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How to Perform Your Own Practice Operational Assessment

by Steven Peltz, CHBC^*

It is important to evaluate if your practice is operating as an efficient business. This article will provide suggestions on how to evaluate each component of your medical business yourself.

You have a busy practice. It seems to be successful. But you just don’t have the same diagnostic information about your practice as you would have for a patient you see for an annual examination. You also probably do not get regular reports on the financial health of your practice. You have an unsettling feeling in your stomach that there are things going on in your practice you should know about but don’t. Is this bad? It probably is. To paraphrase a saying, what you don’t know about your practice, you probably should know. What should you do?

The first step is to think through why you have concerns about your practice. Identify and narrowly define those nagging thoughts that creep into your consciousness when you least expect it:

Does your office manager/administrator truly manage all parts of the practice?
Do you have regularly scheduled meetings with your manager/management team?
Are you involved in too many operational decisions for which you have no experience in resolving?
Does it seem like there is always a lot of staff turnover?
Are you confident that the front desk and billing office are collecting the maximum amounts and that those dollars end up in the practice’s bank account?
Do staff members come to you with issues you take to the manager? Does the manager then need your help in resolving the problem?
Does the practice have an operational and a strategic plan?
Do you have a high degree of confidence about the operation of your practice?

These and other questions are the ones we ask when we receive a call (an actual call) that goes something like this: “We think we have a good practice, but we are just not sure what is going on here. We have five physicians and a support staff of about 20. We need some help in determining what’s going on.”

You go to medical school, do a residency and maybe a fellowship. You develop a set of skills that help you become successful in applying your knowledge to patients’ problems. But you were not given the opportunity to develop the skills necessary to create a business framework around your medical practice or business problem-solving skills.

When the IRS wants to find out about the details of your tax return, it performs an exercise called an audit. Over the last 15 years, we have perfected our practice operational audit and practice assessment to uncover festering problems and identify and implement solutions. While there are many more components to our practice assessment, what follows is a basic field test on important components of you practice that a busy practitioner can implement. This article will give you the basics on how to perform your own operational assessment.

This article will give you the questions to ask and benchmarks with which to compare your practice, and instruct you in how to perform a basic “H & P” on your practice.

This article also will explain how to implement strategies and develop habits in your staff that will increase your confidence in your staff. If some items seem very basic, it is because we assume nothing whenever we perform an operational assessment. Some tasks may be the responsibility of staff other than those identified here, or technology may have eliminated some positions.

The process we use when we enter an office is to interview each employee. We ask them these three questions.

What are your job responsibilities?
What are the areas where the practice needs improvement?
What are the strong areas of the practice?

These questions almost always open the door to what is happening in and around each employee. The employees’ responses are compiled to create a comprehensive look at your practice. We know what they are supposed to do; they tell us what they actually do. From that starting point, we prepare the report that describes what your employees do, what they are supposed to do, and how to implement a change process in your practice.

STAFF AND PATIENT FLOW

Front Desk

The usual responsibilities are to answer the telephone, direct calls, make appointments, meet and greet patients, collect co-pays and deductibles, and schedule follow-up appointments. Ask the following questions regarding scheduling appointments:

What is the correct number of patients per hour depending upon the reason for the visit?
Is that what happens?
Are you double booked all the time, at the top or the bottom of the hour?
Is that what you asked for?
Are nonemergency patients “squeezed” in without your approval?
Do you have more “no shows” than you think is appropriate?
When you ask about this, is the problem resolved or are you given reasons why it cannot be improved?
Are you always running significantly behind?

Your First Step

Pick eight times over a month and call your office (or have someone else call for you). Obviously use different names, but keep track of the names you use and the content of the call.

1. Nonacute Problem; Established Patient: On two calls, try and make an appointment for the same day for a nonacute problem. Let your staff make the appointment (example for John Quick). Write down who you spoke to, the time, and his or her response.

Correct Response: Your staff members should explain that they will get you in as soon as possible, but they should not fit you into an already over-filled schedule.

2. Nonacute Problem; New Patient: On two calls, try and make an appointment as a new patient looking for a doctor. Write down who you spoke to, the time, and his or her response.

Correct Response: New patients help build a practice and are usually reimbursed at a higher amount for the first problem visit. Your staff should have been told by you to always try and fit in a new patient as soon as possible.

3. Message for the Doctor; Personal Call: On two calls, try and reach the doctor as a really slick salesman requesting time to show new software to the doctor and as an old friend. Write down who you spoke to, the time, and his or her response.

