Transcript Benchmarking

Taking Charge of
Your Practice
Frank A. Pettrone, M.D.
AANA Annual Meeting 2007
San Francisco, CA
Benchmarking
Why Benchmark?
1.
2.
3.
Compare your practice with like practices of the
same specialty to provide sense of “how am I
doing?”
Provides indications of where to look to change /
improve performance
Provides opportunity to learn about and employ
“best practices”
Benchmarking
What to Benchmark?
1.
Physician group demographics/profile in order to
determine comparability





# of physicians by specialty/subspecialty
physician extenders used and if so, how many (e.g., PAs,
NPs, etc, …)
# of office locations
Group ownership (e.g., physician owned vs. hospital
owned)
Ancillary services provided (e.g., PT, imaging, ASC)
Benchmarking
2.
Various financial indicators to compare performance /
efficiency






Charges, payments, adjustments
Days in Accounts Receivable
Accounts Receivable Aging (0-30 days, 30-60, 60-90,
over 90 days)
Net collection % (what you should get paid according to
your contracts)
Insurance payer mix
Staffing ratios per FTE physician (break down by
clinical, administrative support, billing)
Benchmarking
2.
Various financial indicators (continued)

Practice expenditures as a % of total expenses… as a %
of revenue…per FTE physician







Direct staff expense (e.g., wages and benefits)
Office expense (e.g., supplies, furnishings)
Medical expense (e.g., drugs, medical surgical supplies, DME
Facility expense (e.g., rent, utilities, maintenance)
Technology expense (e.g., computer hardware/software, phones,
EMR, digital x-ray)
Marketing expense
Malpractice insurance
Benchmarking
2.
Various financial indicators (continued)
Physician work RVUs
 # new patients
 # patient visits
 # surgeries
 Surgical yield (ratio # patient visits/surgery)

Benchmarking
Operational practices to find improved ways to do things
(office flow, staffing patterns, technology
applications)
3.
•
•
•
More qualitative/anecdotal vs. quantitative in nature
Idea sharing…how are you organized? How do you
schedule patients? If you have physician extenders, how do
you deploy them? How do handle Rx calls?...
May require site visit to another practice
Benchmarking
Benchmark Cautions
Benchmarking is not absolute …remember, it is to give you a
“sense” of how you are doing, a comparative feel
Benchmarking will only give you ideas as to where to look for
improvements
Important to compare “apples with apples” as much as
possible
Cannot always duplicate someone else’s experience
1.
2.
3.
4.
•
5.
Market considerations…Organizational culture…
Financial constraints…Legal constraints…
Beware of envy…work on / change the things you have
control over
Benchmarking
Sources of Benchmarking

Medical Group Management Association (MGMA)



Bones Society



Conducts annual cost survey…compares like size groups by specialty,
by geographic area
State MGMA organization meetings
Conducts annual orthopaedic practice survey
Annual educational meeting
Other self-directed opportunities

My practice joined Asheville Orthopaedic Forum (group of 20
orthopaedic group practices of 20+ physicians) with specific purpose
of benchmarking data and sharing ideas
Marketing


Marketing is the process of developing and
executing tactics to obtain your share of the
market
Marketing is making every impression count
“It is of the highest importance in the art of detection to recognize
out of a number of facts which are incidental and which are
vital.”
-Sherlock Holmes

Data-driven decisions



Market data
Patient Information System
Satisfaction surveys




Referring Physicians
Patient
Employee
Development of communication efforts




Marketing Committee
Branding
Toolbox
Measurement of communication efforts
Data Collection/Analysis


Supply and Demand of Orthopaedic Surgeons
Physician Marketing Plans






Patient Origin reports
Inpatient Market Share
Production Data
Referral lists for each MD and each office
Patient Satisfaction
Develop Mailing lists



PCP referral base
ATCs in Northern Virginia
Large employers who send us worker’s comp
Communications

Branding
Logo/Tagline
 Stationary
 Photo Library
of patients to
use in all materials
 Uniforms
 Giveaways

Customer Groups
New Patient Referrals

External Customers




Referring Physicians
Self-referrals
ER/WC/Hospital referral
The unknown influence of
managed care
13%
1%
2%
3%
Referring MDs
Family & Friends
4%
Est. Patients > 3yrs
Office Staff
Other Media
10%
Yellow Pages

*Source: Synapses Inc. (19 MD orthopaedic group)

Internal Customers

Employees
67%
ER/WC/Hospital
Research Initiatives
Referring Physicians (67% of referrals)

Research:
Identify top referring physicians and groups, for
volume and revenue, and develop a 3-tier system of
high/middle/low referrers
 Identify key individuals within PCP offices

