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The Business Opportunity of Medicine

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The practice is getting squeezed; Want ideas?

First, don't give up on the idea that small practices are out.  Consider them, if for no other reason then they are often better then large pracices that are overly driven to see large volumes of patients. IOW, solo and small practices are still playing an important role, although they may require TLC to thrive.  Regardless, should we "urge them all to become part of larger health systems?  Not so fast.  There is some evidence that a smaller practice can achieve good outcomes³ and that larger, integrated systems might drive up costs4 with no improvement in quality.5

Many ACOs and vertically integrated systems are working to improve outcomes and reduce unnecessary costs, but there are compelling reasons to consider policies and programs that support solo and small primary care practices:

  • Many parts of any state have a significant proportion of very small primary care practices

  • Small practices can provide high-quality/low-cost care

  • Larger practices may only drive up costs with no improved quality

  • Because they make up a small part of total expenditure, a small percentage cost to the overall budget would be a dramatic increase in support for primary care

  • High-performing primary care is the foundation of high-performing health care."

L. Gordon Moore, MD*."Why Would Anyone Care about Solo and Small Primary Care Practices?" Posted on January 16, 2015.

*Senior Medical Director for Populations and Payment Solutions at 3M Health Information Systems

Medical Business and The Financial Reality

  • The recession has eroded health insurers' profits; they then lower practitioner reimbursement. Layoffs mean fewer enrollees in company-sponsored plans and less premium revenue for insurers.
  • Reimbursement for E&M services declined by 7.3% on average; 99213, the bellwether CPT Code, fell to $65.49. 
  • E&M reimbursement for private payers declined, esp. in the Mid-Atlantic region, however it improved in Medicare. 
  • Primary-care doctors were hit harder than medical or surgical specialists


Then consider the following practice management techniques:

  • Know your insurer/managed care contract terms inside and out and be extra vigilant with any and all proposed pay cuts.
  • Consider seeing privately insured patients on a cash-only basis.  Write off bills for hardship cases rather than reducing your whole charge profile. 
  • Hire a midlevel practitioner such as a physician's assistant or nurse practitioner to leverage their income-to-collections ratio.
  • Be more efficient and accommodate a few extra patients each day.

Robert Lowes "2009 Fee Schedule Survey: Survive the Perfect Storm; How to stay dry in turbulent weather" Physicians Practice, Jan., 2010

From: Gilbert, R   Sent: January 21, 2010 8:27:07 PM EST 

As you know, as a physicians' network, we have locked in our rates at better than Medicare, so I can't relate to the physician problem except to say the docs need to understand antitrust. 

As for what individual and group practices should do?  Most practices have real and curable leakage issues - hence the book's the bible. Schedule right and you can add 5%-20% to your income without breaking a sweat. 

Other suggestions:

  • Analyze your practice--knowing which payers are contributors and which are losers, one can (one must) modify your access accordingly. Help your patients move to health plans you do better with - readily possible in Medicare and in Medicaid Managed care, but choose one plan; your patients will follow you.  (I have a physician that moved 100% of his Oxford Medicare, paying at less than that of a negotiated Medicare rate, to Empire Medicare, upping his revenue higher than Medicare.)
  • Participate in Medicare's Physician Quality Reporting System (PQRS) and e-prescribing - I am amazed that physicians are not going for the added 4% increase in Medicare compensation - that's real money!

​REF.:  click right to  View the Medicaid Managed Care fact sheet here.

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