Operations: Learning From the Best

There are two - and only two - reasons your practice exists: to deliver high-quality care and to drive volume and revenue. That’s it, says Jayne Oliva, the cofounder of the practice management consulting firm Croes-Oliva. Practices don’t exist so your staff can work in a place that closes for lunch. It’s not there to run a computer system.

Just care and cash.

Nobody will argue with delivering high-quality care. Driving volume and revenue sounds a bit crass in comparison, but if practices don’t make money, they’re not sustainable, says Oliva. No money means no resources to deliver patient services.

So with those simple objectives in mind, we wanted to know: What are the major characteristics of the most successful practices in the country? What do they know that you don’t? To find out, we asked the most well-run practices we could find and the sharpest consultants we know to tell us their secrets of success - and to dish about some of the biggest mistakes they’ve seen.

And you know something? It turns out that the secrets to success aren’t really secrets at all. There’s no magic book; no one graduated from the Hogwarts School of Wizardry and Running a Practice. The best-run practices rely on a simple formula: Know your patients. Develop sound fiscal policies and stick to them. Create a positive office culture that focuses on patient care and financial performance. Find ways to grow.

We’re still trying to express all this in an Everything-I-Needed-to-Know-I-Learned-In-Kindergarten-type essay. In the meantime, we thought we’d tell you the stories of the best.

Create the right culture

There’s nothing like a robust, well-defined office culture to beget a successful practice; in fact, the culture and the “care-and-cash” objectives depend on each other. But that’s where the fuzziness sets in. A practice is not a faceless enterprise functioning à la Detroit car manufacturing. It’s run by people - a team, a group of human beings who perform various duties in support of the practice. How they interact with one another will define your office culture and determine your outcomes. Do it right, and you’ve got yourself a great practice. 

Easily said; not so easily done.

Psychologist Martin Seidenfeld says that “too many people think that a good team is where you get together and like each other.” That’s fine for a hiking club or quilting circle, but for a business you need more. So make sure your office culture is one that works for the good of all those involved. Here are some tips:

1. Model the behavior you want. Although it’s desirable, even imperative, to get input from your team, someone must serve as the buck-stopper. For practices, of course, this is you - the physician. “The real key is the functioning of the person on top,” says Seidenfeld. “There’s no getting away from that. Bosses have got to believe they’re not regarded as ‘normal’ people. [They’re] being watched. … Their behavior will be emulated.”

Your values are your inner beliefs regarding the “proper” way to behave, and how you act has practice-wide consequences. So if you miss deadlines or dress down, count on your staff to do the same. On the other hand, if you follow through on staff concerns and remain calm in a crisis, likely so will they. Of course, even as the leader, you can’t control every aspect of your staff’s behavior, nor should you try, but never doubt the heavy impact you have.

Which is one reason allergist Weily Soong (pronounced “song”) is so happy at Alabama Allergy & Asthma Center in Birmingham: The staff laughs at his jokes, and he laughs at theirs. “Fun is a big thing [here],” he says. “Everybody jokes. Nurses are laughing all the time. I don’t mind that. That’s what the workplace should be - I don’t try to squelch it.” That way, he says, “when things get really rough and busy, I’m not yelling and screaming.”

His own core values - “Work as a team. Value everybody’s opinion. Don’t be arrogant. Work hard. Know your role” - are perfectly reflected in the way Alabama Allergy does business. Honoring them is critical, he says. “If you can keep with your core values, you can only go up.”

For Gene Cook, an OB/GYN at Murray Woman’s Clinic in Murray, Ky., it’s all about communication. When he and fellow physician Conrad Jones opened their clinic 30 years ago, they agreed that both open communication with their staff and immutable confidentiality with their patients were vital to success. “I aspire to be someone who does those things,” says Cook. “[My patients] should feel comfortable talking about anything they want to talk about, and it will go no further.” As for the workings of the practice, he adds, “if you check around, I’ll pretty much say what I feel.”

2. Accept your mission. The fact that Alabama Allergy’s culture works for Soong is no accident. “I was looking for a practice that would fit my own culture,” he says.

