Challenges Facing an Independent Physician Practice
Physicians who operate independently are facing several challenges in the current healthcare environment. They may be stressed and overburdened by administrative requirements, or they wish they had more time to spend with their patients. These factors negatively affect patient care and hurt physicians financially. Thus, the challenge these physicians face is how to continue operating independently while providing the best quality of care for their patients—but at the same time maintaining financial viability. Dr. Imran Minhas, a geriatrics specialist, stated, “Doctors simply no longer have control over how they can treat patients today.”
Background & Context
Consider the following statistics and takeaways as outlined in Kareo’s 2019 “State of the Independent Practice Industry Report” (Report):
- Physician-owned practices see 990.8 million visits, or 3.1 visits per person in the U.S. each year. In contrast, hospital outpatient visits number 125.7 million visits per year, or 0.4 visits per person.
- Key Takeaway: Independent physician practices will continue to be in demand because patients are looking for good services and personal attention from their providers.
- Independent practices have a lower 30-day readmission rate compared to hospitals, and they reduce avoidable hospitalizations by 33 percent.
- Key Takeaway: Quality of clinical care is better in independent practices because physicians spend more time with their patients without interference from hospital management.
- A large percentage of independent practitioners cited autonomy as a top factor in selecting their current practice model.
- Key Takeaway: This practice model will continue because many physicians still like the idea of autonomy despite the challenges they face.
Less time with patients: The economic challenges within a physician practice typically lead doctors to make up their losses with volume. As reimbursement rates have either been cut or failed to keep up with inflation, providers have felt the need to squeeze in more patients on their schedule to make up for that loss. This has resulted in less time with the patient and affected clinical quality as well.
Ethical dilemmas: Reimbursements have been reduced and physicians are trying to survive independently. As physicians feel the financial burden, they may be tempted to become more aggressive with their coding procedures. For example, based on the time spent and type of consultation provided to the patient, the doctor would be required to bill a level two; however, if the billing level were increased to level three, then the physician would be reimbursed 15 to 20 percent more for the same patient visit.
Managing regulatory requirements: It is critical to keep up with new policies and regulations monitored by the Centers for Medicare & Medicaid Services (CMS). It takes a person with knowledge and experience to handle these changing policies, and it can be a challenge implementing them within the practice.
Burnout: All of the above-mentioned items can lead to provider burnout. Physicians might be the first to tell you it is the “administrative duties and personnel issues that cause them the biggest headaches and eventual burnout,” according to Dr. Minhas.
Finances & Reimbursements
Declining reimbursements from third-party payors, increasing responsibility for payment falling on patients, and the complexities of the changeover to value-based payment and merit incentives are something practitioners are facing each day. According to the Report:
- Seventy-two percent of patients in independent physician practices fail to fully pay off their medical bill balance.
- Forty-two percent of total U.S. healthcare payments in independent practices are tied to alternate payment models (APM).
- Key Takeaway: Without effective tools and processes for practice engagement and population health management, this trend can present a risk to the independent practice.
There are several areas where a practice can manage and look to increase their revenue. The following three are the key areas of focus:
1. Improve Insurance Reimbursement Workflow
|Planning for Success||Before Visit||Delivery Care||Post-Visit|
|Team responsibilities||Scheduling/patient reminders||Review schedule||Superbill/charges|
|Software setup||Eligibility check||Delivering care||CMS program reporting|
|Security & compliance||Patient intake||Document management||Patient engagement|
|Enrollments||Authorizations & referrals||ePrescribing||Managing referrals & diagnostic testing|
Source: Medical Economics
A few of these areas are particularly critical to practice sustainability:
The eligibility check is important because if not followed appropriately, the doctor may see the patient and not be reimbursed due to lack of coverage.
Superbill/charge management is crucial because if these charges are not submitted to the billing company in time for reimbursement, then that will delay the funds coming in from the insurance companies. They need to be managed on a daily basis, and extensive delays in submission can result in denial of the claim.
Managing referrals and diagnostic testing are key activities within a practice because they generate direct revenue and help sustain the practice’s profitability.
2. Collecting Revenue
- Seventy-nine percent of practices agree that insurance reimbursement is a key challenge.
