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15 posts from June 2011

June 30, 2011

New “Annual Wellness Visit” Brochure

The new publication titled “Annual Wellness Visit” is now available in downloadable format from the Medicare Learning Network® at

http://www.CMS.gov/MLNProducts/downloads/Annual_Wellness_Visit.pdf.  This brochure is designed to provide education on the Annual Wellness Visit and providing Personalized Prevention Plan Services, at no cost to the beneficiary, so beneficiaries can work with their physicians to develop and update their personalized prevention plan.

Remember this is a great marketing opportunity for physician medical practices - promote this service to your newly eligible Medicare patients.

June 28, 2011

Standard Mileage Rates Increased for Rest of 2011

To reflect the recent increase in gas prices, the IRS raised the standard mileage rates for the last six months of the year. The rate will increase to 55.5 cents per mile for business miles driven from 7/1/11 through 12/31/11, a 4.5 cent per mile increase from the rate in effect for the first six months of 2011. The rate for computing deductible medical or moving expenses will also increase by 4.5 cents per mile to 23.5 cents per mile, up from 19 cents per mile for the first six months of 2011. The rate for providing services for a charity is set by statute, and remains at 14 cents per mile.

June 27, 2011

Is your physician practice ready for ICD-10?

At last week's annual meeting of the National Society of Certified Healthcare Business Consultants (www.nschbc.org), we had two excellent presentations on ICD-10, which begins implementation on 1-1-12. Quite frankly, I'm nervous. These are big changes and could severely impact the cash flow of any physician practice if you are not prepared.

To get you started, on January 12, 2011, CMS held a national provider call on “Preparing for ICD-10 Implementation in 2011.” From the audio of that event, CMS has created the following four podcasts:  

  • Welcome and ICD-10 Overview – Pat Brooks, CMS 
  • Implementation Strategies for 2011 – Sue Bowman, AHIMA 
  • Question and Answer Session, part 1 
  • Question and Answer Session, part 2 

These podcasts are now available here in the downloads section.

Also, Frank Cohen will soon be publishing a ICD-10 survey that is designed to assess readiness amongst medical practices.  Please participate in this important survey: 

The link is https://www.surveymonkey.com/s/ICD10Awareness

June 22, 2011

Physician alignment and ACOs

From www.fiercehealthcare.com:

As healthcare organizations and providers consider making the leap to an accountable care organization (ACO), a new survey finds that the biggest obstacle to forming one is physician alignment, according to healthcare staffing agency AMN Healthcare.

AMN asked 882 healthcare facility administrators and physicians about forming ACOs. Fifty-eight percent were in the process of doing so or considering it, but 42 percent did not see ACO formation in the foreseeable future.

Of those who were in or considering ACOs, 42 percent said physician alignment was the primary reason for not moving toward ACOs, as well as lack of capital (38 percent), lack of IT (31 percent), and lack of evidence-based treatment protocol (25 percent).

"While capital and data are essential to forming ACOs, the success of this emerging model turns on people," said AMN Healthcare president and CEO Susan Salka in a statement.  "Health facility leaders and physicians must align their interests, communicate and cooperate for this model to work," she said.

Of those respondents who are not considering ACOs, 40 percent similarly said physician alignment was a reason not to, followed by lack of capital (31 percent), lack of IT (26 percent), and lack of evident-based treatment protocol (23 percent). 


Respondents considering ACOs (58%)

Respondents not considering ACOs (42%)

Physician alignment



Lack of capital



Lack of IT



Lack of evidence-based treatment protocol



"Aligning the interests of physicians and hospitals has historically been difficult, as the two sides have often conflicted over patient care, cost, reimbursement and governance issues," states the survey. "These issues continue to resonate in the ACO model, as it is unclear who will be at the helm of these organizations, how risk will be shared, and how reimbursement will be calculated. In addition, in an era of physician shortages, it is uncertain whether or not hospitals and other facilities will be able to staff the primary care and other physicians required by federal regulations to form ACOs."

The majority of administrators and physicians still hope that ACOs will provide cost savings and improve quality over time, according to the survey.

June 20, 2011

New MGMA physician compensation survey highlights released

The Medical Group Management Association ("MGMA") recently released the result highlights of the largest physician compensation survey in the United States. The survey is based on 2010 data from 60,000 providers in more than 150 specialties; the publically reported figures focus on 15 specialties.

According to the selected specialties data, orthopedic surgeons were the highest earners, with a median salary of $514,659. Invasive cardiology ($500,993) and diagnostic radiology ($471,253) were also among the highest paid specialties.