Because of the practice’s clear mission-and-values statement, Soong knew exactly what to expect and what would be expected of him. Everyone at the practice does. They take their mission statement very seriously. “Any time we have a bump in the road, I always refer back to that mission statement, in terms of problems or our priority,” says Soong.

He jokingly calls it “The Comer Way,” after Carolyn Comer, the practice’s head physician, but it also reflects his own values so accurately that he could just as well call it “The Soong Way.”

A mission statement is a written manifestation of the specific attitudes and goals of the physicians who run a practice - a rulebook, if you will. To be “S.U.P.E.R.”-effective, a mission statement must be:

• Succinct: Never mind lofty, motivational prattle; precision is more important.

• Unique: What sets your practice apart from others? List specific activities and goals.

• Posted: The more often people see and read the statement, the more it will drive desired behaviors. This goes for both staff and patients.

• Employed: The best mission statement ever crafted is a waste of time if you don’t use it to solve problems or direct your practice’s actions.

• Revisited: Your practice’s needs and goals will evolve over the years; make sure your mission statement reflects that. Evaluate it annually, and invite input from your staff and even your patients.

3. Love your staff.

The only true “earners” in any practice are the physicians and other healthcare providers who can bill for their services. The staff is the underpinning, “there to make that provider productive,” says Oliva. So naturally, you want your staff to feel good about coming to work every day and supporting the practice’s money-makers. Note that if your staff is happy to be there, your patients will be too. “We have huge patient retention,” says Soong. “People keep coming back and also will refer out.”

Incentives work well at Murray Woman’s Clinic, says Cook. Two days off if you make a great suggestion. A $100 bonus to all if the practice achieves its quarterly challenge benchmark for getting patients through their exams within an hour (now at 80 percent, up from the mid-60s prebonus).

Alabama Allergy looks forward to fun events throughout the year, including paint-your-own-pottery parties and birthdays off. The staff is encouraged to chat and get to know one another. “We make a point of complimenting each other: ‘Those scrubs are a good color for you;’ ‘Nice hair’,” says the practice’s administrator, Helen Combs. “People realize you’re recognizing them as people and not just as staff.”

Fostering relationships adds warmth to culture. “It feels good,” says Seidenfeld. “It’s hard to measure, but it’s nice when people like to come to work. They’re willing to help each other. Like if the nurse’s filing got way out of whack: It’s not your job, but you help her out.”

“We spend more time here than we do at home,” Combs notes, “so when we walk through the door here we want everyone to be happy so they can do their best. It’s imperative because without it they wouldn’t be productive.”

They also might not stick around, and then you have to go through the pain and expense of hiring someone else. At Alabama Allergy, every single person feels valued. “It’s a primary reason we keep our staff,” says Soong. Indeed, the average employee tenure there is seven years. “Many people say this is the happiest practice they’ve ever been in. People are shocked.”

Add more revenue

Of course, nobody’s happy if the practice goes broke. One way to ensure you stay in the black is to develop ways to grow revenue. That may include adding new lines of income, but most important is to expand revenue from your core business in a sustainable way.

Allergist William Smits’ approach is a perfect example. Not afraid to take on a challenge, Smits invested in a state-of-the-art shot clinic and a brand-new office building. Smits is also no stranger to the kind of procedural work that other allergists might avoid.

But when asked to advise other physicians on how to add more revenue to their practices he answers: “double-check charges.”

Double-check charges? It’s so basic - so Practice Management 101.

“It’s back to basics, but it’s so important,” Smits insists. “And even when I think we have it down, we don’t. ... Just last week I had an instance where [we missed some charges], and it woke me again to that fact. It had gotten so mundane that we aren’t really checking. I would estimate at least 10 percent of revenue gets lost that way. Ten percent is huge in today’s market.”

So, for a fatter wallet, by all means make sure to charge for everything you do. And here are some other ideas, from advanced to easy:

1. Consider pay for performance. Not everyone is sold yet, but David Nash, MD, chairman of the health policy department at Thomas Jefferson University in Philadelphia and editor of the book “Practicing Medicine in the 21st Century,” is convinced that “pay for performance will be a huge new opportunity for revenue. Putting in the infrastructure to measure one’s work now … could yield [future] dividends.”

