Fw: [practicemgt] You Own, They Own

[Guest guest]

----- Forwarded Message -----To: Practice Management Issues Sent: Thursday, February 2, 2012 9:19 AMSubject: Re: [practicemgt] You Own, They Own

I lived that once. My experience agrees with the conclusion re: hospital billing. Didn't realize the difference was so great. But, the hospital that once owned my practice was terrible at getting the correct insurance information (still are for hospitalized patients I have there) and they were terrible at following up on denied claims. It's true that some doctors who sell their practices to hospitals are looking for a way to smooth the way to retirement and they may let their productivity drop as a result. But, my experience is that when the hospital sees their collections go down, their response is not to improve their billing practices but to come down on the doctors and try to force them to be more productive than is possible.Pennie Marchetti, MDAt 10:17 PM 2/1/2012, you wrote:

Excellent article, i was able to read between The lines what happens when u have too manyChiefs and no productive workers.I think that happens when u have bigOrganizations running the show.I strongly believe having too many coffee Drinkers administrators could add more toxicityTo the primary care equation.Anyway my half cent.Adolfo E. Teran, MD

Why Income May Drop if You Sell Your Practice to a Hospital ConomikesPosted: 01/26/2012

IntroductionRecent reports from the MGMA (Medical Group Management Association) show that hospital- owned practices are 25% less productive than those that are privately owned. Our experience as medical practice consultants confirms these findings.In some cases, previously-profitable practices start to see a decline in their income. In other cases, the practices may have been less profitable to begin with. Here are the major roots of the problems and some suggested solutions.

1. Centralization of Billing and Collections A New England hospital brought in varied practices, eventually totaling 82 physicians. The hospital decided to centralize the billing operations and put these activities under the control of the hospital's financial VP.Fifteen months later, when we were called in, the net collections for these physicians, had dropped by an average of 18 percent. The result: these once-profitable practices were now losing money and the physician salaries were threatened. This same scenario occurred with an Oklahoma hospital that had acquired the practices of 24 physicians.Our findings were that the hospitals' financial V.P.s knew little about medical practice billing. Additionally, the practices, prior to being acquired, were doing a

creditable job.At the individual practice, it is the symbiotic relationship between the front-desk staff and the billing staff which makes the difference. If the front-desk staff does not do an effective job of gathering and updating the patients' demographic data, plus collecting required copayments and deductibles, then the tasks of the billing staff become formidable. At this stage, the billing staff and/or the practice manager step in to show front desk staff what is needed to cut down on unnecessary billing and collections work.With centralized billing, there is no such connection between front-desk staff at the practices and the more remote centralized billing staff. And there is no data that supports the effectiveness of centralized billing. It may appear to more efficient, but usually is not as effective.An accurate measure of collections effectiveness is a practice's Net Collection Percentage. The sample formula, in this

example, uses data for the prior 12-month period:Payments $750,000 Charges minus Contractual Adjustments = $1,000,000 - $200,000 = 93.75%Contractual Adjustments are write-offs for lower fees/payments in payer contracts.This Net Collection Percent of 93.75% shows that 6.25% of copayments, deductibles and other allowable fees, that should have been collected, were, in fact, not collected.Well-run practices have Net Collection Percentages of 97.5%. A figure of 95% should be the minimally acceptable result for any practice.

Why Profits May Plummet After Sale to a Hospital

2. Loss of Physician Control and InvolvementWhen a practice lacks billing and collections staff, then physicians recognize that they have no control over the financial performance of their group. This loss of control results in the physicians being less involved in the oversight of their individual practices.It is further manifested when physicians are no longer responsible for correctly documenting their codes and now leave this for the central billing staff. Yet our studies show that when physicians code and document their services, optimum billing and collections result. No one is better able to document and determine the correct codes than the involved physician.The second fallout from this scenario is that, since the physicians are really not in control of their practices and their financial performance, they feel more like employees, which they have, in fact, become.

3. Lower-Performing Practices May Be More Likely to Sell to HospitalsHigher-performing practices often do not see a need to become part of a hospital system. Therefore, it has been the lower performers, lacking the know-how to be very profitable, that have turned to the hospitals for support.This trend will probably continue, particularly with the increasing emphasis on Accountable Care Organizations. The challenge to the hospitals is to improve these low- performers. And it can be done. For physicians, it pays to find out if the hospital you've sold to has plans or strategies to increase the revenues of its affiliated practices.

How to Correct These ProblemsFor physicians, this may involve having a serious conversation with members of your hospital administration. First, ask for a status report on how the practice has been doing since acquired by the hospital. If you haven't yet sold your practice to a hospital but are in negotiations, bring up some of these issues so that you can avoid problems developing.1. Make an effort to bring billing and collections back to the practice level. Billing staff will feel more involved, being in the presence of the physicians, mid-levels, and other staff members, rather than in the more remote central billing office.2. Ensure that physicians are responsible for the financial performance of their practices. This includes having physicians to do their own coding and documentation.3. It's optimal if the hospital would set up an incentive system that rewards physicians for the financial

results of their practices. This is worth suggesting.4.Ask if the hospital would consider having coding consultants conduct coding and documentation workshops at the hospital. These can be attended by physicians, mid-level providers and billing staff. Prior to the workshops, have the coding consultants perform coding and documentation audits. These audits will allow the consultants to tailor their workshops to the audits, resulting in more personalized training.Medscape Business of Medicine © 2012 WebMD, LLC ---

You are currently subscribed to practicemgt as:

zapoyol@...

To unsubscribe or to manage your settings, please go to

http://members.aafp.org/members/cgi-bin/myaafp.pl?op=subscriptions & type=lists

---

You are currently subscribed to practicemgt as:

drmarchetti@...

To unsubscribe or to manage your settings, please go to

http://members.aafp.org/members/cgi-bin/myaafp.pl?op=subscriptions & type=lists

---

You are currently subscribed to practicemgt as: zapoyol@...

To unsubscribe or to manage your settings, please go to http://members.aafp.org/members/cgi-bin/myaafp.pl?op=subscriptions & type=lists