Year end is the perfect time for a practice "well visit" or "checkup." This is the time to see what worked in 2008 and what can be improved upon for 2009. While assessing the health of a practice requires taking a hard look at all aspects of the business, patient and staff considerations top the list. When looking to the future, ophthalmologists will first need to determine whether they want an insurance-based model, an elective practice or a hybrid. The next consideration is how to staff that type of practice.
Identify Patients and Payers
The first step in assessing the health of a practice is to look at patient demographics. "In the past, we have consulted with practices about positioning themselves as 'specialists in refractive surgery,' " says Mike Malley, founder of the Centre for Refractive Marketing, in
He notes that the future in ophthalmology—in terms of strength, revenue streams and less volatility—is a broad-based comprehensive practice. Because of current economic conditions, elective procedures may be lower on patients' list of priorities than non-elective procedures, products and services. However, he notes that the future of refractive surgery looks bright. "From a standpoint of safety, precision and outcomes, refractive surgery has never been better, and because only 7 percent or 8 percent of the people who are LASIK candidates have undergone the procedure, the vast majority of myopes, hyperopes and presbyopes have still not had refractive eye surgery," Mr. Malley adds.
Bruce Maller, founder of BSM Consulting, in
According to Kay Coulson, president of Elective Medical Marketing, in
She notes that a comprehensive, insurance-based practice has traditionally been required to see more patients per hour and accept less reimbursement. "Ophthalmologists are now starting to rethink that, she says. "They are evaluating whether seeing fewer patients and structuring their appointment calendars will allow them to more successfully integrate upgraded, elective services. The physician will need to be comfortable integrating fee discussions into the visit, but it will allow him or her to see fewer patients per hour. From a surgeon's standpoint, this can mean higher profitability and a better quality of life."
Traditionally, multi-doctor practices have included ophthalmologists in different specialties who were all insurance-oriented. Ms. Coulson has recently seen a trend where some doctors in large comprehensive practices want to do more in the elective vision arena. "They may want to incorporate presbyopia-correcting or astigmatism-correcting lens implants," she says. "In these situations, new partnership agreements may be necessary, because other doctors in the practice may be uncomfortable moving out of the insurance-reimbursement model or may be unsupportive of marketing investments required to educate the elective customer. They are worried about allowing a particular doctor to attract and build an elective patient base, presuming it means they will be further over-burdened with insurance patients. These shifts also involve discussions about whether the office should be remodeled and whether staff should continue to be shared, which all have financial repercussions on the partners."
In these cases, ophthalmologists will need to decide whether their current partnership agreements are appropriate for future growth, and even whether they've partnered with the right people.
Practices that offer elective vision services are typically more customer-service oriented. These patients require more time on the phone during scheduling and a quicker response to phone or e-mail messages. Additionally, they do not want to wait weeks for an appointment. They typically want to be seen within seven days. They expect an attractive office environment with prompt appointment times. They expect the surgeon to be knowledgeable about newer technologies and experienced with his particular procedure. They also require more education and involvement in the treatment decision.
"You can't offer a cataract patient a $6,000 lens upgrade and simply expect him or her to accept", says Ms. Coulson. "The surgeon needs to involve the patient in education from the very first point of contact. The right questions need to be asked on the phone so that the staff knows what educational materials can be sent to the patient prior to the visit. Surgeons become frustrated with the old model of scheduling, because patients are not educated before they visit the office."
She notes that, in the past, cataract patients were not given a choice of which lens would be implanted. Surgeons implanted their monofocal lens of choice, which was covered by insurance. "Now, you involve the staff and the patient when discussing the type of vision the patient wants, to ensure it suits their lifestyle," she says.
According to Ms. Coulson, the key to financial health is structuring your calendar for those conditions you want to treat, not simply accepting every patient who calls. A practice that is purely insurance-based should be prepared to see 5 percent to 10 percent reductions in reimbursement annually. The only way to make up for that lost revenue in an insurance model is to see more patients. She notes that the core group of patients seen by ophthalmologists is 55 to 80 years old. Today, there are 60 million people in that age group. In 20 years, there will be almost 90 million people in that age group. "Yet, we have no increase in the number of ophthalmologists completing residency," she says. "The only way to extend care if you are an insurance-based practice is for ophthalmologists to see more people or to hire ODs as physician-extenders. That's vital to maintain financial growth when faced with more people for less reimbursement. But, if you're going to restructure a percentage of your practice into elective services, or even become 100-percent elective, then you're not only changing the number of people you see but how you see them."
