At Vantage Clinical Solutions, we recently published a number of free practice management tools intended for use by private practice owners and managers. 

The tools are simplified for quick and easy use and focus on 5 areas of practice management that we commonly address with our clients: the startup process, budgeting, productivity, breakeven analysis, and strategy. 

More detailed versions of the tools are available for purchase and Vantage offers a selection of consulting and management services that work hand-in-hand with the online toolbox in order to help private practices navigate our healthcare economy both efficiently and profitably.

So, check ‘em out and let us know what you think!

This article in USA Today reports on a trend reported by the CDC regarding the frequency of visits to the physician’s office.  The CDC reports that visits increased 26% between 1996 and 2006, the same time period that experienced an 11% growth in population.

The reason?  An aging population.

Juxtaposed against this information from the University of Missouri which predicts a shortage of 44,000 primary care physicians by 2025 (I blogged about this recently in a post about supply in demand in healthcare here) and we’ve got a problem on our hands.

Time to get crafty with our access points into the healthcare system…

The aging of the U.S. population is translating into many more visits to doctors’ offices and hospitals, a reality that is taxing weak spots in the health-care system, according to a government report released Wednesday.

Introduction by Tannus Quatre PT, MBA

It pleases me to welcome Dr. Steven Knope to The Healthcare Entrepreneur.  Hailing from Tucson, AZ, Dr. Knope is board certified in internal medicine and has owned his own practice in the Tucson area for several years.  Dr. Knope is considered by many as one of the pioneers in the area of concierge medicine, and has been referenced and featured by a number of news organizations for his efforts and accomplishments in this area. 

Dr. Knope recently authored the book, “Concierge Medicine: A New System to Get the Best Healthcare,” a publication dedicated to sharing with both physicians and patients a history of the concierge medical model as well as the practical aspects of the model that can be used as an alternative to the traditional 3rd party payment system (learn more about Dr. Knope here).

Dr. Knope is a true healthcare entrepreneur, and will author a series of posts on The Healthcare Entrepreneur about the benefits of entrepreneurial business models within the healthcare arena, and specifically the viability of concierge medicine.  Please enjoy reading the first post in his series below.
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The Hostile Takeover of Medicine: An Entrepreneurial Response - by Dr. Steven Knope

Fifteen years ago, after graduating from Cornell Medical College and completing my residency at UCLA, I settled into private practice with five other internists in Tucson, AZ. After only a year, I knew I could not continue.

I was too independent. I quickly learned that I was not employable. As I talked with my colleagues about opening my own practice, I received many warnings. They said I was “too idealistic.” They said that by striking out on my own, I would be losing the protection of the pack. They projected that I would soon be eaten by the corporate predators - the third-party payers who controlled their lives.

All around me, doctors were forming larger groups and capturing a greater percentage of the “market share of patients,” all in an attempt to maintain some level of control at the bargaining table. Instead of defending their profession on their own terms and focusing on their mission of patient care, they tried to hire their own corporate foot soldiers to do battle in the business arena.

Stating the obvious, this strategy was doomed to failure from the beginning. Over time, it has not been successful in putting doctors back in control of their professional lives. It has been disastrous for patients. Doctors were outflanked by their opponents. Their office managers squabbled pitifully over minimal increases in reimbursement rates from insurance giants and Medicare.

They got bogged down in small, meaningless battles as they slowly lost the war. Meanwhile, physicians in these large groups seemed willing to accept the fact that their patients were getting precious little of their time and less than optimal care. The quality of their “product” in this business model (patient care) was deteriorating.

Most new problems, like our current healthcare crisis, are at their core, old problems with a new face. Here is the age-old problem that doctors faced: One of the basic rules of nature is that as soon as you have something worth taking, someone is going to try to take it from you. It’s just that simple. This rule applies to hyenas prowling the Serengeti, and it is true for predators in the medical marketplace. Business predators realized that there was a lot of potential cash to be made if they could morph the old Marcus Welby-style of medicine into a Wal-Mart model. The brand without the goods.

They first made a deal with the employers, who paid for much of nation’s expensive healthcare. They sold the idea that they could limit rising healthcare costs and manage “greedy doctors.” Having made the sale, they soon controlled large panels of patients. They then moved on the Medicare arena and offered to take some of the administrative load off of Uncle Sam. Controlling the healthcare dollar, they could now manipulate doctors at every level, essentially stealing doctors’ medical practices and forcing them into employment relationships. Physicians were no longer doctors; they were “providers.” Is this evil? Maybe, but it’s just what predators do: the frog must recognize a scorpion for what he is.

