Retuning the Practice for Sustainable Profitability – 2019 and Beyond

Key Points: Defining core financial goals. Key practice data points and predictive analytics. Adroit diplomatic skills. Staying out-front with operational best practices.

Welcome to 2019 and congratulations on another year. 2018 may be over but the impact on practice operations and financial performance provided sharp messaging – Staying profitable remains a constant challenge. That said, we firmly believe step one to start the new year is a top down practice business review. For this article, we will briefly look at key areas and how 2019 is quickly validating the need for defining business improvement strategies (tactical and strategic). Today’s medical practice operates in a dynamic, multi-faceted, and an increasingly complex environment. With this caveat, it’s not unreasonable to expect more turbulence going forward, i.e. new payer payment models, rising patient financial responsibility collections and seemingly endless regulatory oversite. These stressors are real, they will continue, and they can affect net income expectations.

For many physician practices, the cost of delivering higher-quality care is near the breaking point. We see this dilemma unfolding live as we work in concert with numerous groups around the country. Both private practice and employed groups are confronting growing demographic demands for specialty care aligned with weak operating margins. Some core causes: 1. Declining and stagnant reimbursements, 2. Growing financial exposure with new payment models, 3. Increasing overhead (staff, office occupancy, technology costs…) inefficient operations and poor business processes. Add to the mix growing administrative burdens and recruiting/retaining skilled staff and you have a difficult business environment. Successfully operating in this unforgiving arena mandates an effective, profitable business model. Health care is a scarce resource with growing demographic demand, therefore, basic economics would support a profitable business, right? Yes, it should be. However, the environment is skewed with infinite regulatory burdens and draconian provider payment controls. Bottom line: Delivering sustainable practice profits requires experienced leadership, robust financial skills, a clear understanding of what’s important and business goals aligned with the group’s culture. Discount the latter point, practice culture, and no matter how financially sound the course trajectory, you will likely encounter headwinds that can upend even the best plans. We understand and agree providing quality patient care and services remains top priority. We also understand effective revenue cycle processes and accurate collections are essential to ensure the practice can continue delivering patient care. With 2018 in the file and 2019 in full swing, cautious optimism would be a fair assessment. In this environment, harnessing innovative ideas and integrating effective business goals requires an adroit combination of targeted objectives and hard work to improve operating margins.

There’s a range of profitability options in most practice situations, many defined by community and regional markets. For example: How many patients are available in the market area? How many of these are candidates for urological services? Time lines to access practice and treatment? Are they getting urology care and services from a competitor? Don’t ignore the increased overhead costs to optimize operating margins critical to the practice’s success and ultimate sustainability. Yes, managing costs is essential but not at the expense of slow rolling or deferring growth of profitable revenues. Simple dictum – increasing revenue will, assuming aligned costs, decrease overall operating expense. Add increasing profitable market share and decreasing patient out migration and you have internally driven added value. Get value out of every practice dollar expensed – Return on Investment.

A brief look at what we see working in better performing practices.

1. Effective communications. This step one and often the most difficult.
2. Define Realistic Income Targets. This will show where you need to go and why. Expect spirted dialog.
3. Perform a Practice Financial and Operations Evaluation. Defines the current situation and required improvements to improve to secure the primary goals – increase income and sustainability.
4. A Successful Strategic Plan. A rolling 18-month strategic plan will provide direction for the group and define key goals and supporting objectives. For example: Expand in terms of services and providers, with whom it may affiliate or align, implement key technologies or initiatives…
5. Streamlined Revenue Cycle Management (RCM) Processes. Direct management oversight required to decrease billing and coding errors, effective collections and maintain compliance.
6. Concentrate on services that are still profitable. This requires shifting the practice mind set to drive performance improvements both tactical and strategic.
7. Grow revenue on the existing practice footprint. Capitalize on the practice fixed 24/7 expense
8. Effective changes to workflow. Aligned protocols and processes targeted core goals.
9. Use improved technologies and commonsense solutions. This not a static business.
10. Improving patient care delivery. For example: New treatment models, enhance clinical documentation, coding and effective collections.
11. Expand practice’s online presence. A relatively low-cost, efficient way to grow your practice.
12. Review outsourcing critical portions of your billing services. This may not be the right solution for everyone, but with today’s weak operating margins, it’s worth a serious top down evaluation. Selecting the right company is critical and could save significant costs, especially for smaller practices already overloaded with administrative burdens.

In closing, given the complexities of leading a profitable group practice and the unsettled state of affairs in the broader healthcare environment, it’s more important than ever to have a “Road map” and “Solution tool box”. Keep it simple, one win at a time, show success and keep moving forward. Rest assured tomorrow will bring more challenges. How you deal with the challenges will help define the future.