In a recently released report from Physicians Practice, more than half of doctors surveyed were disappointed with their practice’s net income. Only 11% of respondents thought their compensation was “excellent” in 2018. Physicians have not been seeing income go up because of the much-talked-about move toward value-based care. Only 13% of the surveyed doctors said more than 25% of their income is tied to value, and 75% said none was related to patient satisfaction. About 50% of the respondents’ income was tied to productivity.
“I understand what doctors are feeling and what they are expressing,” said Ken Hertz, a principal consultant with the Medical Group Management Association. “Reimbursement is going down and expenses are going up, and that’s not a good combination.”
In most practices, there is at least some amount of room for improvement when it comes to revenue. Treating a practice more like a business can go a long way toward increasing physicians’ pay.
An array of solutions
When Hertz managed a practice, he talked with the physicians at the end of each year to get a sense of plans for the practice in coming years. Did they want more compensation? If so, were they willing to work more for it? Did they want to reduce patient load? He tried to focus on factors over which they had control.
“What is happening is, many physicians are seeing more patients, and whether it’s 1 or 3 [more] a day, it adds up over the course of a year and can make a significant impact in their compensation,” Hertz said.
But many doctors are struggling with how to pack more people in but still provide quality care. “It’s important for physicians and staff to maintain a positive attitude toward patients,” Hertz said. “If everyone there is burnt out, you are going to start having problems [with] not treating patients well.”
Those who do not want to increase their load can focus on things like reducing overhead and improving collections. Hertz recommends considering the use of medical transcriptionists and mid-level providers. Physicians also can focus on being more efficient with medical records systems. They should consult with their IT department to make it work for the practice’s specific needs. “They can leverage technology instead of being a slave to technology,” he said.
Starting at the top
The best advice Hertz can give, he said, may sound “lame,” but it works. Physicians must think more like business owners (because, in the end, a medical practice is a business).
“You happen to be in the service industry, and the service you provide is health care,” Hertz said. “So, it’s important to understand how much difference a good owner can make.”
Hertz had friends at a cardiology practice where the founding doctor was concerned about the organization’s finances. When Hertz asked what he was doing to manage it, he found out the doctor did not sign the outgoing checks or look at the monthly financial statements.
Another practice called him in to find out why they were making less money. They were certain they were not working less, but revenue was lower. He looked through their numbers and found they were working less than they had the year before.
“They can hire me to come in and take a look, but I will only do it once,” Hertz said. “Doctors have to invest time in that every month.”
Part of the time investment physicians can make in a practice should reduce their overall workload, if done well. This includes good human resource practices.
Hertz said investing in good tools and training staff on how best to use them can make a huge difference in an office’s bottom line. Understanding data and how to use it can go a long way toward pinpointing and remedying some of a practice’s major cost-draining issues. For instance, if a group has a problem with no-shows, many just start overbooking. This, Hertz said, is a Band-aid, not a remedy.
“If a plane takes off and there are 50 empty seats, that’s lots of lost money for an airline: Once the plane is gone, that’s it,” he said. “If you have 20 slots for a doctor scheduled 1 day and 5 people do not show, that’s a lot of lost money. You have to find out why people are not showing up.”
Or maybe a new doctor joins a practice and he cannot stay on schedule because he’s taking twice as long as he should with patients. A good manager and staff may be able to break down what is happening and get that physician on track. A great staff can also improve coding and documentation to maximize reimbursements and improve collections from patients and insurance companies.
“There are a lot of things that you can do in a practice and part of that responsibility is on the administration side with managers and staff,” Hertz said.
Having a great staff that runs a practice effectively and efficiently can dramatically improve a group’s financial success. But it helps to have reasonable expectations.
Doctors can find out what they should be making by benchmarking annual surveys from groups like Physician’s Practice, SullivanCotter, Doximity or MGMA. But when looking at these surveys, it is important to consider things like the community in which the practice resides.
Finally, physicians should set individual priorities. Hertz asks physicians why they got into medicine in the first place and set financial goals and expectations.