As a practicing martial artist, I seek to recognize the world’s ethical people. However, I also fully accept the fact that there are predators and scorpions on the planet; people who would just as quickly cancel the insurance policy of a sick child as they would throw a half-eaten sandwich into the dumpster. Years of fight training have taught me how to survive a battle brought by a predator: I had better fight smart.

So I urge private practice physicians - Play to your strengths. Make your opponent do battle on your terms.

If you want to lose a fight, battle on your opponent’s turf. Follow his rules. This is the mistake that doctors made. They tried to play the game of big business against a giant that they didn’t understand, using his rules.

The way to beat the third-party payers is fundamentally easy: opt out of his system. Walk off of his battlefield. Stop.

What most physicians fail to realize is that healthcare predators have no weapons other than intimidation. They are not licensed to practice medicine. They cannot operate without doctors. By contrast, doctors don’t need third party payers. As primary care physicians, we do NOT need the third party payer to treat the sick or to make a living. The patient/consumer does need one valuable service offered by insurance companies - namely catastrophic healthcare coverage - but there is no reason why every dollar in the healthcare system must flow through their hands. There is no reason why the patient cannot, or should not, pay the doctor directly for his services. This is what is being done in the concierge medicine movement across this country. It is not a pipe dream. It is not complex. It is both an effective and simple way to deal with the predators.

It is now quite clear that patients who are dissatisfied with the present system are willing to pay their doctor directly for more time and access.  Concierge medicine is very much a consumer-driven phenomenon. Doctors who are willing to respond to this market can change the rules of the game, without any change in the law or the need for any governmental intervention. Primary care physicians can return to focusing on patient care. They can increase their income to a level commensurate with the demands and responsibilities of their calling, and regain control over their professional destiny.

How do I know this is possible? In the year 2000, after dropping all of my HMO contracts, I opened one of the first concierge practices in the country in Tucson, Arizona, which was ground zero of the for-profit HMO movement. At the time, I was one of a few doctors in the country experimenting with this model. Today, there are approximately 1,000 doctors engaged in direct financial relationships with their patients. The genie is out of the bottle and he is not going back in.

Many believe that a “nationalized healthcare” system is the only way to solve our current healthcare woes. However, make no mistake about it: We Americans are not socialistic at heart. Nothing else we do involves socialism. We are uniquely free-market driven and an independent breed. Our people will not tolerate a mediocre, socialized medical system, regardless of political stripe.

Like all freedoms, the freedom to practice medicine the way that doctors want to practice medicine comes at a price. If physicians are currently experiencing taxation without representation, it is time to dump the tea into the harbor. There are times when fighting is appropriate and necessary, to defend what is dear to us.

If doctors want medicine to be reformed, they must take back their own profession, one practice at a time. Unless we are willing to pay the price for professional freedom, we will be at the mercy of those who wish to subjugate us and subjugate our patients for their own profit.

Medicare can be frustrating.  The constantly changing rules, regulations, audit requirements, fee schedules - all of it.  To receive pennies on the dollar from a system that has turned into a large distraction and huge disincentive to providers gets old for many, but it’s what we have to deal with to provide care through the failing system.

What’s even more frustrating is to hear in the Miami Herald about a South Floridian with a drug-trafficking conviction who successfully ran eight (count ‘em) medical equipment companies using fake names, submitting over $48 million in false Medicare claims during his reign of fraud.  While many of us were working hard to keep our expenses to the system low as we provided care to our Medicare population during 2005-06, this same criminal profited to the tune of $8 million, landing a quarter of that money in his own pocket.

And if he were the only one.  In South Florida alone, medical equipment and HIV-infusion fraud amounts to a loss of $7 million per day by the Medicare system, or $2.5 billion per year.  And how’s this for a statistic - investigators reported to congress that between the years 2000 and 2007, the identification numbers of 18,240 deceased physicians were used to rack up $92 million to fraudulent medical equipment providers.

Not that eliminating fraud would by itself save the Medicare system, but a $7 million-per-day hole in the taxpayers’ bucket from only one region of the U.S. is certainly evidence that there is a long way to go to get the system on the right track.

Read the full story from the Miami Herald here.

The Centers for Medicare and Medicaid Services, which manages the 43-year-old federal insurance program for the elderly and disabled, doesn’t have a specific amount for the cost of corruption nationwide. Internal audits mainly focus on billing mistakes, excessive payments and other waste with only a fractional measure of fraud. Therefore, the agency estimates its combined loss is $11 billion annually.

Private healthcare companies, credit card companies and other industries have implemented new technology to fight fraud aggressively, but Medicare has failed to adopt even the most basic changes that the U.S. Department of Health and Human Services’ inspector general has warned are sorely needed to combat the crisis.

Medicare, one of the government’s largest agencies, seems more intent on paying claims quickly than verifying them first, according to many critics and law enforcement officials.

Boston’s mayor announced an innovative service to help residents find primary care physicians in one of America’s oldest cities: a telephone referral service staffed by city workers.  A concierge health desk of sorts, the calls will come in through the mayor’s health line and attendants will provide callers with a list of primary care physicians who are accepting new patients.

The primary care referral service is a result of outrage by Mayor Thomas Menino in response to the primary care crisis in Boston, whereby many sick patients are unable to find physicians.  It appears that the retail healthcare movement in Boston spurred recent concern by the mayor over the “allowing of retailers to make money off of sick people.”  (Read more about retail clinics here and here)

An innovative idea, the primary care referral service is not the only card up the mayor’s sleeve.  The mayor is also considering the feasibility of requiring medical institutions to subsidize housing for primary care physicians in order to lure them into the city. 

The primary care crunch has been in the works for a while now and there isn’t a clear end in sight - in fact it’s looking like it’s going to get a lot worse before it gets better.  Hats off to some healthcare innovation out of one of America’s most historic cities.  Click here for a link to the article on Boston.com.

“One of the most important things we need to do as a city this rich in resources is make sure that all of the residents, particularly those who are most vulnerable, have really good access to primary services.”

When I managed a clinical staff in the hospital environment nobody liked the word “productivity.”  We’d refer to it as the “P” word, because it had such negative connotations when discussing job performance and the overall operations of the clinical staff.  It was as if by discussing it, we were saying that production was more important than quality in the care that was delivered.  It was untrue of course, but the misconception was difficult to overcome, and the “P” word remained.

The “P” word was my first exposure to the world of misconceptions in the healthcare industry with regard to the juxtaposition of “business” and “healthcare.”  There are many others though, and often times talking about issues such as profitability, collection of patient co-pays and controlling expenses conjures the same emotions that I used to stir up when talking about “P.”

Marketing is one of these, and while I haven’t come to the conclusion that it’s yet worthy of the single acronym, “M,” it certainly is a contender - especially when it comes to specialty care.  It is felt by many specialists that marketing doesn’t have a place in private practice - the provision of high quality care should be enough. 

If only that were the case.

Marketing is important, but not in the same was that it is for auto sales and credit cards.  Marketing is simply the process of letting those in your community know what you have to offer.  I will counsel practice owners that if they truly believe in the service they are offering their community, than it is part of their professional responsibility to educate others so that the community can receive the benefits of their care.  A great clinician who is disenchanted with marketing to the extent that they don’t build up a following does little good to anyone.

Here is a great reference from the American Association of Neurological Surgeons that speaks to this very point in the context of marketing counsel for neurosurgeons - a specialty that historically does little marketing, and instead relies mostly upon the laurels of their specialized service offering to do the work of building up a patient base. 

Negative connotations blemish marketing. The “M” word conjures up images of a plaid-coated, hand-waving carnival barker hawking discounted cars or televisions. The assumption is that it’s perfectly OK to pitch cars and washing machines but inappropriate to promote a health service.

Well, it is indecorous to aggressively advertise a health practice. But that’s not what marketing is. Marketing is a more sophisticated and more subtle strategy than blatant advertising. Even the most conservative neurosurgeon, one emotionally tied to the healthcare climate of prior generations, would feel comfortable with a genuine marketing plan.

One of the core services offered within the healthcare industry is time.  Time to ask questions of our physicians, one-on-one time with our physical therapists, and time for our providers to actively evaluate and make recommendations for us as patients.  As a core service, time is both a driver of revenue and costs within the healthcare model, making it one of the most important and most scrutinized variables by physicians, practice administrators and insurance payers.

The notion that a correlation between the amount of time providers spend with patients and the quality of service provided is conceptually valid and serves as a platform for many of the ethical debates waged in today’s healthcare arena between providers and insurance companies.  If providers are increasingly paid less by insurance companies for the time they spend on their patients, it’s easy to see that incentives will be in place to increase the volume of patients seen, and decrease the amount of time seen with each patient.  From a qualitative standpoint this sets the stage for the ethical and political battlefield between providers, patients and payers.

