| You Can Turn Your Practice Around |
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Family and friends call her Taffy, but Landers proved to be one tough cookie in the face of her financial doldrums. Instead of moving to Canada or the classroom, she slowly began overhauling her practice. Her perseverance has paid off. Last year, she earned $125,000, a great leap forward from her 2002 compensation (though still well under the norm for internists). And she's expecting to grow her practice more in 2007. Landers didn't take any extraordinary measures to achieve her turnaround. She simply did many of the things that practice management experts regularly preach in the pages of this magazine. We'll review those moves in detail so you can take away lessons for your own bottom line. Take a hard look at billing and collections One of Lander's first acts of financial self-preservation was cutting loose three insurers—Aetna, Cigna, and UnitedHealthcare—whose miserly fee schedules were depressing revenue. "It was a scary prospect at the time, but my practice didn't suffer," says Landers. "I'm still seeing as many patients per day as I did before I fired these insurers. Some of those plans' patients did leave my practice, but plenty of others stuck with me. They had to pay me out of pocket, but they were able to get some reimbursement from their insurer. I used to discount their fee if they paid me cash at the time of service. Then I discovered that their insurance reimbursement usually exceeded their discounted fee. So I ended the discount." Landers' biggest move on the revenue side, though, was dropping her outside billing agency in 2004 and taking that job in-house. The company that she had relied on to collect her money was lackadaisical at best. Instead of getting claims out the door within 24 hours of the service, it sometimes sat on them for a month. The company also was slow to work denied or underpaid claims. If an explanation of benefits came back stating that the patient wasn't covered under a particular health plan, the company would dun—and irk—the patient instead of finding out if he had a new health plan. When checks from health plans and Medicare didn't arrive when they should, Landers' urgent calls to the billing agency were met with nonchalance. To set up her own operation, Landers purchased billing and scheduling software called PracticePoint Manager from McKesson along with the necessary hardware, all for about $25,000. More importantly, she turned to a billing and collection consultant named Leanne Chaney-Baldwin to train her staff. Chaney-Baldwin taught them not only how to use the new system, but also how to master the entire revenue cycle, from patient scheduling to payment posting. In sharp contrast to the outside billing company, Chaney-Baldwin has mother-henned Landers' practice, monitoring office morale as much as accounts receivable. "If people aren't happy, I want to know why," she says. In addition, Chaney-Baldwin brought Landers and her staff up to speed on coding. "Undercoding was killing Dr. Landers," she says. "She was doing far more for her patients than the documentation suggested." Chaney-Baldwin also spotted mistakes in the use of ICD-9-CM codes. "Some ECGs weren't getting paid because the justification was a screening code when the charge ticket should have listed a diagnostic code for a condition like hypertension," she says. Another problem caught her eye—insurers were reimbursing some of Landers' fees at the 100-percent level. "That told me her charges were too low," says Chaney-Baldwin. "You always want to charge more than your contracted rate. If you charge less, you won't receive the contracted rate." Weak follow-up on denied or underpaid claims became a thing of the past. "Leanne [Chaney-Baldwin] will pull the medical records, review the documentation, and write a letter to the insurer," says office manager Patti Hembd. "We win about 90 percent of the time." Learning to play the Medicare card Other steps that Landers has taken to boost revenue involve Medicare. For one thing, she no longer gives away services that Medicare doesn't cover. Case in point are annual physicals, for which Landers charges $350. Because her typical Medicare patients have diagnoses like diabetes, hypertension, and other chronic conditions, about two-thirds of the charge reflects medically needed services, and therefore is reimbursable (although it's heavily discounted). However, the remaining one-third of the $350 charge falls into the category of preventive care, which Medicare doesn't pay for (except, of course, when it's provided under a one-time "Welcome to Medicare" exam). Landers once wrote off that portion of the charge—usually around $130—if the patient lacked secondary insurance. And like many doctors, she declined to ask the Medicare recipient to pay that portion. "Doctors just forget about it, because they don't want to alienate people," says Landers. These days, Landers is more assertive: She bills the patient for what Medicare and others won't pick up. "Only a few have left the practice rather than pay," she says. "If I perform a dozen physicals each week for Medicare patients, I can collect between $50,000 and $80,000 a year from them." While Medicare is an important source of revenue, Landers doesn't want to become overly dependent on it. Accordingly, she no longer accepts new Medicare patients unless another doctor refers them. Instead, they go on a waiting list. A desire for a more balanced mix of patients helps explain why Landers has extended her office hours to 8 p.m. each Tuesday. "This will attract a younger working crowd," she says. "They'll either have insurance or the means to pay a bill themselves." What a cost-cutting scalpel can achieve To rehabilitate her practice finances, Landers also took a scalpel to overhead. She excised a big chunk by parting ways with a younger associate physician who was still ramping up in terms of production, and the medical assistant who worked with the associate. Besides reducing salaries, downsizing made it easier for Landers to see more patients per day. She and her associate used to share four exam rooms between them. Now Landers has three exam rooms to herself (the fourth was turned over to her office manager), streamlining patient flow. The cost-cutting scalpel sliced into benefits, too. Landers switched from a 401(k) plan for herself and her office manager to a SIMPLE IRA, which saves her $1,200 a year in management fees. She also contributes less to her manager's retirement plan than before, but that's partially offset by a significant jump in salary. Malpractice insurance is always a fat budget line that invites a diet. When Landers' associate left, she saved $36,000 on her premiums. She reaped another $5,200 in discounts on her own premiums by attending numerous risk-management seminars offered by her carrier and subjecting herself to chart audits. Other savings came from little acts of thrift. Landers decided that instead of mailing lab test results to patients—and spending 39 cents on postage—staffers could make a phone call instead. This frugality saves roughly $1,500 as well as staff time, says office manager Patti Hembd. "And patients like the personal touch," she adds. "What I do is worth what I charge" When Lander's practice hit financial bottom in the early part of the millennium, she went so far as to call a local junior college to find out what requirements she had to meet to teach there. Medicine is still a tough profession, but Landers exudes more optimism now that her earnings have rebounded. An accounts receivable that once exceeded $200,000 is now a less frightening $80,000. She was fiscally fit enough in 2005 to pay off her lingering medical school debt as well as a loan taken out against a life insurance policy to tide her over during the bad years. But impressive as her practice turnaround has been, Landers isn't resting on those laurels. She continues to seek out ways to operate more profitably and efficiently. She's mulling over the addition of in-house lab tests. She's also implementing an EHR system with the hope of reaping such benefits as quicker charting to get her out of the office sooner and more accurate coding to boost revenue. The system will also qualify her for a deeper discount on malpractice premiums. Perhaps the biggest change of all, the Illinois internist now approaches the business side of medicine with more confidence. "She trusts her profession again," says consultant Leanne Chaney-Baldwin. "What I do is worth what I charge," says Landers. "I'm not practicing medicine to make millions of dollars, but I'm not going to work for zero, either." By Robert Lowes Medical Economics |
A few years ago, solo internist Catherine Landers considered closing her Skokie, IL, practice and opening a new one in Canada. Or teaching high school or college science. Or working with computers.| Next > |
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