Correct Response: Front desk staff members should have a message pad on which they write the messages. Those messages should be given to you during the day. You should not have to ask for them or get them all at the end of the day.

4. Patient Requesting Information: On two calls, ask for information the front desk should have:

A list of the insurance companies the doctor accepts;
The hospital(s) that the doctor admits to;
Whether the doctor is board certified;
Whether a noninsured patient can pay on a budget;
How to get a referral (for a primary care provider); and
How to get a copy of a chart.
Write down who you spoke to, the time, and his or her response.

Correct Response: Your front desk staff should not be a dumping ground for employees. The person who answers your phone should be able to answer these questions or ask someone nearby how to respond quickly. In all cases, the person who answers the phone and greets the patients must be pleasant, and the patients should take away from the interaction that your staff member is trying to help them.

Your Second Step

Put the questions and responses on a single sheet of paper with the name of the staff member, days, times, and responses and make copies. Bring your office or front-end manager and the staff member(s) you spoke to into your office and give each a copy. Explain to them what you did. If they performed well, tell them that you are pleased that they are performing up to the practice’s standards. If they did not perform well, explain to them what your expectations are and the correct responses. Tell the manager that the front-end staff members need to be trained in the areas in which they are deficient. Explain to everyone that you expect the training to be complete and “cheat sheets” if necessary to be in use within one week and that you will reconvene then to review what they have done.

Always put a time limit on what you have asked to be done and put it in your book to double check. One of my biggest challenges as a consultant with practitioners is to make sure they follow up on what they requested. If you find the problem and address it but don’t follow up, you have wasted your time and effort. Your staff members will know that you forget about things you tell them. If you invest your time, and it will be more than you want to invest, it will pay off in a better-run office and usually an increase in collections.

Nurses/Medical Assistants

While the responsibilities of nurses and medical assistants (MAs) differ from practice to practice, there are a few basic tasks that all should be able to do. Realizing that physicians would like to walk from room to room treating patients and do less paperwork, we start from patient preparation.
The MA should track the exam room activity and know when a room is free. The MA should clean and prep the room, walk up front to get the chart of the next patient, call the patient from the waiting room, escort the patient to the exam room, and perform the following tasks. Remember that there are different tasks based on the physician’s specialty. These are the basic tasks:
Open the patient’s chart and

Confirm the patient’s insurance;
Elicit the:
- Reason for the visit
- Other complaints
- Present medications
- Recent surgeries/procedures
- Allergies; and
Take and record vitals.

These questions and the patient’s responses are then entered into the chart for the physician’s quick review.

Note: For practice’s that have chart retrieval/management programs, the MA should be able to enter the information into the program. In some cases, it will be even more efficient if the physician and the MA work together. They enter the exam room (a different MA has prepped the room and the patient) as a team. The physician then looks at and speaks to the patient while the MA records into the chart retrieval/management system the responses. After the examination, the physician reviews the MA’s entries and moves to the next exam room.

This accomplishes a number of important functions that result in an efficient practice:

The MA learns the physician’s style and ordering habits.
The physician does not have to go to his or her office or a wall shelf to enter notes into the chart thus adding paperwork time to the length of the visit.
The physician does not look away from the patient while entering notes in the chart and may pick up subtle messages from the patient about his or her condition.
The number of patients seen will increase as the time spent on paperwork decreases.

Again if this is not happening in your practice, and it is what you want, first write it out in great detail. Then meet with your office manager or clinical supervisor and office manager. Explain to them how the clinical part of your practice should function. Give them your detailed description, and find out why your practice cannot function the way you want it to. Give them a week to come up with a description of how close they feel the practice can function to the ideal.

Evaluate whether or not they are capable of implementing the changes. Monitor the changes, and meet with your manager(s) once a week for the next four weeks. Compliment them for their successes, and evaluate their reasons for not being able to implement the requested changes.

BILLING AND COLLECTIONS

Front Desk

In today’s environment, almost everyone who visits a physician’s office is required to make a co-payment or deductible. Every day, there needs to be a reconciliation of the dollars and checks collected, with what is posted in your computer system and the receipt book. These three components of the co-payment-collections system should have at least two different staff members involved.

Ask how many patient statements are mailed out for the co-pay or the deductible or for balances that are over 90 days. An efficient practice will mail out very few statements for balances over 90 days or for co-payments.