When assessing a practice, she asks ophthalmologists three questions:
• What type of patients do you want to see?
• How much do you want to work?
• How much do you want to earn?
The answers to those three questions can help practices build an appointment calendar that delivers the correct patient mix. Kenneth Hertz, a principal with the MGMA Health Care Consulting Group, agrees that physicians need to consider how much they want to work. In the coming year, some older physicians may want to slow down, or a pregnant surgeon or staff member may be considering working part-time. Talking to the surgeons and staff members about their expectations for the coming year may reveal the need for hiring additional staff.
Mr. Maller recommends proactive business planning for each of the doctors in a practice. Each doctor's schedule should be dissected to better understand its component parts. "Then, the doctor can build a forecast of the future of what he or she would like the schedule to look like next year," he says. "This starts with the doctor defining how many weeks and how many days per week he or she wants to work in the coming year. Ophthalmologists need to determine how many clinic days they want compared to surgery days, and they need to consider what they want their scheduling template to look like in terms of the types of patients and the volume of patients. I encourage doctors to look at their historical numbers of money brought in and patients seen. This includes patient visits for which there was a charge as well as patient visits with no charge, which can include postoperative visits."
After examining the mix of patients and the money brought in, an ophthalmologist may discover that he is seeing quite a few patients with no reimbursement. If this is the case, he may consider referring postoperative visits to an optometrist or another caregiver in the practice. This would allow the ophthalmologist to add "paying" patients to the schedule in those slots.
"This exercise is designed to put the physician back in control of making decisions about what he or she wants the book of business to look like versus simply seeing everyone who is put on the schedule," Mr. Maller says. "When people are more conscious of these decisions, they identify areas of opportunity to enhance their yield per patient visit. Examine exactly where your patients are coming from. They are coming from a mix of third-party payers. I want the doctors to take a baseline history and physical of what their scheduling book looks like today in terms of volume and revenue yield per patient visit. Then, go deeper and examine the payer mix. Then, examine the payment you are receiving from different types of third-party payers. That will uncover areas of opportunity to negotiate higher reimbursement rates with third-party plans and eliminate underperforming plans."
Practices also need to examine the mix of new and established patients. "To build an elective practice, a larger percentage of your patient base needs to be new," Ms. Coulson says. "To reach these new patients, you can't rely on insurance referrals. You've got to reach out and attract them directly. This means marketing. Your staff must become less process-oriented and more customer-service oriented."
This means hiring staff members who fit your practice culture and then training them for ophthalmic skills. Traditional insurance-based practices hire for skills, because the practice's main concern is productivity, not customer experience. Practices also may need to consider hiring wellness extenders, such as ODs.
Mr. Malley agrees, adding that a patient's visit to a practice for an elective procedure needs to be a true experience. This experience begins with education, conversion and introduction of new product lines, he says.
Other Considerations
Besides patient and staff issues and evaluating the revenue coming in, it is also important to examine the money going out. Mr. Hertz, who is based in
He also recommends making sure that the office systems are being used to their full potential. If there has been a significant amount of staff turnover during the past year, he recommends bringing in a trainer to train the new staff and to give a refresher course to the old staff.
Mr. Maller agrees that many practices become complacent about managing the expense side of the practice. "Doctors need to understand what is embedded in every line item of their P&L," he says. "I want them to ask questions about what the money is being spent on. Be vigilant about challenging where the money is being spent. Many clients have renegotiated better leases on their space. It has become more of a buyers' market for real estate. The marketplace is re-pricing fair market value. We are seeing that in stocks and real estate. Don't just accept what people say at face value; actively negotiate. Put your health insurance plan out for bid."
He notes that, in many cases, the key to efficiency is right under your nose. "Many times, the people who work for you know how to fix a problem. Make sure to communicate with your staff before you hire a consultant," he adds.
If your practice has an elective component, Mr. Malley recommends developing a relationship with a lender so that you can make products affordable for your patients and for the practice. "You need a lending partner who can offer patients the added benefit of programs like 'pre-approval,' patient tracking, referral systems and the absolute highest possible approval ratings. Otherwise, you're risking patient loss, because people will need more affordable ways to access health care than they have now," he says.
