Life After Fellowship or Residency: Transition to Practice Mayo Clinic Alumni Association Mayo Schoo

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Life After Fellowship or Residency Transition
to PracticeMayo Clinic Alumni AssociationMayo
School of Graduate Medical EducationJuly 13,
2009
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Managing Your Medical Practice

• Jerry W. Sayre, MD
• Consultant, Department of Family Medicine
• Assistant Professor, Mayo Medical School

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What a privilege it is to be able to
teach. Dr. Charlie Mayo, 1919
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ObjectivesThe beginning physician should have
a basic understanding of management principals
to

• Appreciate the importance of maintaining a
  balanced budget to insure practice vitality
• Identify methods of tracking costs to increase
  income and cash flow
• List three resources available to establish
  benchmarks

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Baylor College of Medicine
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UT-SouthwesternJohn Peter-Smith Hospital
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Coryell Memorial Hospital
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Gatesville ClinicGatesville, Texas
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Physician Training in Practice Management

• Residency limited
• Prior work experience, financial background
• Personal interest
• Consultants

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Medical practice must be financially viable

• Income
• Expense
• Productivity
• Maintain Mayo quality
• Staff morale
• ? Quality-Prices-Customer Service

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Its About Value

• Value Quality/Cost
• Prove It !
• Value Outcomes/Cost
• Service/Cost
• Safety/Cost

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Physician Productivity

• Objective measure of the physicians work and
  labor
• Related to efficiency
• Distinct from quality, service
• Used to measure physician compensation

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How do we measure productivity ?

• Traditional , numbers and types of patients,
  hours
• Capitation panel size, risk adjustment, ?
• More recent RBRVU
• (compare CRVS-1969)

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Resourced Based Relative Value Scale

• Evolved from California RVS
• Harvard Study to quantify MC fee payments to
  physicians
• Each CPT Code is assigned RVU
• Advantage independent of dollar effect
• Disadvantage dependent upon accurate CPT
  coding, not useful in capitated environment

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RVU Reflect

• Time required to perform the service
• Technical skill and physical effort
• Mental effort and judgment
• Psychological stress associated with the
  physicians concern about iatrogenic risk to the
  patient

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TOTAL RVU WORK RVU
X GPCI PRACTICE EXPENCE RVU X
GPCI MALPRACTICE RVU X
GPCIMULTIPLIER 2009 36.066MEDICARE
PAYMENTTOTAL RVU X MULTIPLIER
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Physician Compensation

• Fee for service, Productivity
• RVU based
• Capitated
• Salary
• Mixed

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Typical Physician Response

• Work harder, see more patients, longer hours
• Raise fees
• Fire staff, spouse manages office
• Cancel vacations, new car, summer camps for
  children
• Things will work out

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Physician Skills

• Examine patient, make diagnosis, prescribe
  treatment
• Use same tools to evaluate practices financial
  health

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Process

• Gather data
• Diagnostic tools
• Normal values, benchmarks
• Differential diagnosis
• Patient management, practice management
• Periodic re-evaluation

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Select Benchmarks

• Medical Economics surveys
• AMA surveys Speciality organizations
• Medical Group Management Association (mgma.com)
  500.00
• American Medical Group Association (amag.org)
• Internalyear to year, compare to self
• Purchase benchmarks
• No benchmark is exact, expressed in quartiles
• Compare to similar practice and geography

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Access Your Provider RVUs Benchmarks Online Any
Time!Have you developed a fair provider
compensation and incentive plan to retain your
providers?Can you compare provider work RVUs to
provider salary, expenses, benchmarks, and
budget? Do you know which providers are
covering their costs? Contributing to the
practices profitability?How many hours do you
spend every month creating provider productivity
reports in Excel? PracticeSense Will Make YOU an
Expert in Provider Productivity! Calculate your
physicians' Work, Malpractice, Practice Expense
Total RVUs. Analyze dollars RVUs per day.
Compare work RVUs salaries to benchmarks of
your choice. Calculate work RVUs needed to cover
each physicians costs. Drill down into provider
productivity details to understand what is
driving practice metrics. Compare all providers
and their performance trends. Easily distribute
accurate concise provider progress reports
including multi-year variances. View historical
data at a glance rather than waiting for reports
or reviewing old files. Understand the key
drivers of practice productivity and
profitability. Eliminates the burden of building
spreadsheets and manipulating complex
calculations. Create concentrated analyses of
high-volume CPTs analyze volume per CPT for each
physician. Compare reports including RVUs,
volume, charges receipts. Track productivity
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Practice Management ConsultantCall for Help
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Evaluate the Monthly Income Statement

• Total Revenue
• Expenses
• Salaries, benefits
• Medical supplies
• Equipment
• Rent
• Insurance, legal, accounting
• Retained earnings, cost of capital
• Lab, X-ray fees
• Telephone
• Administration, marketing, office supply
• Management fees
• Charity care
• Physician Distribution
• Take an Accounting class

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Financial Measures

• Total gross charges per MD FTE, encounter, work
  RVU
• Net medical revenue (NMR) per MD FTE, encounter,
  work RVU
• Total physician expense per MD FTE, encounter,
  RVU as a of NMR---efficiency measure
• Total staff expenses
• Staff compensation
• Bad debt
• Rent per square foot

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Operational Measures

• Annual and daily patient encounters, charges, RVU
  per MD FTE
• Patient panel
• RVU and charges per encounter
• Patient care hours per day
• New patients per month per MD
• Staff per MD FTE
• Age of charges entered
• Proc per MD per day
• Distribution of E M charges by MD

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ExampleDr Cortese Increase productivity
102004

• Work longer days
• See more patients
• Work smarter, not harder
• Use technology
• Collective and collaborative wisdom
• Effective practice management

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Evaluation of operational, production, and
financial measures

• Decreased patient demand, 5
• Reduce level 1, 2 E M charges
• Increase level 4, 5 E M charges (with
  appropriate documentation)
• Increase procedures
• Add Preventative Medicine E M services
• Add Home Health, Hospice, and Care Plan Oversight
  E M services

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Gross RevenueBeaches Primary Care Center
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Gross Revenue Per Consultant FTEBeaches Primary
Care Center
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Positive Percent ChangeBeaches Primary Center
40.8
23.7
Percent Change
13.3
5.8
5.0
0.10
Year
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2004-2005 Distribution of Service
Number of Visits
Level of Service
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Gross Revenue and Preventive Medicine
VisitsBeaches Primary Care Center
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Gross Revenue and Procedure RevenueBeaches
Primary Care Center
Procedure Revenue
No. of Procedures
800
8
761
73.0
695
700
666
63.7
600
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57.8
53.2
494
500
Dollars (thousands)
No. of Procedures
400
4
341
37.7
300
200
2
100
0
0
2008
2007
2006
2005
2004
Year
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Basic Formula

• (Collections/RVU) X (Total RVU)
• Net Income
• Practice Expense overhead
• Physician Salary Physician Benefits

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Responsibilities

• Collections per RVU Payer Mix Billing
  Performance
• Overhead management Administration
• RVU Physician Performance Coding

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Change Practice Parameters

• Periodic monitoring of changes and benchmarks
• Is the cost worth the benefit
• Some medical services for patient satisfaction /
  fun / MD convenience
• Observe for unintended consequences
• Admit mistakes and move on to next step

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Summation

• Control Overhead
• Compare to National Benchmarks
• Bill For Your Services
• Appropriate documentation and coding of E M and
  Proc
• Collect What You Bill
• Know Your per RVU

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Mayo Clinic Jacksonville
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