It is positive reinforcement to the front-end staff when patients come to expect that they have to pay their co-pay at the time of the visit. When your front desk staff is more disciplined about collecting the co-pay at the time of the visit, the result is that it decreases your costs for postage and staff time to print out a statement and stuff an envelope. It also increases your collections.
Increasing the collection rate of co-pays at time of visit is a double-edged sword. Once the staff collects the money, you have to make sure it goes into the bank. Most staff members are honest. However, in case you have a staff member who wants you to share the co-pays with him or her, you have to compare the sign-in sheet with the receipt book (each person who pays should be given a receipt) and the funds collected with the amount posted in the computer. Try and have at least two people do this so when they present their data to you, you can compare what each one says was collected.

Co-pays collected = receipt book total =
amount posted in the computer =
amount on deposit slip

The person who collects the funds should not be the same person who prints out the amount posted in the computer. If the office manager cannot give you computer reports that agree with the dollars collected and the total of the copies of the patient receipts, you have the beginning of a real problem.

Billing Department

When you send a claim for a patient visit to an insurance company describing the service you performed, the insurance company processes the claim and sends you back a check (reimbursement) and an explanation of benefits (EOB) that describes how the amount of your check was calculated. Table 1 shows an example of what the top part of an EOB might look like.

Ask your billing staff members to explain all the above. I like to ask questions that challenge their knowledge such as, “How come the insurance company sent only $48 when the submitted claim was for $125? If the practice bills $125, why doesn’t it get paid $125? How much of the adjusted amount can the practice bill the patient?”

The correct answers are: if the practice agreed to participate (par) with the payor, it agreed to accept the payor’s fee schedule; if the practice is par with the payor, it accepts the payor’s payment and the patient’s co payment as payment in full; the practice cannot bill the patient for the difference between the practice’s fee schedule and what was collected.

The next and maybe most important part of the interview with your billing department is to evaluate its effectiveness by reviewing your aged accounts receivable (A/R). This is the amount of money owed to you over specific time periods. Remember that the A/R usually shows you gross amounts owed and not the actual expected collections.

We have established a benchmark for all practices, regardless of their specialty, that we compare to what the practice management system (PMS) prints out. Our benchmark for a practice’s A/R is shown in Table 2.

When we work with practices, it is not uncommon that the PMS report for A/R will look like the one shown in Table 3.

Figure 1 depicts the goal versus the actual for this practice.

Note how the line that represents the goal decreases over time. That means that you are owed less money as time goes on. However, the line that represents the actual A/R for the practice indicates that the billing department works fast to collect the monies it can easily collect. But then there is less effort given to the more difficult claims: the denials and the requests for more information. The follow-up in this practice is not a consistent part of the billing process because the billing staff is focused on collecting the claims that it knows can be collected quickly. There may also be no identifiable process for sending claims to collection and then writing off claims that are truly uncollectible (after getting the doctor’s approval). As a result of this inconsistent and undisciplined approach, these claims get older. And as they get older, they become worth less, and the staff tries to ignore them. As the owner of the practice, your responsibility is to get your A/R report each month and review it against either our standard or another standard.

GOVERNANCE DOCUMENTS

In addition to reviewing the work of your staff, you also need to review your nonclinical work. If you are a practice with at least two partners (and in this example we will assume you are a corporation), you will need at the minimum:

A shareholders agreement;
An employment contract; and
A deferred compensation or buy-sell agreement.

If you are an LLC, you should have an operating agreement and a buy-sell agreement.

We find many practices have governance documents that date back to the time of UCR (usual, customary, and reasonable). As a result, the practice may be in a “first man out wins” situation in which the amount paid for retirement is out of step with today’s healthcare reimbursement environment.

The shareholders agreement should explain how you value shares, how you lose shares, and how shares are bought, among other issues. The employment contract describes your salary, benefits, and responsibilities, and how you can be terminated. The deferred compensation agreement explains what you or your estate gets upon your death, disability, retirement, or withdrawal for any reason (also called “events”). If you have not reviewed these documents with your advisor, now is a good time because you know your date of birth but you don’t know your date of death. When an event occurs is not the time to start negotiating. For a more complete explanation of governance documents, refer to the Journal of Medical Practice Management November/December 2003 issue.

When we come into a practice to perform an audit or assessment, the staff usually sees us as “suits” and expects the worse. We have the office manager and physician explain to the staff beforehand that our team is there to share with them 26 years of working with practices that had the same problems, and that we will share our experience so they can work smarter not harder. This usually makes the staff more forthcoming and easy to work with, although some staff members do bring a list of written complaints to the interview. You should also consider explaining to your staff members that the result of your review is that they will work smarter not harder.

Additional articles from The Journal of Medical Practice Management: