CHICAGO – Buck the trend of "physician as employee" and retain your private practice through better business practices, cost control, and potential collaboration with other entities, advised Dr. Thomas Grogan, past chair of the American Academy of Orthopaedic Surgeons’ Practice Management Committee.
"You can go into employment, or you can stay and survive and maybe even thrive," Dr. Grogan said at a physicians’ legal issues conference held by the American Bar Association.
One of the first steps to stabilizing a private practice is understanding costs and improving revenue, said Dr. Grogan, a practicing orthopedic surgeon in Los Angeles. This includes knowing how much revenue is generated per patient and what each procedure, treatment, and visit costs.
"Most of us have to learn how to collaborate... it’s like learning how to play together in the sandbox."
"A lot of times doctors don’t think about costs, they just pay them," he said in an interview. "That’s one of the big problems. If you know what the revenue is per patient, you can determine the profit margin and whether you can survive."
Analyzing cost structure can help determine the best approaches for improving income sources such as the possibility of subletting part of the office or seeking lower medical malpractice insurance premiums.
Ancillary income can be another focal point for physicians who desire to stay in private practice, Dr. Grogan said. Physicians should look for ways to increase and protect the revenue that stems from services such as X-rays, supplies, imaging, and other ancillaries. For instance, physicians can ensure that contracts with payers enable them to be reimbursed for maintenance of the equipment or devices they use. Physicians should beware of contracts with insurance companies that require them to use the payer’s providers or affiliated facilities for ancillary services.
Another key is the development of new revenue streams. New technology provides excellent opportunities for independent physicians to add skills and generate additional income, Dr. Grogan said. His practice, for example, utilizes stem cell treatments to treat joint problems.
"Learning how to do these new technologies can contribute positive revenue," he said. "In order to survive in business, you have to make a profit. In order to make a profit, you have to get very good at controlling cost or be able to grow revenue. That’s how you improve your financial situation."
Collaboration is another tool for retaining independence. Collaboration models could include merging two or more physician practices, becoming a medical home, joining an accountable care organization, or participating in a super group or independent network. Super groups refer to practice entities that share a single tax ID and ancillaries but can have multiple offices. Networks can be independent practices linked via a management system such as a physician-hospital organization, management services organization, or an independent practice association.
To achieve success in collaboration, physicians must overcome challenges to operating with other practices and organizations, Dr. Grogan said. A common obstacle is integrating practice cultures and learning to work with other specialties.
"Most of us have to learn how to collaborate, and it’s like learning how to play together in the sandbox," he said. "The culture of an orthopedic surgeon is not the same as that of a pediatrician or an internist. An orthopedist is used to taking care of the problem and moving on. That’s not necessarily the case with an internist or a pediatrician."
Learning how best to communicate and work within a strong team is essential to survival of unified groups, Dr. Grogan said.
"It’s hard to exist in our own little vacuum," he said. "Somehow, we have to integrate or at least collaborate."
Strong teamwork, communication aids practice integration
When a group of seven Chicago-area pediatric practices decided to join forces, they knew unification would not be simple. In the end, strong cooperation, efficient management, and skilled advisors were required to build a successful partnership, now called PediaTrust LLC.
"It’s really important to make sure the physicians are of like mind and it’s a good fit," Kathleen McTigue, executive director of PediaTrust LLC said at the conference. "They [must] have similar views of running their businesses."
For PediaTrust, agreeing on a single vendor for each necessary service allowed for a smoother process, Ms. McTigue said. For example, each practice came to the table with its own attorney and accountant firm, so the new group needed to choose one provider for each service.
"We had great advisers," she said. "I would be concerned using advisors – attorneys, accountants, consultants – who had not worked with a company structure like ours. In the end, it turned out to be successful because we were thoughtful about that."