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Category Archives: Practice Management

Physicians Still Feeling the Impact of the Affordable Care Act

In early 2010 the Affordable Care Act, also known as Obamacare, was signed into law by President Obama. Since then, 30 million previously uninsured Americans now have access to healthcare services. There is a variety of different people and organizations that Obamacare has affected, including patients, nurses, hospitals, insurers and physicians in particular. The workload and productivity of physicians has shifted as they adapt to the new regulatory environment since the law went into effect.

Balancing the Benefits with the Flaws

The healthcare industry is still in the process of sorting through the short and long-term implications of Obamacare. This legislation has allowed more Americans to have access to an affordable option for health insurance, with a large percentage of these newly insured people being young adults.

Healthcare Practice Management

From a physician standpoint, it is exciting to see more patients getting the medical care and attention they need. Now that more Americans are regularly attending their appointments, physicians have the opportunity to catch any medical conditions or health problems early on. In the long run, this could save the patient and physician time by reducing the need for extensive medical treatments, since more conditions can be diagnosed before reaching a crisis.

Now that more Americans have access to affordable healthcare than ever before, it’s no surprise that physicians are seeing a substantial increase in their daily workload. In 2015, the Commonwealth Fund projected an average national increase of 3.8% or about 70 additional patient visits to physicians per year. This increase in amount of visits has generated more daily paperwork and unfortunately, does not always correlate with a higher compensation.

The ACA also mandates the use of Electronic Health Records (EHR) as the new form of patient files and requires existing handwritten records to be converted to electronic. While this system overall keeps patient files in the hospital or practice up-to-date, the initial investment of making the switch has been a financial strain for many physicians, especially older doctors with extensive medical records. With this system, doctors have to enter data into a computer while talking to patients and families, which could lead some patients to feel the physician’s attention is more focused on the computer screen.

Patients want to feel important and build a relationship with their doctor. These relationships could be jeopardized because of the reduced time physicians have available during the course of the day to spend with each patient. The excessive workload has had many negative effects, such as doctors not fully discussing treatment options, delaying patient admissions or discharges, unnecessary tests or procedures and poor patient satisfaction. Compounding the frustration for patients is the fact that it is now harder than ever for Americans to find a local doctor who are available to them, because several doctors are not accepting new patients while they cope with increasing demands.

Legislation Faces an Uncertain Future

The workload of physicians has changed significantly since the Affordable Care Act went into effect, which has made it highly controversial despite the positive outcomes. This act is likely to change every year, especially with changes in the healthcare and political field in years to come. Despite being signed into law several years ago, 54% of Americans opposed the act and many groups are still working to repeal Obamacare. Regardless of what the future holds, physicians still face the challenge of balancing their already busy and stressful lives with the demands of increased regulation.

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Advisory Services offered through Larson Financial Group, LLC, a Registered Investment Advisor. Securities offered through Larson Financial Securities, LLC, Member FINRA/SIPC.

Integrating Value-Based Payments in Healthcare

Healthcare reform has led many physicians to express concerns about the future of the industry. Change is difficult, and can often lead to stress. Stress is a heavy burden to bear as a physician and can unintentionally affect the treatment of patients.

The traditional fee-for-service payment system is under criticism for driving up the nation’s healthcare bill by rewarding over use. Under this model, providers are penalized for providing better care that keeps patients from repeatedly interacting with the health system. Various efforts to change productivity incentives for doctors and hospitals are being tested nationwide. One is a value-based payment model that offers bonuses to doctors delivering high-quality care that is cost effective. They would be compensated for the value of the care they provide, rather than the volume of services rendered.

Defining Value

There are various value-based care models for an organization to choose from and it’s up to the provider to determine which is the best fit for their healthcare organization. While most agree that the shift to value-based payments is a positive development for the industry, some healthcare systems simply don’t have the infrastructure in place to evaluate their population’s risk factors yet. Furthermore, there is no broad agreement as to what “value” means and how to measure it, as many value-based arrangements are largely still experimental at this point.