How do you prepare? Here’s Nash’s starter list:

• Implement an EMR.

• Standardize your approach to patients.

• Follow through on abnormal lab tests.

• Place follow-up calls to patients missing mammograms and other preventive tests.

• Follow practice guidelines.

• Participate in CME.

• Offer patients open-access scheduling.

If it sounds a bit obvious, it’s supposed to. “It’s really down to the level of blocking and tackling,” Nash says. “If … you do the right things, you will make more money. You will reduce waste, you’ll increase your volume … and make a higher margin. We know from every other industry in the world that high quality costs less to produce.”

2. Improve the patients’ experience. Apart from formal programs, there are economic and patient-outcome benefits to improved performance. Knowing that his allergy patients hate having to wait around a sterile clinic in case of an adverse reaction after getting their shots, Smits thought about where people might enjoy hanging around for 30 minutes or so.

And the answer was obvious: Starbucks.

Smits’ shot clinic now features free Starbucks coffee and contemporary décor. Automated check-in means patients get their shots almost immediately rather than 10 or 15 minutes after they arrive.

The whole experience is more convenient and pleasant for patients, so it’s no wonder that Smits’ patients show up more consistently than his peers’ - and that he has more of them. “When we compare our compliance with allergy shots to a national average, we are well above the national average, and I know it’s because they are happy to come see us,” Smits says. Better compliance means happier patients and more revenue from shots.

Smits also mails both a reminder card before the appointment and a “we-missed-you card” if patients no-show. About 70 percent of his no-shows come in after they get the “we missed you” card, Smits reports, again improving care and revenue: “It’s worth the
23-cent postcard.”

3. Educate your audience. But what if you’re already a fantastic doctor with compliant patients? Another path to revenue is developing new or better methods for telling patients what you do. New patients pay better than established patients, and they promote gradual practice growth instead of stagnation.

Some of Smits’ best outreach expands the population of people who understand that they might need an allergist. He doesn’t wait around for referrals. “With allergies, a lot of people don’t realize that it causes … headaches and migraines,” Smits explains, so his promotional materials explain all the symptoms that allergies can cause - and that his practice can help relieve.

Even easier strategies have also paid off: “One thing is just blowing me away recently. … When we built our new office, we put out a very well-lit sign. We’ve averaged five new patients a month who come in because of that sign. … The sign cost us, I think, $4,000. I can’t imagine a way I could spend $4,000 and bring in 70 patients. It’s just a simple sign. Isn’t that something?” Indeed. And it’s sure less stressful than adding ancillary services.

4. Don’t go too far. While labs, imaging, lasers, and the like are increasingly popular ways to increase revenue, Smits and Nash feel they should be done judiciously.

“There is a lot of evidence that there is unnecessary testing out there,” Nash worries. “I think we can put our training and education to better use” than offering cosmetic services. “It sounds very reactive to me.”

It’s important to make sure that any ancillary services you offer dovetail nicely with your practice’s current services, and that you have the systems and the people in place to handle whatever added business comes your way as a result. You don’t want to start tacking things on that don’t make sense for your specialty or patient base, or that you can’t fit properly into your office work flow.

“Whatever it is that you do, you want to be excellent at it,” says Smits. He offers some ancillaries himself, but he discourages a profligate approach. “I encourage it if someone is going to do something extra, and it’s something they really have an interest in, something that they are going to take to an excellent level and they can come to be known for that.”

But don’t add services just hoping for ready cash. Revenue growth is possible, and simple strategies are the best place to start.

Firm up your financial performance

But developing new lines of revenue and trying to grow your existing ones is somewhat beside the point if you aren’t getting paid correctly and consistently for the services you’re already performing. Nancy R. Smit, president of SHR Associates, an Annapolis, Md.-based consulting firm, so often sees practices costing themselves thousands of dollars in revenue by failing to develop and follow simple financial policies that she’s developed a Top 10 list of financial mistakes.

In short, she says, practices don’t know what to charge for the services they perform because they don’t set their charge schedule correctly; don’t capture all the charges for the services they perform; improperly downcode the charges they do capture; don’t know how to collect, especially from patients; and don’t even know when they aren’t collecting what they’re owed because of outdated accounts receivable systems.

