As small practice physicians are forced to combat increasing overhead and shriveling reimbursement, we seem to be entering an era of medical practice Darwinism—survival of those that are most fit to operate in today’s severe and unforgiving healthcare environment.
Explore this issueDecember 2008
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In an attempt to survive and keep practice finances out of the red, many physicians fall into the trap of scheduling more patients in order to bill more and increase cash flow.
At first glance, this may appear to be a valid fix. Unfortunately, this is not always true. As you increase your patient load, you also increase the costs associated with seeing these patients and, after a point, efficiency and productivity levels drop. Even though you are billing more, you may not see an increase in profits. In fact, you may experience larger losses.
So if working harder isn’t the answer, what is? How can you manage operations so that your practice not only survives, but also thrives?
New and Innovative Practice Designs
Newly emerging practice models work smarter, not harder. They rely on basic business concepts such as supply and demand, operating concepts taken from manufacturing industry, and customer service practices taken from the hospitality industry, and on newly developing technology—all of which serve to streamline the delivery of healthcare and eliminate muda, a Japanese word that means non–value-added work that adds stress, is costly, and drains motivation.
This medical practice evolution has led to a new breed of medical practice design concepts. Although many of these emerging practice models were born out of the primary care setting, the following models have proven particularly effective in specialty practices and have been successfully adopted by some rheumatologists.
Micro-Practice: At the core of the medical micro-practice are the two key ideas of low overhead and high technology. In this practice setting, the physician is the sole provider of care and performs all administrative functions with no ancillary staff, leaving dramatically lower overhead than found in traditional practices that allot roughly 40% of income to pay staff salaries. The reduction in overhead, then, allows the physician to see fewer patients than before and leaves more time to be spent with each patient. The physician is able to do this on his own through the combination of high-quality patient-centered care with the extreme efficiency of using high technology and promoting patient responsibility.
Direct Practice: The direct medical practice (also known as personalized, retainer based, or concierge) is a rapidly growing trend that has been sweeping the United States since the late 1990s. These practices give patients the opportunity to pay a fixed annual fee to join the practice’s limited patient base in exchange for “premium medical services.” The theory behind the direct practice is that the physician can capture the same or higher revenue levels by charging a flat fee per patient and treating that patient in a way that promotes preventive healthcare and disease management through personalized patient education. The limited patient base allows physicians to spend more time with each individual patient to identify their needs and formulate a total health management plan that is custom fit to his or her lifestyle.