2 Employed Physicians: Leadership Strategies for a Winning Organization Ray Chorey Southeastern Ohio Regional Medical Center President and CEO Thomas Ferkovic SS&G Healthcare Managing Director
3 Practice Comparison Payer Mix All payers Preferred payers Scope of Services Practice Size Practice Focus Charity Care All services Dynamic Enterprise Focus Growing Optimized services ( profit margin) Stable (or stagnant) Internal Focus Minimal
4 Operating Investment ($130,210,534) 1,122 FTE s Worth it?
5 Reimbursement Changes Increase in Per FTE Investment $500,000 $450,000 $400,000 $350,000 $300,000 $250,000 $200,000 $150,000 $100,000 $50,000 $ Current Less 5% Less 10% Less 15% Less 20% Less 25% Group A Group B Group C Group D Group E Group F Group G Group H Group I Group J Grand Total As revenue declines 5%, investment per Physician FTE (as a group) increases by 11%
6 Why Not????? 5
7 Successful Physician Health System Integration Group Formation for Leverage Developing Efficiency through best in class Operations Reducing Variation and managing care Rationalizing Care Sites and Delivery Triaging Patients Across sites Impact on Cost,Quality, Profitability Mission, Sites, Services Joint Negotiations w/ Payers and suppliers Shared Clinical Systems Shared Operating Standards Share expertise Across business units 6
8 heart monitor for workouts
18 Characteristics of Successful Physician Networks 1. Disciplined 2. Well-defined strategy 3. Consistent physician contracts 4. Mature financial reporting and key indicators dashboards 5. Effective operations group
19 The Superior Med Story Ray Chorey Southeastern Ohio Regional Medical Center President and CEO
20 Who are we? Southeastern Med Sole Community hospital Hardwired 98 beds Acute general care Cardiology and Telestroke with OSU Cancer services Orthopedics General surgery OB/GYN Occupational medicine Wound care Community Health Link Sleep medicine Superior Med Multi specialty group 1 internal med/peds 3 family practice 1 Pulmonolgist/intensivist 1 Orthopedic surgeon with second to join in July ENT 1 Urologist 1 Occupational Medicine 2 Pediatricians 3 mid level providers
21 Superior Med For profit entity formed in 1998, owned by the Vice President of Medical Affairs and controlled by the hospital under a control agreement, to be the vehicle that facilitated the recruitment and retention of physicians Superior Med s payer mix is very similar to the hospital with Medicare, Medicaid and Self pay making up 55% of the business. The % s are much different in the primary care practices where Medicaid and Self pay are a third of the business. Specialists in a market with the demographics of Southeastern Med will never exist without hospital existence
22 Setting the table Assumed position of CEO in May 2007 Economy tanking, unemployment rate 6.5% on its way to a high of 12% Additional recruiting needs for Orthopedics, ENT, Urology and Peds Hospital barely making money, defined benefit pension plan that was requiring significant increases in employer contributions Superior Med important in physician recruiting but requiring increasing support from hospital
23 2007 Consistently losing $1.5 to $2.0 million per year 2006 Net loss for a practice of 11 physicians or 10 FTE was ($2,266,000) Initial step since no access to wrvus was to simply take the number of office visits and divide into gross and net patient revenue This provided a gross charge, net revenue and expense per office visit for comparison
24 Superior Med had been following the national trend by increasing the number of employed physicians leading to increased losses. Year FTE Physicians Net Income Net per Physician ($1,529,000) ($254,884) ($1,445,000) ($206,414) ($2,266,000) ($323,691)
25 2007 Built an excel spreadsheet with a What if scenario that showed how the operating loss could be reduced/eliminated based solely on volume Introduced bar graph showing number of office visits, net collection per visit and goal Some improvement but not enough Invested in an electronic health record Still not enough.
