At the beginning of this year, Medical Group Management Association's Center for Research, with funding from United Health Foundation, began rolling out chapters of an online resource guide that outlines essential financial know-how for running an efficient practice. "Lessons for Financial Success" is open to everyone through the MGMA Web site (www.mgma.com) and takes the reader through valuable operational information in five chapters, the last of which has just been published.

 

"We wanted to provide it not only to MGMA members but to others who would benefit," explained Dave Gans, MSHA, FACMPE, vice president of MGMA Innovation & Research. He added his organization, through their 501(c)(3) foundation, has made a concerted effort to bring more educational tools to the larger practice management community.

 

Considering the nation's current economic downturn and calls for healthcare reform, the publication could not have been timelier. Gans said even before these two key factors came into play, practices were already facing the reality of rising operational costs and relatively flat compensation. Real profit has been eroding for years in the face of offering competitive salaries to staff, investing in technology and factoring in rising costs for equipment, supplies and rent.

 

"So what can a practice do if your reimbursements stay static while costs escalate?" questioned Gans. "You have three choices," he continued. "Number one, you become more efficient … same work, lower costs. Another choice, you become more productive … more work, same costs. Or, you can also improve your business systems so you get paid for what you did." Most practices, he added, leave dollars on the table.

 

The book, Gans continued, helps practice managers and physicians effectively implement strategies to do all three. The chapters outline best practices and come with tools such as checklists, reports, self-assessment surveys and downloadable educational modules to integrate the lessons into real-world practice. "We provide success stories on how you can improve your performance," Gans added. "You're more apt to retain the information if you see it in application instead of just reading the theory."

 

The first chapter underscores the axiom – you can't change what you haven't measured. Benchmarking helps a practice evaluate its performance, understand relative strengths and weaknesses, observe where the practice has been and predict where it will go, analyze what others are doing and gain from their experience, identify areas for improvement, and provide the hard data needed before implementing change.

 

"Benchmarking is a concept that allows you to compare your performance to other organizations to see what areas need attention, and it allows you to celebrate your successes," Gans pointed out. He added the chapter also looks at process benchmarking, which puts a focus not only on the outcome but also the process by which that outcome was obtained.

 

The chapter includes links to other benchmarking resources and applicable tools including a glossary of terms used in medical practice management, an integrated delivery system performance self-assessment and access to free MGMA Dashboards that help a practice graphically compare its own practice data to national norms.

 

Gans said safety and quality are hallmarks of successful practices for a number of reasons. While the assumption is that all practices want to deliver safe, effective, quality care, the reality doesn't always match up. For practices that do get it right, the benefits to patients translate into bottom line benefits for the office. Practices that make safety and quality a priority have a good reputation and build a strong, loyal patient base while decreasing adverse events and the legal and financial woes that go with them.

 

The topic warrants so much attention that in addition to the online guide, MGMA has also recently released a white paper on patient safety in the ambulatory setting (see Medical News, "Safe and Sound," October 2009). "Lessons for Financial Success" includes an important self-assessment tool with this chapter that is also referenced in the white paper, plus a patient satisfaction survey and a patient safety educational module that can be downloaded and used for staff training.

 

"Chapter three addresses that critical need — getting paid quickly and appropriately for what you did," noted Gans. After all, he continued, doing this function well is what keeps the doors open.

 

Unfortunately, Gans said, practices often don't get fully reimbursed for their negotiated rates. This chapter looks at how practices manage coding, documentation and rejected claims. Tools include tips on how to encourage credit card payment and collection at the time of service, information to help a practice manager better understand the revenue cycle and links to other accounts receivable resources.

 

"Also, there's a section in the chapter on fraud abuse. We have a tool and information that gives insight to the doctor and practice manager on how to safeguard the money they have," Gans said of minimizing the risk of employee theft.

 

The fourth chapter hones in on planning, budgeting and marketing while also focusing on managing costs and maximizing profitability. The first step to managing costs is to understand the various types of costs and how each impacts day-to-day operations.

 

Budgeting is an important form of benchmarking for a practice so one of the tools included in this section is a year-to-date percent of budget worksheet to help a physician or manager assess the practice's monthly performance and compare that to the annual budget. A revenue diversification scorecard also helps a practice determine whether or not they are in the position to add new services.

In many ways, the last two chapters work hand-in-hand. "How do you provide the most cost efficient practice?" questioned Gans. "So many of your costs are fixed, so increases in productivity have a substantial impact on the revenues of the business."

 

For most physician practices about half of the operating cost is tied to personnel costs. "Managing your personnel activities is critical — having the right people doing the right things at the right time," said Gans. "Are you using your staff to their education and skill levels?"

 

Using staff appropriately works both ways. Could an RN or LPN take over a task currently being completed by a physician? Should the RN or LPN spend time on this task, or could a technician or clerical staff member handle it? Gans added an investment in training is essential to ensuring employees are working to the highest level.

 

He also noted, "Technology can substitute for labor, or it may provide new efficiencies. The key word is 'may.'" Gans warned, technology that is not properly used and properly implemented could wind up being a cost drain.

 

Although the lessons of each chapter stand alone, Gans noted they certainly work best when they are used together to maximize the financial health of a practice.