- According to Lance Beus, CEO of Clinton Memorial Hospital, fewer than 65 percent of providers and/or provider representatives said they had low confidence in succeeding negotiating rates or didn’t know where to start.
|Planning for Success||Patient Intake||Claims Processing||Monitor Financial Health|
|Enrollment||Schedule appointment||Charge capture||Establish KPIs|
|Software setup||Check in||Claims management||Reporting|
|Practice setup||Eligibility check||Rejection & denial||Process improvement|
- Beus also stated that 72 percent of practices agree that patient collections is a key challenge.
A few of these areas are particularly critical to revenue capture and related cash collections:
The charge capture process must be managed carefully. Administrators need to make sure the doctors complete their clinical notes in the EMR system so there is no risk of the claims being kicked back. The issue is that doctors are trying to see as many patients as possible as per the demands of running a profitable practice. The risk is that the physician may not be thorough, which could result in incomplete notes and unprocessed claims. It is crucial that physicians complete their notes before submission.
Rejection and denial of claims need to be tracked very carefully to ensure they are reprocessed quickly for resubmission and payment.
Process improvement is a key element to running an effective practice to help make efficient patient flow result in quicker reimbursement.
|Planning for Success||Before Visit||During Visit||After Visit|
|Training staff||Appointment confirmation||Check-in/recheck eligibility/collect copay||Confirm balance & send statement|
|Technology||Eligibility check||Physician visit||Confirm follow-up & collect remaining balance|
|Financial policy||Appointment reminder||Check out/schedule follow-up||Follow-up visit/check eligibility again/collect copay if any|
Source: Medical Economics
Confirming follow-up for patients is important to ensure the schedule is full and optimized; if a patient is unable to make it, then that opening can be filled by another patient.
3. Additional & Alternate Revenue Opportunities
Finally, there are opportunities for providers to make additional revenue through a variety of sources.
- Laboratory and other ancillary services
- Participating in the Chronic Care Management (CCM) reimbursement program
- Recurring patient visits
- Targeted patient referrals
- Business name search engine optimization (SEO)
- Growth through practice acquisitions
Dr. John Mehnert is an independent wound care specialist in Wilmington, Ohio, who has indicated that he is not reimbursed what his services are worth. He has owned his own practice for more than 30 years, and he says a surgical procedure such as a bunionectomy pays $350 and then the patient cannot be charged for 90 days' worth of consultations. These types of reimbursement policies have made it very challenging for independent providers.
In addition to creating revenue opportunities, managing personnel also requires significant time and effort when part of an independent practice.
Shortage of quality staffing is affecting independent physician practices a great deal as they have to compete with hospital systems for talent. If the hospitals get better quality staff, the independent practices are forced to work with less qualified individuals, which leads to added stress on the physicians due to limited training capabilities. In addition, due to regulatory requirements, there are more functions the staff has to learn with limited training in those functions. This results in the staff being too stretched to complete their day-to-day duties and affects patient care.
- Establish relationships with local colleges for direct hires from their medical programs (medical assistants, nursing). Although the individual will be fresh out of school, you will have the advantage of molding them according to your requirements and ingraining them into the culture you have set.
- Invest time in structured training for your staff so they are comfortable with new policies and procedures. Although training takes time and money, it will be worth doing, as it costs more to rehire and retrain.
- Create an environment and culture of a family business for your staff. Think about why you prefer to go to a family-owned business rather than a franchise. If you hire the right person, then you can offer more flexibility compared to the less-flexible hospital system’s corporate environment.
- Offer low-cost perks, such as:
- Discounted gym memberships
- Store discount programs (grocery, gas)
- Performance-based rewards (sports/concert tickets)
- Weekly lunches or barbecues
- Company day trips
- Flexible work schedules
These benefits can be effective when you have hired the right people to do the work. In a small physician practice setting, it is critical to have the talent and work ethic to support individual and practice success. In return, the benefits offered to the staff will go a long way. Dr. Khurram Khan, an oral surgeon based in Cincinnati, lives by this philosophy. He suggests retaining staff is not as complicated as you would think. Treating your co-workers with respect is most important. As an independent practicing physician, it is crucial he has continuity with his staff—otherwise it will result in poor customer service, something he cannot afford. Dr. Khan also adds that staff have to believe in the core values of the organization and work towards the common goals and beliefs that have been established.
These issues are important, but this list of challenges that physicians face is not all-encompassing. If you have questions about this, reach out to your BKD Trusted Advisor™ or submit the Contact Us form below.