Igor and I have been doing some behind-the-curtain work to examine the impact of the recession on our clients. So far, the news is generally positive for PCC customers, but there are some signs on the horizon - or on the front page of your newspaper - that we need to keep an eye on.
You can read an interview Igor and I did about this subject here on PedSource (where it is more nicely formatted) or, for those of you who haven’t signed up to PedSource (it’s free), you can read it below.
Over the past few months, the news has been filled with tales of economic distress: the woes of the banking industry, the failing financial markets, and the auto industry on the brink. These developments lead us to the question, “Where does that leave pediatricians?”
We understand that you may be concerned about your practice’s finances. In response, we have done some initial research to determine the impact of the recent economy on your practice, and wanted to share the results with you. Chip Hart and Tim Proctor of PCC’s Pediatric Solutions Team provide answers to questions you may have about the impacts of the economy on your practice.
What prompted you to do this research?
Chip Hart: Many PCC clients I’ve spoken to recently have expressed fear or nervousness about the effect of the economy on their practices. PCC has the unique technical ability and expertise to assess the reality of the situation by combining and analyzing data from hundreds of pediatric practices nationwide. So we decided we needed to look at the numbers. Is it really true? Whatever the impacts, PCC needed to be prepared to do something about it.
What were you looking for?
Tim Proctor: There are a couple of important measures we considered. Specifically, visit volume and total revenue for the month. The conventional wisdom right now is that families are going to put off visits, for example.
What are the results of your research?
Chip Hart: PCC clients have continued to have very strong growth trends, and have been busier in 2008 than in 2007 overall. So far, we have not seen a drop in visits and have not seen revenue drop either. Generally speaking, practices haven’t yet started to feel the pinch. One thing to keep in mind is the difficulty in measuring the economy’s impact on pediatric practices in real time, because there’s always a lag.
Tim Proctor: Another thing to keep in mind is that there are natural trends that take place as well. 2008, so far, seems to be a relatively healthy year without a major flu impact to drive up visits. When you consider how many illnesses have been taken off the table in the last 5 to 10 years because of immunizations, the growth trend is impressive.
If the economy isn’t taking a toll on PCC practices so far, what is your prognosis?
Chip Hart: With financial markets crumbling, there’s incredible pressure on insurance companies. Susanne Madden of The Verden Group predicted that insurance companies will start releasing policies and procedure changes aimed at cutting payments. True to her prediction, United Healthcare released changes that target primary care, with new policies for bundling codes. When this happens, the insurance company no longer pays for a what could be considered a little procedure, but United just saved itself $3 million.
I wrote about this in my blog a few weeks ago. The insurance companies start whittling reimbursements down in this way. It’s something to watch out for. It’s too soon to tell how the insurance angle will play out, but we believe that it will be tougher to negotiate in 2009 and practices who worked their way into strong contracts in 2008 will be happy they did so. Practices that have not yet negotiated with their insurance companies should contact us or another qualified expert right away.
Tim Proctor: One interesting trend we have identified is the impact on the partnership in established practices. Although we can’t measure it, it looks like a number of older physicians have put off retiring for a few years as a result of many of them seeing their nest eggs lose half their value recently. Practices with physicians nearing retirement should review and update their plans.
Are there practices that are more susceptible to downward trends than others?
Tim Proctor: Practices with more self-pay patients or patients with high deductible plans could be affected more than others, as these patients are less likely to come in for visits. This could also be true for practices in areas with a high number of layoffs, and have a high number of uninsured as a result. Also, practices who see a lot of Medicaid patients may also suffer in the future if Medicaid budgets are slashed.
Chip Hart: Practices that have not negotiated strong contracts with insurance companies are also more susceptible, as they let the insurance companies dictate what they are paid for services.
What can practices do to help prevent negative impacts of the economy on their practice?
Chip Hart: While most PCC practices aren’t yet feeling the pinch of the faltering economy, that doesn’t necessarily mean they won’t six months down the road. There are a few key things practices can start doing now to help prevent problems.
First, they should examine their existing contracts and negotiate with any companies whose contracts are coming due in the near future. The belt is going to tighten.
Second, all practices should get on board with a chronic disease management system and patient recall process.Very few practices maximize their patient volume. As PCC practices can see in the dashboards, there are a lot of patients that are overdue for well visits and flu shots.
Third, practices should adopt a full patient educational resource system. Patients need to understand that maintaining their family health is a priority, even in a down economy. Medical expenses are the number one cause of bankruptcy, and preventing health problems is what pediatricians do best. This is not only important marketing, it’s good medicine.
Tim Proctor: And lastly, every PCC client should regularly look at a number of important Partner reports and review the Practice Vitals Dashboard. They’re free, they provide insightful pediatric benchmarks, and let busy providers get a snapshot of the practice’s financial and clinical status.
What are some specific reports or dashboard measures PCC clients can look at to help monitor their practice?
Tim Proctor: I really like to look at the clinical benchmarks when trying to gauge this issue. What is the Sick-to-Well visit ratio, is it increasing? That might imply that your families are putting off well visits. How many of your patients are caught up with their physicals? How many of your asthma patients have their flu shots? Like preventive care for patients, spotting problems early lets you address them before they get out of hand.Two measures in the dashboard that practices should continue to watch closely are Revenue-per-Visit and A/R days. Changes to these numbers could signal trouble, though they are unlikely to change right away. Clients can also keep an eye on these measures in real time with Partner reports. That’s where you’ll quickly see problems that come up.
Insurance Aging (insaging) is also a useful Partner report breaks down A/R by insurance company. Keep an eye on your A/R to make sure you stay on track with your collections.
Another important thing is to keep an eye on EOBs (explanation of benefits) for any policy or procedure changes. There’s also a report in SRS, called “Billing Error Report” that checks for errors in billing claims. Be sure to resubmit problem claims quickly to get every penny you’re owed.
Chip Hart: It’s very important that every practice carefully monitors its numbers right now. PCC will continue to look at these measures and keep pediatricians informed. We’ll especially be looking to spot any negative trends early on, so practices can make the necessary changes to stop them.