Primary-care physicians earned least based on the data. Family practice (without obstetrics), pediatric/adolescent medicine, and internal medicine recorded median salaries ranging from $189,402 to $205,379.

Emergency medicine physicians experienced the highest level of salary increase (5.65%). Neurologists (5.02%) and internists (4.21%) rounded out the top three salary gainers. On the other end of the spectrum, the largest median salary decrease was seen by urologists (-4.66%). In comparison, the 2010 rate of inflation, as indicated by the Consumer Price Index, was 1.5%.

Regional data revealed that primary care physicians and specialists earned least in the Eastern region and most in the Southern region.

June 17, 2011

New ACO initiatives announced

On May 17, 2011, CMS announced three new initiatives relating to ACOs that attempt to alleviate some of these problems.

Pioneer ACO Model

First, CMS announced that a new ACO model will be made available to providers this summer in the form of the "Pioneer ACO Model," which is designed for more mature integrated organizations ready to participate in shared savings now.  The Pioneer ACO Model is a three year program. During the first two years, Pioneer ACOs will participate in a shared savings payment policy with generally higher levels of shared savings and risks than what is currently being proposed under the Shared Savings Program.  In the third year, Pioneer ACOs that have demonstrated a specified level of savings over the first two years would be eligible to move a substantial portion of their payments to a population-based model. Under the population-based model, Pioneer ACOs would receive per-beneficiary, per-month payments that would replace in large part the current fee-for-service payment policy.  Applicant ACOs would have to serve at least 15,000 beneficiaries (5,000 in rural areas).  Also, by the end of 2012, Pioneer ACOs must demonstrate that 50% of the ACO's PCPs have met the requirements for meaningful use of electronic medical records ("EMR") and CMS will give further preference to applicant ACOs with advanced EMR capabilities.  Parties interested in participating in the Pioneer ACO Model must submit a non-binding letter of intent to CMS by June 10, 2011 and applications must be submitted by July 18, 2011.

Advance Payment ACO Model

Second, CMS is seeking comment on an Advance Payment ACO Model that would provide up-front capital to providers to support the formation of ACOs.  Advanced payments would be recouped from an ACO's earned shared savings.  Comments should be submitted by June 17, 2011.

Accelerated Development Learning Sessions

Third, CMS has set up Accelerated Development Learning Sessions as a way for provider groups to learn about how to coordinate patient care through ACOs. Four sessions will be offered in 2011 with the first session to tke place from June 20-22, 2011 in Minneapolis, MN.  These sessions are free and are intended to help providers develop an action plan for creating an ACO.

June 16, 2011

Physician practice management - Managing by the Numbers

One of my prior articles cautioned readers on the use of overhead rates as a financial indicator of practice performance. I called it “screwing with” the overhead since overhead is an easy target in every medical practice. The point I want to make now is that numbers are important in managing a business. But never confuse fixating on numbers as managing the business. 

Numbers are data. What any manager needs is information. In many clinical situations, the numbers are information. In business situations, most numbers are data – the value a practice manager brings to the business is applying his or her knowledge, experience and judgment to turn data into information, information that is the basis for decision making. 

For the smaller of small businesses, which would encompass most physician practices, cash is king. On a weekly basis, know what your cash position is – the cash available for use by the practice. You should be budgeting cash each week for payables and payroll. Payroll is pretty fixed, so you have to pay the bills that are starting to get closer to the due date. While you don’t have to pay bills the moment they come in, you do need to be setting aside cash and paying every 1-2 weeks to stay current. 

On a regular basis – usually monthly, but for solo practices on a quarterly basis – look at actual revenue and expenses compared to the prior year (notice I don’t make mention of comparing these to your budget; in my opinion most budgets are worthless in a medical practice). Items that are in excess when compared to the prior year are neither a cue to be upset nor a cue to stop spending. You have to ask constant questions – why is an item higher this year than last year? Why are revenues lower or stagnant this year versus last year? Many times, there are seasonal variations in both revenues and costs. Also, sometimes you might order a quantity of supplies in order to gain discounts. 

You also want to look at productivity, such as: the number of patient visits (office versus hospital), how many diagnostic tests or other in-house services were provided, and the percentage of available time that is being booked for patient services. You should also look at payer mix revenue distribution, physician work RVUs, collection percentages broken down by individual payer class, and a variety of different accounts receivable agings. 