(eg. referral nurse/office manager)

Conduct PCP satisfaction survey
Referring Physician Tactics

Visitation Program

PCP office visits with surgeons to increase referrals
Bring collateral materials such as magazine, brochures,
referral pads
 Meet with physicians if available, also meet office
manager and staff


Track results
Referring Physician Tactics

Communications








Nationals Tickets to use to reward high referrers
Thanksgiving Chocolates sent to top 10 referrers for each
office
List of Participating Insurance Plans
Participating Insurance Plans
(given on visits and on the web)
As of February 1, 2007
• Aetna PPO
Top 3 Areas of Specialization
• Anthem PPO
• Anthem Healthkeepers (HMO)
New Physician Announcements
• BCBS CareFirst: PPO and HMO
• Cigna: PPO and HMO
• First Health
Referral Pads
• Kaiser
 MAMSI Life & Health
 Medicare
2nd Issue of Commonwealth
• Multiplan
 NCPPO
Magazine & Insert
 One Health
 One Net/Alliance PPO
2005 Annual Report
 PHCS
 Tricare: Prime and Standard
 UHC: PPO and HMO
Magazine Insert
Research Initiatives
Self-Referred
Patients
(20% of referrals)

Research:
 Analyze zip code
reports of
existing patients
 Electronic patient
satisfaction survey
on website
 Collect patient email
addresses in office
and on website
Patient/Community Tactics

Patient/Community Tactics
Magazine Insert
 “Meet the Coach” at local HSs


Team MDs introduced to parents
Yellow/White/Super Pages
 Redesign website
 Collection of patient email addresses
 Ads (football, basketball, running)

Patient/Community Tactics




PT Recruitment Brochure
Total Joint Reunion
ATC Workshop
Articles in Gameday Magazine
and website





Annual Report for 2006
Sports Ads
Magazine: Issues 3 & 4
Email marketing campaign
Loudoun Office
Internal Customers: Employees

Research:


Employee satisfaction survey
Tactics (in conjunction with HR):
Enhanced customer service training
 Employee recognition

“If employees don’t live the brand, all the
expensive branding voodoo in the world
won’t make it work”
-Identitybranding.com
Financial Ratios
Current Ratio




Measure of liquidity
Calculated as current assets/current liabilities
Measures the company’s ability to pay debts as
they come due
Healthy ratios in the 1.0 to 1.5 range minimum
Net Profit Margin




Measure of profitability
Calculated as current year net profit $ divided by
current year total revenue $
Ratio indicates how much profit comes from
each $ of revenue
Trends directionally indicate ability to manage
overhead expenses
Debt to Equity Ratio




Calculated as total debt divided by total equity
(from balance sheet)
Indicates portion of capital invested by owners
as compared to lenders
Higher ratios equate to greater risk to creditors
Banks rate small businesses seeking credit
“risky” if ratio > 2:1
Current Assets to Total Debt



Calculated as total current assets divided by total
debt (from balance sheet)
Indicates degree of protection linked to short
term and long term debt
Ratios significantly > 1.0 indicate greater ease in
paying long term debtors in full from working
capital in liquidation situations.
Profit & Loss Statement Analysis

Comparative trend statements identify
opportunities
Absolute changes (i.e., dollar increases in expense
categories from prior period)
 Relative changes (i.e., percent increases in expense
categories relative to other categories)

Revenue Cycle
Measures
Days in Accounts Receivable




Calculated as current month ending A/R
divided by ((the sum of the prior three months
charges) divided by (the number of calendar
days in the last three months)).
Measures turnaround of cashflow via the Billing
Office
Electronic billing of claims helps.
Lower days in A/R is better; for orthopaedics
30-40 is good.
Percentage of Days > 90



Calculated as the dollar amount of all claim dollars in
accounts receivable (still outstanding) that are over 90
days old divided by the total amount in accounts
receivable.
Less than 20% is good; as an account ages the
likelihood of collecting the amount owed decreases
significantly.
Low percentage indicates “freshness” of accounts
Bad Debt Percentage


Calculated as the percentage of dollars sent to a
collection agency (or written off) out of the
total receipts
Should be kept to 2% or less
Percent of Copays Collected



Calculated as the total copay dollars collected
divided by the total eligible copay dollars
Greater than 90% should be a minimum; should
target 100% collection rate
All copays, deductibles, outstanding patient
balances should be collected BEFORE services
are provided.
Reimbursement/Payer Mix


Important to know which insurance payers
provide what percent of your business and
which payers reimburse better or worse than
others.
Critical data points to know when engaging into
contract negotiations.
Utilization Measures
Surgical Yield


