Improving Profitability without Sacrificing Quality: A 3-Month Plan

In today’s hyper-competitive market, patients have more options than ever in selecting who will provide their care, where it will be offered and when it is available. The ability to provide the quality consumers expect while maximizing legitimate reimbursement requires a basic organizational infrastructure, that enables the practitioner to provide expanded service without incurring additional cost. This infrastructure typically includes technology (an electronic health record, an automated telephone system and a practice management solution), physician extenders (either Nurse Practitioners or Physician Assistants) and a medical coding methodology (whether technology-based or person-based) that quickly and accurately turns medical documentation into credible billable data. If these fundamentals are present, the beginnings of a positive impact on your bottom line can be realized in under three months.

Leveraging Technology

Whenever possible, move towards a self-service model. In the world of ATM's and online shopping, consumers are very comfortable with using automated attendant telephone systems on webbed-based portals to schedule an appointment. By doing so you free up your office staff to do other important tasks, minimize the need for returned phone calls or the consumer receiving a “busy” signal.  In addition, the consumer can provide their insurance card information thus ensuring payment to the provider and also an estimate co-pay cost to the consumer - all occurring before the customer enters the office.

Many of the activities regarding scheduling the appointment, insurance verification and the staffing of the office to have the right provider there at the right time, can all be automated. These technologies also then provide all the basic data to help determine:

1. When busy and slow times are in the office

2. What are the consumption levels of medical supplies?

a. This can be tied into your supply chain solution to minimize a potential standing inventory problem.

3. What’s your payor mix?

a. There a pattern for scheduled patients for one type of payor vs. another.

4. Are you being reimbursed properly and timely?

a. Does the data support renegotiating your rates?

5. Are all your providers meeting their performance goals?

Implementing Solutions

The safest way to increase profitability is to minimize the cash outlay for these solutions whenever possible using a subscription based cloud model. The requirement of purchasing hardware, storage, technical personnel and providing ongoing support, including security, becomes a variable cost with minimal upfront cash investment. In addition, most cloud based solutions provide a short ramp on time for staff to become proficient, the necessary data to management and proper billing.

Additionally, cloud based solutions are more scalable and can grow or contract as your business does. In-house solutions are typically over-sized in that you are paying for available resources as you “grow into” the capacity of your servers. Once you hit the storage plateau, you typically require another incremental hardware investment. In addition to the hardware, you have higher operating costs in terms of electrical usage, cooling and security access.  

Cloud based subscription models are far more predictable from a budgetary and planning perspective and help to accelerate the cash-flow process by minimizing many upfront costs.

The power of technology to continually transform the entire medical industry has not diminished over the last few decades, and it shows no sign of slowing down. There are many clinical functions that are in the process of being automated – something that may not have been a possibility even a few short years ago. For example, most medical facilities have implemented chat-bots that can address patient questions and help with administrative tasks, such as scheduling. Those facilities that currently do not have this capability may want to explore it to determine how it may help their operations. Similarly, patient portals provide a way for patients to access information themselves, rather than contacting the clinic to speak with an employee.

Another key aspect of how technology may improve efficiency is in data storage. For medical facilities, this often requires huge servers that are expensive to buy and maintain. However, most industries are in the process of moving operations onto hosted cloud services. This has the potential for huge cost savings since cloud storage is flexible and scalable, meaning that the facility only has to pay for what they need. While the security of data has always been a major concern for healthcare facilities, which is why many of them host their data on-premises, cloud platforms are quickly becoming much more secure than even on-site servers, simply because they are large enough to truly have the resources and skilled employees to ensure the safety of the data. While it’s likely that not all of an organization’s data and operations could move to the cloud at this time, taking stock of what could and making the transition could result in huge cost savings, both immediate and in the long-run.

Consider a Workflow Redesign

Peter Drucker said “If you can’t measure it, you can’t improve it” and the same can be said for workflow redesign. It is sometimes misleading that what looks like an improvement actually has a negative impact on the overall operation and profitability of the organization. With the introduction of the proper technology, analytics becomes a cornerstone of the operation as it can provide a dashboard of the health of the organization based on the key performance indicators of the operation. Even organization has an optimal steady state at which it is producing the highest levels of quality product and the lowest possible costs with the best utilization and profitability. With all the variables in the modern healthcare operation, these variables are beyond the ability to observe those trends and patterns without the use of technology. Once the analytics have been perfected, the next step, using predictive analytic techniques can identify potential areas of improvement before making any capital and personnel investments. This marks the beginning of a higher level of return.

Provider Incentive Programs

Provider incentive programs are also gaining traction as a way to reward quality and efficiency. These programs have a track record of success when implemented correctly and managed well. This begins with identifying strong quality metrics that will determine the incentive. These metrics can align themselves with the organization’s patient satisfaction goals as well as its business and profitability goals. However, in order to be successful, the incentive program must be developed in a climate that has high trust levels between physicians and administrative leadership, data must be reliable and timely, and the incentive must be large enough to truly shape behavior. Many institutions have found that setting up a compensation committee that draws from staff throughout the organization can help to determine how to best structure and implement a physician incentive program.

Profitability and patient care are often pitted against each other, but in fact they are not mutually exclusive, but inclusive. If patients have choices, they will go to the facilities that have the nicest accouterments, the easiest access, the friendliest staff and ultimately the best outcomes.  In order to provide these essentials, healthcare organizations need to provide competitive compensation, the latest in medical technology and facilities that meet these expectations at a price the consumer feels is reasonable. To do so means to engage many of the well vetted principles in other industries and find their appropriate application in healthcare. Which brings us back to the three-month plan approach. If every initiative undertaken was sub-divided into a three-month plan approach that resulted in small incremental gains in both quality and profitability, an organization would ultimately change its culture to one that could respond to the changing market, yet be resilient enough to support its mission. Some of the best organizations in the world have mastered this technique which explains not only their success but their longevity.

Are you looking to implement a three-month plan within your organization? I would be happy to share my thoughts on how this could apply to your organization.

Contact Nicholas:

Nicholas.Christiano@Tatum-US.com

917.258.9611

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about the author

Nicholas Christiano - Northeast Practice Leader of Tatum Healthcare

Nick has 20-plus years’ achievement in C-suite leadership roles in the healthcare space, evangelizing business transformation and leveraging state-of-the-art technologies to improve performance. With experience across the entire healthcare market — from acute, post-acute and ancillary services to physician practice management and health plans — Nick has a demonstrated ability to analyze operations, pinpoint challenges and growth opportunities and then implement solutions that take enterprises to the next level.