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Making Medicine Pay Off: Practices seek answers to increase profits

As published in the Memphis Business Journal.

A doctor's office with no phones?

How about a primary care doctor who is also the receptionist, nurse, office manager and bill payer for her practice?

Crazy? Those are just two of the ideas being floated by practice management consultants.

And for the practice that wants to survive in today's health care environment, the pressures are forcing them to consider any and all suggestions, say practice administrators and consultants.

"Doctors are being squeezed at all angles to reduce costs," says Dave Ellett, CEO of RemitData, which provides medical reimbursement and claims management services.

That's largely because the flip side of the coin - increasing revenue - is getting more and more difficult, he says.

Cuts in Medicare reimbursements, scrutiny from private insurance and the impact of the slow economy are all converging on medical practices to create as tough an operating environment as ever, Ellett says.

The changes have forced medical practices to embrace new alignments with health systems, new partnerships, new technologies and new business practices while at the same time facing a public that expects more positive health outcomes.

"Physicians are some, if not the most, intelligent people working in the field today," says Barney Hebert, a director in the health care services division for accounting firm and business consultant Horne LLP. "It doesn't take them long to grasp these business concepts."

But they don't all do it willingly, and not all the options are palatable, especially in some speciality practices such as cardiology where changes in reimbursement rates have decreased revenue as much as 40 percent in the last few years.

For those practices, especially those that invested heavily in new technologies expecting big paydays that didn't come, their options are limited.

That's forced many of them to consider strategic alignments with health care systems that they might not have otherwise considered, says Scott Shanker, an attorney with Butler, Snow, O'Mara, Stevens & Cannada PLLC in its Healthcare Regulatory and Transactions Group.

Shanker and his partner, attorney Charles Crawford, have worked with several Memphis-area practices in the last couple of years to help craft the complicated arrangements between their practices and Methodist Le Bonheur Health Care or Baptist Memorial Health Care Corp.

"It's just not as profitable (anymore) for docs to have these ancillary services" due to changes in Medicare reimbursements and the regulatory environment, Crawford says.

The complexities of reimbursements and regulations are also driving practices to focus more resources on those issues to avoid costly fines or lost revenue from improper coding.

"When you talk about increasing revenue in a medical practice, there's only a few ways to do that," says Kristeen Pruit-Coronado, president and CEO of Houston-based Enhance Revenue Solutions LLC.

Technology can be the big equalizer for the business side of the practice for those willing to embrace it, says Pruit-Coronado, a practice manager for more than 20 years before starting Enhance Revenue Solutions three years ago.

"The business of medicine was focused on patients, and pushing paper around is expensive," she says. "I don't see a lot of people getting on the technology bandwagon, but now you have to."

Too often, practices that finally do engage her firm to get their billing straightened out are in desperate straits, she says.

"The groups I've taken on for billing are two months away from being bought," she says. "Their hair is on fire."

Not surprisingly, billing technology is starting to make significant inroads in managing denied claims, she says, where simple coding mistakes can choke the cash flow for practices.

"You have 2,000 different ways to fill out an invoice for reimbursements and thousands of rules on how to get reimbursements and it varies from carrier to carrier," she says.

Tackling the nightmare of remittances is what RemitData was founded on, says Ellett. The company has been collecting remittances for more than a decade and has more than 300 million on file, or about 25 percent of the market at any one time.

The company rolled out a new product last month called Titan that crunches data in the electronic remittance notices filed with Medicare and other payers benchmarking against regional peer practices, based on specialty and geography.

The technology allows physicians and practice managers to manage the day-to-day processes that reduce denial rates, accelerate cash flow, increase administrative efficiencies and anticipate audits, Ellett says.

Horne's Hebert says the changes being instituted because of the Patient Protection and Affordable Care Act related to how doctors charge for services and how payers will reimburse them are among the driving factors in managing practice efficiency going forward.

"I think we're going through a teeth-gnashing period where if you've been practicing medicine 10-15 years and you see the change upon you, it's mind-numbing," Hebert says. "On the other side, there are those that have embraced the technology to run their practices and treat their patients efficiently who are the next generation of physicians."