Calculated as the number of total E&M visits
for the year divided by the number of surgeries
performed for the same period.
Serves as an indicator over time of the amount
of office based work done before a surgery is
generated.
CMS P4P Bonus
Pay-for-Performance


Pay-for-performance is a program of financial
incentives for physicians for practicing quality
medicine as defined by performance
improvement measures
P4P usually includes:
Establishing performance measures
 Collecting performance data
 Determining benchmarks
 Defining and implementing financial rewards

National Demonstration Projects

Rewarding Results





BCBS California
BCBS Michigan
Excellus Health Plan, Inc.
Massachusets Health Quality Partners
Integrated Healthcare Association
National Demonstration Projects

The Premier Project
Pay-for-Performance

In 2006 CMS instituted the Physicians Voluntary
Reporting Program (PVRP)

Any of 36 performance measures were reported

CMS issued reports comparing to peers

Reimbursement did not increase

Participation was modest
Physician Quality Reporting Initiative






Tax Relief and Healthcare Act of 2006 mandated the
implementation of a P4P by CMS
Participation is voluntary but participants are eligible
for a 1.5% bonus
Participants must report on at least 3 measures that
apply to 80% of eligible patients
If more than 3 measures are reported, CMS will use the
3 highest when determining a bonus
Report from July 1, 2007-Dec. 31, 2007
Bonus will be issued as a lump-sum payment of 1.5%
of Medicare billings, issued by February 2008
Physician Quality Reporting Initiative
There are 66 measures in the PQRI, with 7 that directly relate to
orthopaedic surgeons:
1.
Falls: Screening for fall risk (measure #4)
2.
Perioperative care: Timing of antibiotic prophylaxis—ordering
physician
3.
Perioperative care: Selection of prophylactic antibiotic—first or
second generation cephalosporin
4.
Perioperative care: Discontinuation of prophylactic antibiotics
(non-cardiac procedures)
5.
Perioperative care: Venous thromboembolism (VTE) prophylaxis
(when indicated in ALL patients)
6.
Osteoporosis: Communication with the physician managing
ongoing care post fracture
7.
Osteoporosis: Counseling for vitamin D, calcium intake and
exercise
Physician Quality Reporting Initiative

CMS adoption of P4P will have a domino effect
on reimbursement for all providers in future
years
In order to generate funds to pay physicians under P4P
while dealing with shrinking budgets and payments to
physicians under the sustainable growth rate (SGR)
formula, CMS will have to pay non-P4P participating
physicians less than those who participate
P4P and EMRRealities


No provider organization can effectively compete for
P4P without a fully functioning EMR
Payers want providers to install EMR in order to shift
the care/cost paradigm




Today-Care is fragmented, individualized, and coveted by
providers while costs are rising
Tomorrow-Care is less fragmented, more homogenized,
and more open to payers in order to reduce costs
P4P dollars are small in proportion to the effort
required to participate in the short run
EMR ROI is possible, but only after 2-3 years postimplementation
Virginia Hospital Center
Currently reporting information on CMS Core
Measures:

Congestive Heart Failure

Acute Myocardial Infarction
Pneumonia
Surgical Care Improvement Project


Virginia Hospital Center
5 Million Lives Campaign Projects












Deploy Rapid Response Teams…at the first sign of patient decline
Deliver Reliable, Evidence-Based Care for Acute Myocardial Infarction…to prevent deaths
form heart attack
Prevent Adverse Drug Events (ADEs)…by implementing medication reconciliation
Prevent Central Line Infections…by implementing a series of interdependent, scientifically
grounded steps
Prevent Surgical Site Infections…by reliably delivering the correct perioperative antibiotics
at the proper time
Prevent Ventilator-Associated Pneumonia…by implementing a series of interdependent,
scientifically grounded steps
Prevent Pressure Ulcers…by reliably using science-based guidelines for their prevention
Reduce Methicillin-Resistant Staphylococcus aureus (MRSA) Infection…by reliably
implementing scientifically proven infection control practices
Prevent Harm From High-Alert Medications…starting with a focus on anticoagulants,
sedatives, narcotics, and insulin
Reduce Surgical Complications…by reliably implementing all of the changes in care
recommended by the Surgical Care Improvement Project-SCIP
Deliver Reliable, Evidence-Based Care for Congestive Heart Failure…to reduce
readmissions
Get Boards on Board…Defining and spreading the best-known leveraged processes for
hospital Boards of Directors, so that they can become far more effective in accelerating
organizational progress toward safe care
Thank You!