When looking at per-patient numbers it is helpful to look at per-new-patient numbers as well as per-encounter/claim. This distinction provides valuable information about the breakdown of a practice by diagnostic or referral segments. For example, in a clinic such as a physical therapy practice whereby a clinician may see the same patient 12 times per incident, it helps to know the revenue/expense/profit on a per-new-patient basis in order to determine which segments of the practice add to and subtract from the bottom line. Knowing the rev/exp/profit on a per-encounter basis can illustrate the relative efficiency, coding, and diagnostic trending of the practice as a whole, or a segment of the practice. For example, a practice may show increasing profits at the clinic level, however when segmented, it is possible to see that only one or two diagnoses (or referral sources) are really "floating" the practice, and the rest of the diagnoses cause an incremental loss. This is not necessarily good or bad in absolute terms, but is very useful information when managing the operations and marketing efforts of a clinic. 

Another area look at and manage per-patient revenue, expense, and profit. While overall revenues and expenses can yield valuable information about the profitability of an entire practice, the evaluation of per-patient financial metrics can yield great understanding about the efficiency by which their practice operates. Furthermore, by segmenting patients by diagnosis, referral source, payer, or other meaningful classifications, one can glean valuable information about the patient groups that have a positive and negative impact on the practice's bottom line. This, of course allows practices to use profitable patients as a means by which to subsidize the care of those with a negative impact on the bottom line. 

Finally, look at these metrics on a per hour basis - look at the hours available for patient visits, and divide the total revenue, expense, etc by the number of hours available. Physicians sell their time, and since pricing is pretty much controlled, the way to raise profitability - other than working longer - is to increase revenue (and profit) per hour. 

All of these numbers are most useful when put in a context. My main advice to you is always to look at variations over time. You should want to see two years worth of monthly data before getting comfortable making a lot of significant decisions or changes. Usually, the practice hasn’t been capturing data, so you have to start recording data on a monthly basis and build from there. Once you have the basic building block of monthly data, you can look at changes on a quarterly basis. Looking at a data on a quarterly basis smoothes out the month to month variations that occur because of number of days worked (20, 21 or 22), weather, vacations and other factors that impact the workload. Pretty soon, you can see patterns emerge and compare one year to the one past, and then two years and so on. 

Remember this: Data vs. information - One leads to the next, but they are not the same thing.

June 15, 2011

Managing behavior vs performance

Think about how you manage employee group – is it easier for you to address performance issues than it is to address behavior issues? Here are some typical examples of behavior issues: 

“She does her job really well, it’s just that her attitude towards the patients is rude.” 

“Great worker, but she never helps the other team members out.” 

“My best employee, but I’ve noticed sometimes she is inappropriate on the phone.” 

Do you tend to ignore poor behaviors of good workers? If yes, how is it affecting the other team members? How does that reflect on you as a manager? It’s important to realize your superstar employees are watching closely how you are managing the other employees in your physician practice.

June 13, 2011

Workforce in place as an asset of a physician's medical practice

There is a great debate going on right now in the valuation community concerning the valuation of “workforce in place” as an asset of a physician medical practice. There is a growing number of us that believe that unless the POSITIVE cash flows of the practice support it, there can be no value for workforce in place.


As Mark Dietrich mentioned recently (www.cpa.net), no rational investor would pay to replicate assets that result in no income. This is one of the basic underpinnings of financial theory: the value of an asset is equal to the present value of the cashflows associated with it. That in turn is the foundation of Fair Market Value. What is often missed is that the return on the assets ends up being paid out to the physicians as compensation post-transaction, rather than retained by the buyer.


Or as another appraiser colleague said tongue in cheek:

“Apparently some appraisers think that an incompetent, embezzling, sabotaging, shoplifting, illiterate, knuckle-dragging, drooling, high-turnover "workforce in place" that has driven (or ridden) a medical practice into a state of "bankrupt-yet-standing", still has an intangible value in the many millions of dollars despite any ability to find value by the Income Approach. Or so I read in their valuation report of a cardiology practice recently (though they didn't quite phrase it so eloquently!) ;-)”

June 08, 2011

OIG offers online videos on healthcare compliance

The U.S. Department of Health and Human Services (HHS) Office of Inspector General's (OIG's) Healthcare Fraud Prevention and Enforcement Action Team has hosted a series of compliance trainings throughout the country for compliance professionals, healthcare businesses, and in-house counsel. The OIG posted a video of the Washington, DC, training on HEAT's website. In addition to the three-hour and forty-five-minute training video, OIG will release a series of shorter videos, broken down into discrete subject areas so viewers can choose which segments to watch. Presentation slides for the training and eleven related handouts are also available on HEAT's website. These materials offer a valuable tool for developing or delivering internal compliance trainings, and for raising awareness about compliance within healthcare organizations. Compliance professionals will want to ensure that annual and effectiveness review efforts acknowledge these OIG materials as part of any effective review.