Medical Practice Consulting

For many, value is linked to patient satisfaction. This has led many to increase their focus on hospitality, food quality, décor and other factors conducive to a positive experience for the patient. However, patient satisfaction is not always indicative of quality healthcare and outcomes. There are still some areas of medicine that could lend themselves better to a fee-for-service reimbursement for quantifying productivity.

For value-based payment models to work there has to be a way to motivate patients into taking ownership of their health. In addition to eating well and exercising, patients need to take their prescribed medication and follow instructions from their doctor. Ultimately, value-based payment cannot address all the underlying causes of poor health and many have suggested that a broader public health strategy is necessary.

Decline of Private Practice

A number of employers and insurers are already paying health systems a yearly, all-inclusive payment for each patient regardless of their medical needs or how many tests are dispensed. Insurers have also become more aggressive in demanding lower rates from individual practices with little clout to resist. Providers also worry that the goalposts will always be in flux, and that insurers will simply offer less during the next contract if savings are achieved in the 1st year. Standardizing performance metrics and benchmarks across the many insurer plans and provider groups will be challenging and might require a legislative mandate.

Smaller practices are struggling to keep overhead low in this new era of greater regulations and declining reimbursements because they don’t have the leverage to effectively negotiate terms and fees with an insurer. As a result, the percentage of physicians in solo and partnership practices continues to drop. According to data from Merrit Hawkins, one of the nation’s leading physician placement firms, search requests for soloists fell from 22% of all requests in 2004 to 1% in 2012.

Other factors beyond the decline of government and private health plan payments have many doctors considering consolidation with major health systems, such as the need to invest in electronic health records. Medical systems are also increasing the number of doctors they hire as employees. Large hospitals have a reputation for not negotiating after they’ve made an initial offer, but signing and productivity bonuses can be increased by having a solid grasp of the market value for that area.

While remaining independent is a challenge, many small and solo practices improve their chances of survival by banding together in independent practice associations (IPAs) that share practice management services. These function similar to group practices but allow the physician the flexibility to set their own hours, hire their own staff and opt-out of certain insurers. However, hospital employment doesn’t mean a physician has to totally relinquish control. Many doctors receive leadership and director positions with their new employers that allow them a fair amount of input regarding critical decisions.

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Advisory Services offered through Larson Financial Group, LLC, a Registered Investment Advisor. Securities offered through Larson Financial Securities, LLC, Member FINRA/SIPC.

The Myth of the Rich Doctor

By Vicki Rackner MD, President of Medical Bridges

Are you in a financial position to do what you want to do when you want to do it? Could you afford to retire, care for ailing parents or reinvent your medical practice?

Healthcare Practice Management

Wealth buys the freedom to decide how you spend your days. My investments gave me the safety net to leave my conventional surgical practice and launch into a career as an author and speaker and consultant promoting better medical outcomes.

Here’s the dirty little secret. Most physicians are economic slaves to their practices. Our high incomes do not reliably translate to high net worth and the freedom wealth buys.

Income Vs. Wealth

Practicing physicians earn top dollars. The U.S.Bureau of Labor Statistics (http://www.bls.gov/oes/2012/may/high_low_paying.htm) culled data from tax records to conclude that nine of the top ten earners in the U.S. call themselves “doctor.”

Indirect evidence supports the assertion that physicians fail to build wealth. In a recent survey (https://www.amainsure.com/2013-report-on-physicians-financial-preparedness.html), half of physicians are behind where they would like to be in retirement planning. Professional medical associations are exploring how to assess competency in older physicians who continue to practice because they cannot afford to retire.

The Reasons Physicians Fail to Build Wealth

What keeps physicians from building wealth? Here are the reasons usually cited:

  • Medical school debt
  • Late start on earning and savings
  • Failure to protect assets against known and overlooked risks
  • Poor tax planning
  • Getting investment advice from the wrong people
  • Fraud and theft

This is like saying patients become obese because they eat too many donuts. It may be true, but it fails to tell the whole story. Further it fails to lead to sustained solutions that deliver different outcomes. Budgets work about as well as diets.

