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Saving The Independent Medical Practice (Part 1): Fortify Your Income

By News Creatives Authors , in Small Business , at July 21, 2021

Ty Allen is the CEO of SocialClimb, a company that offers automated patient acquisition software & predictive analytics data for healthcare.

It has become increasingly difficult in recent years for independent medical practices to remain independent. Declining reimbursements, regulatory changes, new technology requirements, increasing administrative burdens and changing marketing needs have combined to put physician-owned practices in a precarious position. Physicians are letting go of their need for autonomy and saying “yes” to hospital employment and private equity-backed consolidation in increasing numbers. 

Over the past several years, physicians have seen their incomes gradually erode as insurance companies and Medicare decrease the amount they are willing to reimburse. When it comes to private health insurers, independent practices have little negotiating leverage. They have even less with government insurers. Late last year, the Centers for Medicare and Medicaid Services (CMS) released its 2021 physician fee schedule final rule, which included a 10% cut in the conversion factor used to calculate reimbursement.

In 2020, Covid-19 hit independent practices hard, creating even more hurdles for those hoping to remain independent. A July 2020 survey by The Physicians Foundation found that 43% of independent practices had been forced to reduce staff due to the pandemic and 8% had permanently closed their doors. Nearly three-quarters of physicians surveyed saw a reduction in their income, and for more than half of those physicians, that loss was 26% or greater.  

In addition to the loss of revenue due to fewer patient appointments during the pandemic, independent medical practices had difficulty finding enough personal protective equipment (PPE) to stay safe. They also had to quickly become proficient with telehealth visits in order to meet the needs of their patients and keep some income flowing. Thanks to temporary measures put in place by the Centers for Medicare and Medicaid Services (CMS), healthcare practitioners received full compensation for telehealth visits during the pandemic. Unfortunately, that did not do enough by itself to make up for the financial shortfalls.  

As the fastest growing industry in the U.S., according to the Bureau of Labor Statistics, the state of the healthcare industry impacts both individual patients and the entire economy. Physician-owned medical practices need to survive in order for the healthcare industry to continue to thrive and meet the needs of the patients they serve. As the CEO of a company within the healthcare space, I have observed that remaining independent is possible if they first fortify existing patient income and then focus on growing their business by attracting new patients. Revenue can be secured by implementing a few simple measures: joining purchasing groups to reduce costs, meeting patient scheduling needs in creative ways, negotiating better reimbursements and keeping their medical billers well-trained.

Combine forces for more purchasing power. 

Practices can save 5% to 25% on the cost of supplies by joining a group purchasing organization (GPO) or a physician buying group (PBG). Most GPOs have no fee, and medical practices can often join several organizations. Consider conducting price comparisons every year or two to make sure you are getting the best bang for your buck. PBGs generally offer the best discounts on vaccines. If joining a GPO is not preferred, partnerships with other nearby practices can be put in place to buy supplies in bulk. 

Extend office hours in creative ways. 

Independent medical practices can extend their hours by including virtual visits before 9 a.m. and after 5 p.m. or shifting hours one day a week. These small changes can make a big impact on patients who struggle to fit a 9-to-5 office visit into their schedule. Virtual visits are flexible, so providers can also pick up a virtual visit in place of last-minute no-shows or an open time slot. A University of Maryland School of Medicine study recently found that nearly half of all medical care in the U.S. happens in EDs, and much of that is for non-urgent issues. Making schedules flexible can help keep some patients out of the ED, which benefits both patients and providers.  

Negotiate better reimbursement rates from insurance companies. 

As a medical practice grows, so does its value to insurance companies. Medical practices should not make the mistake of operating under the terms of their original contract. Instead, they should present a data-based case for the quality care they provide, such as a SWOT analysis, that shows how they provide value to the payor and better health for their patients. A well-put-together analysis allows the medical practice to negotiate for better reimbursement rates with confidence. 

Keep medical coders and billers up-to-date with frequent training opportunities. 

Evolving healthcare regulations and continual updates in medical coding and billing can be hard to keep up with, but the opportunity cost of not providing training is immense. New ICD, CPT and HCPCS codes in 2020 alone have been enough to confuse even the most seasoned coding professional. Coders and billers for independent practices need access to frequent training sessions to reduce initial coding errors. Physician-owned practices can also consider putting a system in place to track denials and follow through on patient collections. One of the best ways to boost revenue is to get fully compensated for work already completed. 

Fortifying income already coming in plays an essential role in saving the independent medical practice, making the most of the patients doctors already see and reimbursements they are owed.


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