Productive and Profitable Practice Focus on Workflow
If you want to increase your profit, focus on one thing...your workflows
The most productive and profitable group practices also have the most efficient workflows, according to an analysis by the Medical Group Management Association (MGMA).
There have been a few studies released about what makes a practice profitable and productive, but this one by the MGMA really helps practice owners to understand what drives profitability.
The MGMA released a report on practices that excelled in four management categories: profitability and cost management; productivity, patient capacity and staffing; accounts receivable and collection; and patient satisfaction.
“The most productive practices are utilizing their staff and teams in the most appropriate ways,” Todd Evenson, MGMA analyst, told eConsult. “It’s all about having the right people doing the right jobs at the right time.”
Primary care groups studied were more productive overall than other specialties based on patient visits and services performed, Evenson says, but were less profitable due to the lower reimbursement for typical primary care evaluation and management codes.
“What we’re finding is that some groups are thriving despite some really challenging economic times,” Everson says.
The report, “MGMA Performance and Practices of Successful Medical Groups: 2011 Report Based on 2010 Data,” was derived from survey information provided by 549 practices. Here’s how they performed:
Profitability and cost management. Better-performing medical practices reported less bad debt per full-time-equivalent (FTE) physician. These groups reported approximately $6,900 to $14,000 less in bad debt than other practices. Debt tends to work in good times, but in bad times debt can kill a practice.
Through the COVID-19 pandemic, it becomes particularly relevant to manage profitability and cost-management.
Great practices move at the speed of cash
The better you manage your profitability and cost-management the more sustainable your care will be in your community and to your patients. In the book, Good to Great by Jim Collins, the author points out that even billion-dollar companies do their best to cut costs by any means necessary. In some cases, the "great" companies sold luxury items (i.e. the company jet, fancy offices, etc.) so they could grow and expand in the future.
Profitability should enable you to accomplish your mission for decades into the future.
Accounts receivable and collections. High-performing groups in this category reported collecting their receivables more quickly than their peers. They had only 7% to 10% of their total accounts receivable (A/R) in the 120-plus days category. In contrast, the other groups had 19% to 35% of their total A/R in the 120-plus day category, indicating that strong cash flow is crucial to the success of any practice.
Additionally, half of the better-performing groups reported collecting 90% to 100% of copayments at the time of service.
This speaks to both the money mindset of the clinician and the level of detail and care put into A/R, billing, and collections. If you want to perform better than you have before or perform better than most in your industry it is important to focus on collecting copays and deductibles from patients at the time of service.
Furthermore, it is critical that you either partner with a billing solution that can move the needle on your insurance A/R or that you have an internal process that enables your practice to collect the most amount of money from the insurance companies that your practice is in-network with.
The single best strategy to ensure that you are able to collect the patient's share of the session and the most from insurance is by taking 1 or 2 insurance companies.
There are times when this is not possible, but for the most part this is an option for most clinicians. By limiting the number of insurance payers that you are in-network with enhances your ability to manage your administrative burden, lean your processes, and grow your practice. You can also enhance the profitability of each session by limiting lower paying insurance companies and maximizing higher reimbursing insurance companies.
Productivity, capacity, and staffing. Better-performing practices in this area implemented operational efficiencies to ensure strong provider productivity, including employing midlevel providers and certified nurse anesthetists (63%).
Better performers also reported higher support staff and ancillary support staff costs per FTE physician, ensuring optimal staffing to leverage physician time.
This is an interesting finding from the study. Many businesses and practices will say that their employees are their most important asset.
This. Is. Not. True
Your best employees are your most important asset. By getting the right people on the bus, the wrong people on the bus, and the right people in the right seats on the bus you can seriously grow your practice and your profits.
You do have another option and that is outsourcing.
Outsourcing a process gives you a partner that is interested and incentivized to help you succeed, and is often paid based on their value to you. The other benefit of outsourcing is that you can manage your expenses and costs much better than if you had a full-time or part-time team member.
Outsourcing gives you the freedom to focus on patient care without building out your processes from scratch. The combination of speed, quality, and cost-reduction give outsourcing a unique edge over developing an internal team.
Patient satisfaction. Groups that excelled in this category indicated that they use formal patient satisfaction surveys in which more than half requested feedback on appointment availability (59%), the professionalism of the staff (58%), wait times (57%), and patients’ overall experience (60%). More than 60% used patient satisfaction surveys to evaluate and improve practice operations, and more than 55% educated physicians and staff about behavior based on survey results.
Of course, profitable practices focus on the patient's satisfaction! Patients don't want their experience with your practice to be cumbersome and frustrating.
What are some of the variables that patients care about when they experience your practice and team?
Punctuality and not-double booking your appointments
Ease of payment options
Flexibility in setting up payment plans
Clear billing processes
Easy paperwork processes
Clear insurance processes
It is of critical importance to ensure that your patient's experience is easy, clear, and consistent.
A common mistake that practices (and some businesses) make is having inconsistent processes and procedures for intake, payment, paperwork, and insurance. This is probably the most damaging variable in your practice's development and profitability.
This is why McDonald's has been so successful! They focused on making the experience with each customer identical no matter if you are in Chicago, Il or Minot, ND!
You can do the same thing with your practice. If a patient comes to see you will they have the same experience as the next or previous patient? If the answer is "no" then you need to double-down on your processes as it relates to the patient's experience.
There is a trend of clinicians that want to add more money to the bottom-line of their business. There is certainly nothing wrong with that!
However, focusing on multiple different revenue streams may not be the best way to accomplish this goal. If you are focusing on 9 half-baked business ideas, concepts, courses, masterminds, podcasts, blogs, speaking engagements, etc. you may be losing valuable time in growing your profits and your core business.
By engaging in improving and modifying your workflows in the business that drives your economic engine, you will grow your revenue, your staff, your patient base, your impact, and your profits.