The Real Causes of Unrealized Wealth

I believe that physicians’ failure to build wealth is a symptom of a deeper financial ill: their dysfunctional relationship with money.

Physicians as a group are intelligent people who:

  • Tend to overestimate their ability to manage money, and underestimate the level of difficulty of the challenge.
  • Lack insight about what they do and do not know.
  • Turn to money to solve non-financial problems, like alleviating their guilt about spending so little time with their families.

The real barrier to financial freedom comes down to a conspiracy of silence around money. For physicians, money is the ultimate taboo topic. You cannot fix problems that you cannot talk about.

Here are three reasons physicians avoid conversations about money:

  • The culture of medicine Just as the government calls for the separation of church and state, medical ethics calls for a separation between the care a patient gets and a patient’s ability to pay. We physicians learn to avoid conversations about money to uphold this ethic. As a practicing physician I often thought that delivering medical services was like ordering a meal off of a restaurant menu without any prices. Small wonder health care costs spiraled out of control!
  • Lack of formal education Physicians get no courses in business or financial management in medical school or in residency
  • Awareness of their vulnerability Physicians experience themselves as financial prey. They turn to people they trust–their colleagues for financial advice. I include myself in the group of physicians who have fallen for “DDD’s”–dumb doctor deals.

The Path to Wealth

Physicians have the ability to build wealth.

As Einstein says, problems are not solved on the level at which they are created. The solution begins with physicians’ willingness to tolerate the discomfort when discussing money.

Here are three steps to help physicians achieve financial freedom:

  1. Coach physicians to proactively engage in conversations with patients about the costs of medical care.
  2. Explore –with compassion– the forces that drive spending. Here are some things that struggling physicians say to themselves.
    • “I deserve nice things.” You know the sacrifices you and your family made to answer this call to medical service. When physicians finally start earning their 6-figure incomes, they feel that it’s time to splurge.
    • “I can save lives and I’m smart; that means I can manage my own money.” You cannot see into your blind spot.
    • “There will always be more than enough money.” This physician fails to plan, trusting that there will be a bright financial future. Without a plan, money tends to wander off.
    • “You invested in a marijuana farm with a 200% return? Count me in!” Physicians can follow trusted colleagues into marginal investments.
    • “Look at me!” This physician wants to maintain the appearance of success at the cost of building true wealth.
    • “Sure, I trust you.” Physicians’ trusting nature makes them easy targets for embezzlement, fraud and ploys.
    • “I’m embarrassed.” Many physicians wonder how smart people like themselves could make such ill-informed choices. Disclosing mistakes can be painful.
    • “Mother Teresa took a vow to poverty; I should, too.” This physician does not feel worthy of wealth.
    • “Show me where to sign.” Physicians are often unaware of their power to negotiate contracts, or lack the skill and experience to execute.
  3. Replace wealth-eroding beliefs and habits with new wealth-building tools and skills. Just as we have mentors to guide us through the art and science of caring for patients, mentors and coaches helped me change my beliefs and behaviors around money. I offer my son– headed for medical school–basic financial literacy lessons I never got. I hope he aligns his spending habits with Einstein’s insight, “Compound interest is the eighth wonder of the world. He who understands it, earns it; he who doesn’t pays it.”

Wealth-building is not a do-it-yourself job for most physicians. If you or a family member had a rare medical condition, you would not treat it yourself; you would seek the help of the expert. Manage your wealth with the same strategies you use when you manage your health.

Financial advisors know about the complexities of “referred financial pain” the same way you know about the association of right shoulder pain and an inflamed gallbladder. Could you acquire this knowledge? Absolutely. The real question is whether you want to invest the time and effort.

Physicians can achieve financial freedom. With the economic stresses posed by the Affordable Care Act, now is the time for physicians to take control of their financial destiny.

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Vicki Rackner MD, President of Medical Bridges, works with physicians who want to thrive. This surgeon, author, speaker and consultant offers a bridge between the world of medicine and the world of business.

