/August 1995 ACP Observer, copyright 1995 by the American College of Physicians.

By Deborah Gesensway

Just as managed care has changed how doctors practice, it also demands changes in how practices are organized and managed. "Until now, medical practices have had a long time to slowly get into managed care, and some have slowly disintegrated because they did not [use this transition time to] reorganize their practice," said George S. Conomikes, a Los Angeles-based practice management consultant. Now, he warned, managed care is rarely trickling into communities. "It's gushing."

The medical practices coping best with the new payment systems, rules of conduct and administrative regulations of managed care are those that have made a conscious decision not to just continue business as usual, he said. Take as your model the experiences of the giant retailers Sears and Wal-Mart, he says. Sears did not reorganize its structure and operations in the '70s and '80s to meet the demands of a new economy, and now it is struggling. To be successful, he said, think Wal-Mart: It sells quality merchandise profitably at a discount.

The following are some of Mr. Conomikes' tips for how physicians can reorganize their practices and their employees so they are more likely to survive in the new managed care world. He offered his strategies to doctors and their practice administrators during a recent daylong workshop in the Philadelphia area sponsored by the Pennsylvania Medical Society.

  • Invest in sophisticated information systems. There's more to data collection than tracking billings, collections, withholds and write-offs. You'll need data to determine your efficiency, to help you re-negotiate better contracts with your health plans and, just as importantly, to give your busy employees the tools they need to do their job properly without burning out and giving up.

For example, nurses, scheduling people and billing clerks all need to know--for each patient in each health plan--what is required for a referral, a co-pay, a deductible, a pre-authorization or a consult. Can you do the lab or must you send the patient down the street? How much lag time is needed to schedule the follow-up visit without wasting anybody's time?

"You should know the product line you are selling," Mr. Conomikes said. Why? "Because the patients want you to." When he is hired to help turn a struggling practice around, he makes it a point to ask each employee, "What would make your job easier?" The answers, he said, can lead you to sometimes simple--and not costly--solutions to complicated problems. For example, he said, add a computer terminal in the nurses' area so the nurses don't have to be forever running back to the billing office for information about a patient's HMO.

  • Instruct your scheduling and reception staff to call each patient two days before a scheduled visit. This not only functions as a reminder but also gives staff the chance to ask the patient to read the information right off his insurance card, saving hassles later.

"People's plans [can] change every year," Mr. Conomikes said. And everyone in the same HMO might not be in the same particular plan with the same exact benefits. Use the call as well to remind patients of their co-pay, and to inform them of office policy: If you forget your co-pay, you'll have to reschedule.

  • Put your newly accessible computer systems to full use. For example, set up a template that staff can use to record all calls to health plans. Have them log in the time they call, the time they finished, the name of the person they talked to and any subjective comments on the information received or manners encountered. You can use this information during your next contract negotiations with a health plan, he said. You will have the data to back up a complaint of, "Why do we have to call you four times for an authorization, compared to other plans?"
  • Consider hiring a part-time clerk. This staffer can make the 80% of all calls to a health plan that really do not require the expertise of an RN. "Nurses say that doing authorizations is a total waste of their time, and when a nurse is not with a doctor, the doctor's productivity goes down," Mr. Conomikes said.

On the flip side, don't skimp where it comes to clinical help. Hire skilled nurse practitioners and physician assistants--not medical assistants.

The standard in HMOs is becoming two nurses or physician assistants for every physician. A skilled nurse may cost more than a medical assistant, but also will have greater potential for increasing the productivity. "The discount mode is not going away," Mr. Conomikes said. "So, you must increase volume."

  • Keep to your schedule. Some HMOs in the most competitive markets of Southern California now will kick a physician off their rosters if the plan logs more than three complaints that the physician made a patient wait more than 45 minutes, Mr. Conomikes said.

Create a system in the office to record patient complaints. It's better for a practice to try to get a handle on a problem before it makes its way to the plan. And follow up on patients who leave your practice voluntarily. What they tell you may point you to a service problem that you need to address before it gets out of hand.

"All plans do patient surveys," he said. "It's not the quality of the medicine" they are looking for. "It's the quality of the service."

  • Continue to track the accounts of your capitated patients, just as if you were still billing them. For example, if you would have charged $100 for a visit and you received a $10 co-pay from the patient, account for the other $90 in a ledger column for adjustments. At the end of the month, compare that total to the per-member per-month capitated payment you get from the HMO and carry the balance over to the next month. By the end of the year, you will know if your capitation rate is fair, and will have data to take to your next round of negotiations.

You can use your superbill to document a capitated patient's visit. This will save you having to create a separate claim form, he said.

  • Recalculate your physician income formulas. If you have been struggling with how to determine doctors' compensation under managed care, Mr. Conomikes suggests income-sharing formulas for the managed care portion of a practice that are based on production rather than on compensation. Base the formula on "patients seen" rather than on "visits."
  • Develop in-house expertise. Name one physician in your group "Dr. Managed Care" and educate him. Designate one staff person, also, to be responsible for maintaining the managed care contract files, including updates and reviewing withholds. Make that person responsible for communicating changes to all the staff.

Don't forget to have all contracts reviewed by someone who knows something about managed care contracts. Some local medical societies have collected information about plans' typical contracts.

  • Don't put all your eggs in one basket. Mr. Conomikes said he considers it risky business in today's volatile economy to allow one HMO to dominate your practice. "I'm totally opposed to plans that say, 'Join us and no one else.' " He recommends you say no to that kind of contract; chances are the plan is more desperate for you than you are for its patients. If you are nervous about a new plan that wants you to join, try to get a discounted fee-for-service contract before taking on capitation. Or set a low ceiling on the number of new patients you would accept from that plan.
  • "Hug your primary care physicians." That is, if you are a subspecialist, Mr. Conomikes said. Survey your referral sources now to find out which plans they are part of or are planning to join. Follow them.

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