Last year, a new index that gauges the financial and operational health of physician practices forecast a downward trend in profitability for 2014. The Practice Profitability Index, or PPI, revealed that two out of three practices polled anticipate reduced profitability based on several factors, including…
… healthcare reform, diminished reimbursements, rising operational costs and new coding requirements. In light of these factors, both practitioners and practice administrators need to view their practices more like business enterprises to which they can add revenue and profits in different ways.
The PPI was developed by the collaboration between CareCloud, a provider of cloud-based health technology and services, and QuantiaMD, a social learning platform for physicians. CareCloud and QuantiaMD introduced the new index during their HealthBeat Conference in San Francisco last May.
A new annual barometer for your practice’s well-being
Over 5,000 physicians contributed their insights to the PPI via interactive online questionnaires and discussion groups. The resulting PPI is meant to serve as an annual barometer for the operational well-being of American medical practices in the coming year.
The PPI’s key finding was that two-thirds more of physician participants foresaw a negative trend in profitability for the year ahead. Healthcare reform was seen as responsible for three of the top four issues negatively impacting profitability. Percentages of physician respondents citing individual issues:
• Declining reimbursements, 65 percent
• Rising costs, 57 percent
• ACA-related requirements, 48 percent
• Coding changes, including ICD-10, 44 percent
Unable to accept newly insured patients
Nearly half of medical practices claimed that newly increased operational and billing pressures means they are unable to accept any of the expected 30 million newly insured Americans. From the patient’s perspective, this indicates a deeply concerning access-to-care issue.
Nearly 60 percent of physicians said they already spend more than 20 percent of their practice time doing administrative tasks like coding, paperwork and office management. That represents time that they are not devoting to direct patient care.
Interestingly, the majority of those polled plan to stay in private practice and fight for their survival. Of the more than 2,000 respondents (40 percent of the total) in the survey who own their own practices, nearly 60 percent said they are not looking to sell despite the negative downward pressures on their profitability.
A blueprint for survival
Fortunately, the practice profitability picture does not necessarily have to be all gloom and doom. There are several strategies that smart, business-savvy physicians can use to turn the situation in their favor.
First, they can refocus on their most lucrative cases, procedures, services and payors. Once you have identified these, you can market your practice accordingly and attract those patients who meet your criteria.
Second, they can add elective care revenue from new or existing niches. Consider a hybrid care delivery model or a full-concierge practice model. Patient demand for concierge medicine and dentistry are much higher than you probably think (see last month’s edition of this newsletter).
Third, they can add mid-levels to extend their services, including more lucrative services and procedures as mentioned above. Nurse practitioners and certified physician assistants can provide excellent care for most patients at lower cost.
Fourth, they can market the resulting new service lines more effectively using already proven healthcare marketing and communication plans. Detailed information about these plans is available from Practice Builders now. Simply call one of our seasoned marketing consultants at 800.679.1200 or email firstname.lastname@example.org for more information.