Other than that, they’re doing just fine, says Smit.

All the steps in proper billing “are intimately connected from front to back,” says Smit (not to be confused with allergist Smits). “If there’s a breakdown in any link in the chain, it affects everything that comes after.” Download Smit’s “Building Healthy Practices: Top 10 Reasons Why Medical Practices Fail to Maximize Physician Revenue” PowerPoint presentation. Here are the highlights:

1. Patient intake procedures are weak. “Billing starts with that very first [patient] phone call,” Smit maintains. “Getting all the information is so important: Primary and secondary insurance … verifying that information and then updating it” at each subsequent encounter. “It seems so elemental, but getting it wrong is very common.”

That’s because in most practices, the front desk is staffed by low-paid teenagers who are not properly trained, and it’s where practices tend to have the highest turnover. Meanwhile, front-desk staff are frequent multitaskers; they’re doing patient intake and handling the phones at the same time, and “that’s a prescription for disaster,” says Smit. “We try to move the phones off the front desk. Scheduling doesn’t have to happen there.” 

2. Charge capture documents and fee schedules are outdated. Are you updating your fees and charge tickets annually? You should be; this process should be part of your to-do list as you near the end of the year.

3. Practices under code the services they perform. Smit recalls one otolaryngology practice she visited that had lost nearly $193,000 in one year by undercoding. With its established patients, for example, it was coding Levels 2 and 3 98 percent of the time, even though, according to Smit’s analysis of the practice’s charts, it should have been coding Levels 4 and 5 27 percent of the time. “It’s just easier to downcode than it is to make sure they’ve satisfied the requirements of, say, a Level 4, even though they’ve already done the work entailed in a Level 4 visit,” Smit explains. This is one area where a good EMR can help pay for itself by suggesting the appropriate code and making documentation easier.

4. Accounts receivable and financial reconciliation procedures are weak. You don’t see Starbucks giving away free lattes, do you? Yet staff often fail to enter a charge for every service physicians perform. This is a costly oversight. Make sure you have two people checking charge tickets - that’s the document that shows your billing staff what you did, so they can enter the charges - at the end of the day: one who totals up the tickets, and another who actually enters the charges and keeps a running tab.

The two numbers you get should match; if they don’t, one of them missed something. And don’t rely too heavily on the charge tickets; just because you performed a service that doesn’t appear to have a code listed on your ticket (also called a superbill) doesn’t mean the service should go unnoted, or, worse, that you should check off an inappropriate code. Finally, and perhaps most importantly: “Collections procedures need to be formalized in writing,” says Smit. It’s too often the case that billing procedures are lost when a key billing staffer leaves the practice.

5. Staff-to-physician ratios are too low. We hear all the time from practices that gloat about how few staff they have; they think it’s a sign of running a lean, efficient business. That may be true in some cases, and we’re certainly not advocating for bloat. Yet it is also true that the most profitable practices tend to have higher-than-average staff-physician ratios. Why? Because those practices understand that physicians, as the practice’s highest-paid employees and best (perhaps only) revenue generators, ought to be spending as much of their time as possible on the thing that actually earns the practice money: patient care.

Moreover, when too few staff are on board to handle all the nonclinical tasks necessary for getting paid for services, those tasks don’t get done as well, or at all. Says Smit: “I’d rather be working in the practice with 60 percent overhead that’s generating $1.5 million in revenue than the practice with 50 percent overhead and $1 million in revenue.”

Understand your community

We hate to break it to you: After all of the years you devoted to learning how to practice medicine, your education isn’t complete, at least not if you want to succeed as a private practice physician in America’s rapidly changing melting pot. 

With the nation’s population growing more diverse by the year, you must not only keep apprised of how the demographics are changing in your communities, but you must also adapt accordingly.

No one understands this better than Jeffrey C. Brenner, who, remarkably, splits his professional time three ways: delivering primary care, conducting research in urban health issues, and teaching at the Robert Wood Johnson Medical School in Camden, N.J.

