Medical practices are getting squeezed from all sides and are finding it difficult to stay financially solvent.
Medical practices are getting squeezed from all sides and are finding it difficult to stay financially solvent. Between decreasing reimbursements and increasing costs, it’s imperative for physician owners and partners to take a more granular approach to a practice’s profit & loss (P&L) statement. In her blog, Physicians Practice—Your Practice Your Way, Carol Stryker, a principal at Symbiotic Solutions, highlights ways to boost a practice’s income while reducing expenses. She helps medical practices increase profits, improve patient satisfaction, and mitigate risk. Here are some of her suggestions that may have an impact on your practice’s bottom line. Reducing expenses
Stryker recommends that practice managers be aware of the drug costs of each drug, and the corresponding reimbursement rates by payer. “Depending on the combination of drug and payer, it may be advantageous for the practice to order the drug through the patient’s insurance, as opposed to purchasing the drug,” said Stryker. In this way, the provider will know before administering the drug whether or not the payer will cover it and practice funds won’t be tied up in expensive inventory. “The practice will be shielded from the possibility of a loss on the drug.” She goes on to say that the patient won’t see a difference in delivery of the drug since it’s delivered directly to the clinic. In addition, “some patients will benefit by the drug being covered by the pharmacy, as opposed to the medical benefit,” said Stryker. Looking at the big picture, “practice income will go down by the amount of the drug reimbursement, but so will expenses. The net effect should be an increased net income,” said Stryker.
Regarding the Centers for Medicare & Medicaid Services’ (CMS)’s final rule on physician payment rates, Stryker said that “it’s important to remember that any changes to the relative value units (RVUs) in the Physician Payment Schedule must, in the aggregate, add to zero. The effect is that for any specialty’s position to improve, another must suffer. There is currently a lot of attention being paid to both mental health and primary care.” She notes that the RVUs for drug administration are increasing by 9%-—42%.