The article and opinions contained herein are strictly those of the author. This article is not and should not be construed as an endorsement of or testimonial for Larson Financial Group, LLC

Advisory services offered through Larson Financial Group, LLC, a Registered Investment Advisor. Securities offered through Larson Financial Securities, LLC, member FINRA/SIPC. Larson Financial Group, LLC, Larson Financial Securities, LLC and their representatives do not provide legal or tax advice or services. Please consult the appropriate professional regarding your legal or tax planning needs.

Copyright © 2015 by Vicki Rackner MD. All Rights Reserved

Leveraging Private Investments in the Healthcare Industry

Hospital syndications and ambulatory surgery centers are increasing in popularity since the implementation of healthcare reform. Outpatient surgery programs reflect the shift in healthcare away from a la carte pricing for medical treatments toward the bundled, value-based payments sought by insurers. Patients are also drawn to the convenience – and frequently lower prices – of the centers.

The best work environments establish principles that encourage responsibility, collaboration, continuous improvement and shared benefits. Vesting ownership derives from the belief that a broadly owned facility may enjoy greater utilization than a centrally-owned facility. Implementation of a plan to broaden physician ownership requires compliance with legal and regulatory guidelines, but vesting minority ownership in persons who can contribute to the entity and reap the profits has proven to be an effective business strategy.

Assessing the Opportunity

As a physician, your high net worth affords you the opportunity to consider investment options that are prohibited from being sold to the general public because they are considered to be too risky. Being an accredited investor isn’t always as advantageous as it sounds. However, your status as a credentialed physician (not your income) can often grant you access to investment opportunities such as surgery centers or other types of ancillary service centers.

Physician Practice Management

Ancillary services can generate additional revenue for physicians so that they are less reliant on seeing more patients to boost their income. The ancillary options available to you will depend on your specialty and how often you are referring patients elsewhere. When developing a strategy for which ancillary services to offer, you’ll want to assess what business you are referring out the door the most and make that the priority. Hospitals also consider physician practice ownership as a means of implementing a profit sharing plan among those with a direct effect on the outcome.

When considering ownership of ancillary services, these three questions should be evaluated during the decision making process:

  1. Does the opportunity have a business model that makes sense, and does the financial data support it?
  2. What is your exit strategy in the best-case and worst-case scenarios?
  3. Is the potential return worth the risk?

Weighing the Risks

To clarify the first issue, it is helpful to examine the historical income statements, balance sheets, cash-flow statements and any other historical financial records up front. Calculating the financial ratios for the service in question and comparing it to similar business will allow you to more accurately diagnose whether the physician practice management opportunity makes good business sense.

Your exit strategy is something to evaluate prior to entering any kind of business relationship. The best business opportunities are those that offer little risk in terms of how the exit strategy will impact you personally. For example, if you are selling your medical practice, will the buyer also want to acquire the ancillary business you have established? Taking this and other factors into consideration will allow you to determine how much flexibility you will have when the time comes to divest.

Finally, determine whether the potential reward is worth the risk. Generally, it is not worth the loss of liquidity on any of these services unless you expect 15% or more return on the investment. A surgery center that returns only 8% profit each year would probably not be worth the risk unless you have reason to believe that your group’s involvement would generate enough additional surgeries to increase the profit margin.

While the open market offers long-term opportunities to be rewarded for the risks that are taken, having direct access to additional revenue on the work you are already generating can also be profitable. Just like with any other investment, diversification remains paramount. As such, it is not recommended to tie up too much of your portfolio in any of these alternative investments. Every situation is unique, so it’s always a good idea to have the asset distribution of your investments reviewed by a qualified financial professional with knowledge of your individual circumstances.

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Information gathered from sources believed to be reliable but is not guaranteed. Any information or opinion contained herein should not be construed as an offer, recommendation or solicitation to invest. Information provided is not to be deemed tax or legal advice. Consult your legal, tax and investment professionals for personalized advice.

Advisory Services offered through Larson Financial Group, LLC, a Registered Investment Advisor. Securities offered through Larson Financial Securities, LLC, Member FINRA/SIPC.