We’ve all heard it before: “Medicaid? You can’t make any money with Medicaid in most states. Yeah, Texas, New Mexico, Tennessee and Arkansas make it easy –for now—but most other places, the reimbursement is way too low for a practice to handle the volume and earn a decent profit.”
In a number of ways, that statement rings true. Your expected fee and monthly payment will be lower. And since the market for Medicaid is generally very underserved (because of the lower fee and patient compliance issues), volume for practices accepting Medicaid can swell very quickly. That can create a new list of headaches (some of which we discussed earlier).
But what gets lost in this discussion –and frankly, in the whole Obamacare-reduces-remibursement discussion-- is that solid business and efficiency systems supporting a practice enables you to earn a good living and provide top notch patient care to a patient population crying out for quality care.
For evidence of how this works, we take you out to our case study bureau for a closer examination of one such situation.
DATELINE – Atlanta, GA
The situation – A sizeable, one-office Medicaid-based practice in the city had no problems generating patient flow. On the 3 occasions on which we visited, the waiting room was packed with patients spilling outside the office to wait for the start of the appointment. In fact, the practice generated about $150,000 per month in revenue ($1.8 million annually), but ran at about half of a normal practice’s profit margins and ran at a loss when including the doctor’s compensation.
Below, we describe the key problems we say and the solutions implemented. Read to the bottom to see the final result.
The problem
The 2 highest-paid, most-experienced people in the practice spent all of their time in a back office filing and following up on Medicaid claims.
The solution
Yes, Medicaid can be a challenge when it comes to filing claims, dealing with adjustments, following up on past due claims, etc. But in the end, it is another insurance claims. And like many things with the government, the process and situations become routine. In other words, after some repetitions, a person could quickly be trained to handle this.
More importantly, filing claims is not the best use of time or investment for the most experienced people in the practice. They needed to be in the office dealing with patients and helping the day move along as quickly as possible.
Some reassignment was done to put people into positions that best fit their experience levels and skill sets. The experienced folks were put into key roles in the front and back of the office while a couple of newer, but very organized people were trained on handling insurance claims.
We also set them up with an automated monitoring system using some tools from the Medicaid site and the database from their practice management software to notify them of problems so that they did not have to sift through reams of data to find potential problem areas. With these tools, the plan is to soon have only one person deal with filings and then have that person deal with the filings on more of a part time basis.
The problem
While the waiting room was standing room only, the treatment area was more sparse than a Miami Marlins game. What we found after a short observation period was that patient movement was in a state of chaos. Patients did not check in regularly. They would just come and sit down. Because the time allotted for each patient was so large and the schedule so rigid (regardless of appointment type, each person was put into a 30 minute block), some clinical assistants were just sitting around (remember that idle time is the enemy of profitability) while others were so backed up that they wouldn’t have a chance to eat lunch.
The solution
We were able to solve a lot of the problem with some technology. A patient check-in computer was set up and notices about the check-in procedure were posted all over the office. The patient queuing module of the practice management software was turned on for the first time. A computer with the queuing status of each patient was set up in the back. Now, we had communication throughout the office and a good idea of where each patient stood. When that patient checked in, everyone knew that patient was there and whether or not any financial issues had to be handled prior to the appointment.
The schedule was brought up to date by setting up templates with different appointment types for each day with times assigned based on the type of appointment. Even with that, with the queuing system in place, an assistant waiting on a patient could check the screen to see who was waiting. If someone had been waiting more than 15 minutes, that assistant could find the patient and get him or her started (provided the assistant had the necessary training to handle that procedure).
And with our most experienced people in place, we had another layer of protection to ensure that the day moved smoothly. If they noticed something amiss, one or both of them could get things moving in the right direction either by jumping in and helping out with a patient or directing others to a more efficient solution.
Please note that we are not trying to state that people need to be all-out, constantly laboring like they are in a prison camp, but in order to make a lower fee situation work, you do need them to be as productive as possible.
The problem
Given the area in which the practice was located, the doctor was paying about $6 per square foot more in rent than his fellow tenants. Given the size of his office and additional costs, normalization would result in a $20,000 annual savings.
The solution
We spoke to the landlord about this discrepancy. When he noticed the volume we were seeing, he openly wondered why we weren’t paying even more in rent. No changes to the lease. Epic fail. Hey, we’re not afraid to admit we’re not perfect.
The problem
There was no patient compliance or monitoring program in place. With any type of practice, profits get eaten up by patients not showing up, showing up constantly with broken brackets and failing to follow hygiene instructions. Dealing with all of these things add cost and time to treat. This practice did not have an active program in place to monitor progress.
The solution
To have a good compliance program, you do not necessarily need to start with a comprehensive 32-point program and a complex monitoring arrangement. We started simple with some of the most basic rules for patient compliance and a bonus program for the staff ensuring that compliance. From there, we regularly built on it until it was more and more comprehensive. When starting from zero, get to version 1.0 of the process before worrying about super sophistication.
We also set the doctor up with an automated report to let him know which patients were still in treatment past their estimated completion date. Because payments had finished, any future treatment represented pure cost to the practice with no return on that time spent. The time could better be spent on more productive pursuits. With this information, the doctor could then make a decision. Obviously, the treatment decision was all his. He could keep treating them, dismiss them for noncompliance or whatever he chose (we don’t do treatment here at MPE). Or, he could possibly work out a financial arrangement with that patient. Cost at that point was generally small so it’s not like he needed $129 per month to keep the cost from eating him alive. What is important is that the doctor knew where he stood with these patients so that he could make decisions. Without that, he was flying blind and simply piling up costs.
The problem
To save costs, the doctor was using cut-rate, discounted supplies. This potentially compromised the quality of care and potential for future referrals. The possibility of an unpleasant result with a patient was increased.
The solution
Lower prices are possible from the top suppliers. This is generally achieved through a group purchasing situation in which the purchasing power of many is brought to suppliers to achieve lower costs on the best products. We offer one here and I am certain that others exist too.
Other solutions
We implemented other solutions on the margins like streamlining payroll to reduce cost (by about $6,000 per year in his case), simplified the accounting system, cut shipping costs and made a volume purchasing deal with his lab company.
The result
Without a change in the way he treated patients, margins expanded from 20% to 40% before doctor compensation. He no longer has to fund losses after the doctors are paid. We are hoping for continued improvements in efficiencies and margins and continued patient happiness. In the end, this Medicaid practice worked and yours can too. The process is not complicated, but you do need to be willing to have good business systems underlying your treatment.
Want to know more? Want to discuss your Medicaid practice? Contact us.
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