Camden is the nation’s poorest city, according to U.S. Census data. A majority of Brenner’s roughly 2,500 patients speak Spanish. A language barrier between physician and patient can be particularly daunting and potentially even dangerous. Many Spanish-speaking patients can’t understand their English-speaking doctors, Brenner says. And many can’t read the labels on their prescription medications, which further exacerbates the widespread compliance problem that exists even for those who do understand.

From a business standpoint, an inability to speak a language spoken by a large percentage of your population could send current and prospective patients in search of someone who does.

Brenner and his four staff members all speak Spanish as well as English. “Patients are happy that we’re speaking their language,” says Jennifer Costa, Brenner’s physician assistant.

The savvy office won’t stop with the spoken word, either. All signage and other wall hangings should be bilingual. In Brenner’s office, for example, there’s a handmade sign extolling the virtues of effective hand-washing in both English and Spanish.

Your own office may not have a language-barrier challenge. Twenty years ago, Brenner’s office wouldn’t have been dealing with it, either. But times change. Communities change. And like any business, physician practices must adapt to the evolving needs of their patients.

“Physicians and their staff must always stay in tune with their patients and recognize if there is a shift in demographics,” says Judy Capko, a consultant specializing in primary-care practices.

When there is a shift, physicians “need to study the impact, project the future, and plan accordingly to meet the needs of their patients and provide quality service.”

Capko, who runs Capko & Co., suggests that practices should gather demographic data in a number of ways, from your healthcare charts and practice management system to local newspapers and chambers of commerce. You can also check with your contracted payers to see what information or analysis they will share with you regarding your patient panel.

All of this said, a language barrier isn’t the only thing you need to be aware of. In Camden, where the median household income is $18,007 a year, extreme poverty powerfully informs the culture of many of Brenner’s patients.

In all, 44 percent of city’s residents live below the poverty line (and many argue this figure is artificially low because of the outdated way the poverty-line is calculated). With poverty comes crime: Camden ranked as the country’s most dangerous city last year, “surpassing” Detroit and St. Louis, according to the research firm Morgan Quitno.

Brenner spends about half his professional time conducting research on healthcare in urban centers, and he says physicians are more effective when they understand their patients’ lives. Among the poor, for example, the “unit of survival” is the family, which is often extended. Consequently, an aware doctor can connect the dots when treating several generations of the same family. Because there’s such close contact among the generations, a certain illness can ripple all the way through. Measures can be taken to prevent the contagion from moving. Or early action can treat the illness before it spreads.

Regardless, simply knowing that patients from particular economic, familial, and cultural backgrounds can be at greater risk of developing adverse health conditions ought to inform how physicians treat them, says Brenner. Obesity, for example, is far more prevalent in low-income and minority communities. The poor, who tend to work long hours and have little money for groceries, tend to purchase food that’s cheap and simple to prepare, and such items are more likely to be unhealthy. It’s so much easier to heat up fried boxed chicken than it is to bake fresh, skinless chicken breasts. Mac-and-cheese is the king of cheap-and-easy, and the kids love it. Physicians can counsel patients more effectively when they understand their motivations.

But perhaps your patients are affluent. In that case, consider whether your practice is well adapted from a customer-service perspective to serve people who are accustomed to flying first-class and eating in expensive restaurants.

That doesn’t mean (necessarily) that you must offer everyone in your waiting room terry-cloth robes and comfy slippers. But do you have open-access scheduling and extended hours at least once or twice a week for working professionals? Is your front-desk staff well-trained, pleasant, and professionally attired, or do they dress and act like they just got back from a Guns N’ Roses concert? Does your Web site (you do have a Web site, right?) offer online scheduling and other features that the computer-literate are used to?

Once physicians have developed some familiarity with the evolving demographics of their respective communities as well as the challenges their specific patients face, then it’s time to listen, says Brenner. Really listen.

“What I want for my profession above all else is sensitivity,” he says. “I want doctors to recognize the importance of patient encounters, to understand [a patient’s] upbringing and education, to take all of the issues into account.”

That’s good advice no matter where you practice.

Bob Keaveney is the executive editor of Physicians Practice. He can be reached at bkeaveney@physicianspractice.com.

This article originally appeared in the November 2007 issue of Physicians Practice.