Interestingly, a recent systematic review of 5 studies performed in the United Kingdom has called into question the correlation between time spent between provider and patient and the quality of care delivered, bringing another variable into the equation - the way that the time is used.  Appearing in the Cochrane Library, the review suggests that patient satisfaction was not significantly higher when more face time with physicians was made available and physicians did not practice in a manner significantly different depending upon the amount of time they spent with their patients.

Now, I don’t believe this review in any way wipes out the validity of the argument that there is a correlation between time and quality in healthcare - it simply stands to reason that providing more time allows for the opportunity to provide better care.  It does however bring to the table fodder for discussion about the “elements” of time that are important as relates to quality of care, rather than simply the time itself.

Some patients might feel like they spend more time in the waiting room than actually talking with their doctor, but a new review of studies suggests that these consultations would not be much different if patients had more face time with their physicians.

In five studies conducted in the United Kingdom, doctors did not discuss more problems, prescribe more drugs, run more tests, make more referrals or do more examinations when they had a few additional minutes with patients.

In healthcare finance, numbers are - unfortunately - a game.  As much as we’d all like to focus on the practice of quality care and little else, the amount we charge for services and the amount we are paid are distinctly different concepts, and therefore must be understood (better yet, managed) as such.

Fee schedules upon which payments for services are (loosely) based, must be higher than the amounts allowed by each payer if a practice is to maximize their revenue.  You can rest assured that an insurance company is never going to whisper into your ear, “achem…you know you can charge a bit more for that,” or better yet, “you’re charging less than we’ll pay, so we’ll give you the higher of the two.”  This isn’t the way it works, or will ever work.  Practices must look out for themselves, and must keep on top of payer contracts on a regular basis to make sure that they are getting paid to the extent allowed.

Now, the difference between the fee schedule and the allowable amount creates a game of sorts (I prefer backgammon myself) when managing practice financials.  Because the fee schedule can generally be what you’d like it to be, as long as it’s above the allowable amounts, this can inflate (or deflate) gross revenue (total charges based on the fee schedule) depending on where it sits in relationship to the allowed amounts.  Net income will be the same, but there can be wide swings in the amount of revenue “discounted” which can be confusing to the practice owner if not entirely understood.

In this post, Peter Lucash over at the Medical Practice Business Blog makes the point that fee schedules must remain consistent with what services are worth, AND be higher than the allowable amounts per payer contract.  By doing so, an accurate representation of the value of services provided as well as the “value” (or lack thereof) of certain contracts can be properly evaluated.

Some disagree with billing at full (private) fee as an exercise in self-deception. But it’s not – it reflects what your services are worth, and what some patients are undoubtedly paying. Financial statements always have to be in context, which is why any footnotes are very important.

Interesting theory here: pay more money to the initial point-of-contact physicians, allow them to spend more time with the patient, let them perform a more thorough screening, and just maybe it will save money in the long run.  It makes very good sense and early experiments in several states by multiple payers presented in this article show that it might just be true.  It might also entice more medical students back toward primary care.

The idea is that by paying family physicians, internists and pediatricians to devote more time and attention to their patients, insurers and patients can save thousands of dollars downstream on unnecessary tests, visits to expensive specialists and avoidable trips to the hospital.

Nationally, Medicare and commercial insurers pay an average of only about $60 a visit to the office of a primary-care doctor and rarely if ever pay for telephone or e-mail consultations. Many health policy experts say the payments are not enough to let the doctors spend more than a few minutes with each patient.

Last month, Vantage was featured on the cover of PT Magazine in an article that focused on the topic of “healthcare consumerism.”  Healthcare consumerism is the shift toward the treatment of patients as “consumers” of their healthcare services, rather than simply passive recipients in their care.  As a result, the focus of many [smart] private practice owners is on the development of services and environments of care that will create loyalty and satisfaction among their patients.

Here is a link to the article - Thank you to PT Magazine for their coverage of such a relevant topic to today’s healthcare environment.

In traditional industry, says Quatre, businesses compete for customers by either lowering prices or improving product quality-say, by building a better widget. “In health care it’s much different because you can have a different service based on your training, your staff, your expertise, and so forth, but can you charge more for that because the quality’s a lot better? Your hands are tied to some extent, unless you’re on a strictly cash-based model. To compete for the customer, what you really need to do is make it an experience with which they would prefer to be involved.”