27 Jan-04 Feb-04 Mar-04 Apr-04 May-04 Jun-04 Jul-04 Aug-04 Sep-04 Oct-04 Nov-04 Dec-04 PATIENTS Net Revenue per Patient Goal 500 Goal 63
28 Symptoms of an Opportunity Lack of ownership No compensation incentive Lack of continuity in office practices Distrust of the central business office Lacked documentation check and what the physician did during an office encounter Lack of quality checks Hospital administration is no good at running physician practices
29 What was missing? A strategic plan was needed for Superior Med losses, low physician productivity, stagnant population, compensation, marketing of practices What we knew: Coding inaccuracies previous consultant stated that only about 50% of Superior Med physicians were accurate in coding and documentation More emphasis needed to be placed on collection efforts. Several practices collection performance is below standard. This was always the push back from the physicians. You aren t collecting for the work I do. Physician compensation needed to be considered in the context of a base salary plus an incentive bonus tied to productivity with appropriate benchmarks. Hospital must determine what is an acceptable loss for each physician/practice
30 What else? Southeastern Med lacked the management skills and resources to make lasting improvements to Superior Med Hospital administration does a poor job of managing physician practices In 2008 from a post card mailing contacted SS&G After several meetings leadership felt SS&G was the right partner to help execute a strategic plan to reduce practice loss Negotiated contract in May of 2008 and they placed a part time manager in our business office
31 The Plan Business Operations Financial Management Organizational Governance Human Resource Management Information Management Quality Management Risk Management
32 First Steps Business Operations Start with self not the physician Reviewed Central Business Office processes July 2008 completed a SWOT analysis of Superior Med Management, Finances and Accounting, Vendor Relationships, Payer Contracting and Credentialing, Payer mix, Payment for Services, Physician Recruiting, Policies and Procedures
34 Business Operations Functionalized job tasks; flow charted all jobs this included restructuring billing office duties for improved operational flow Led to revised job descriptions and responsibilities Improved AR collection and overhauled patient financial hardship program Started conversion from independent physician/office approach to a Group Practice mentality Established new orientation program for physicians new to the hospital and community Gained movement of physicians and staff to productivity focused model. All new physicians had wrvu goals as part of contract.
35 Organizational Governance To address lack of ownership formed a Physician Advisory Committee with rotating physician representation; Internal med/peds, family practice, Pulmonologist/Intensivist, Orthopod, Urologist. Supported the Superior Med Board in outlining future leadership structure Organized regularly scheduled All Physician, Physician Advisory Committee and Superior Med Board meetings. Shared group financials, group dashboards Ownership with policy changes such as associate incentive plan Turning point
36 Financial Management Review of revenue cycle with major focus on documentation and coding Functionalized CBO with a major change in billing and collection functions; reduced A/R by 24.8% from July 2008 to July 2009; 46.6% from July 2008 to June Reviewed managed care contract Collection of co pay at time of office visit Financial counseling offered Revised annual budget for each physician and group to include volume expectations Created monthly dashboard reports for each physician and for the group Provided detailed financial proforma models to support new hires which are shared with physicians we are recruiting
45 If you talk the talk be willing to take the walk 2010 group meeting Two physicians who just didn t get it Message and opportunity.
46 1/20/2010 Initiative Task Update Date Updated Next Steps Owner Hold Planning Mtg w Call a meeting with Physician, VPMA, Ray and Wayne to discuss strategic initiatives and requirements for Physician to maintain current compensation; and to outline potential changes if requirements not met During Nov and Dec when Keep minor Physician was on call, review procedures inhouse those dates for count of orthopedic transfers out Cross cover in OR for each other Ask Physician why he won't cover for other ortho cases in the hospital when other ortho is in the office; especially as other ortho does for him Increase face toface marketing with Determine the message to be shared referring doctors Outline when and how to fulfill this
47 Orthopedic Surgeon Hired May of 2006 compensation $600,000 roughly the 75 th to 80 th percentile MGMA New two year contract in November 2008; move to wrvu productivity and compensation lowered to $530, rd percentile MGMA September 2010 renegotiated new contract based on 2009 productivity 24 th percentile first six months of th percentile MGMA Compensation reduced to 16 th percentile or $287,250 with productivity payment of $59 per wrvu in excess of 16 th percentile MGMA Resignation received August 1, 2011.
48 Urologist Recruited and hired May of 2008 Had wrvu productivity numbers in his contract Base salary $450, th MGMA percentile MGMA wrvu percentile th, th, th, nd. November 1, 2010 renegotiated contract to $360,000 adjusted wrvus and hours reduced to 32 hours per week Advised April 2011 we were not going to renew his contract; he tendered his resignation.
49 Human Resource Management Reviewed our policies and pay structure. Revised job descriptions with revised expectations. Introduced new performance evaluation process with physician input. Evolved the staffing float pool into the common model for employing new hires, then reassigning float staff into the various offices as positions opened up. Added positions for Patient Financial Counselor and Billing Specialist Improved staff performance by introducing a production based merit and bonus program. In 2011 started moving existing physician employment agreements to include production bonus.
52 Information Management Initially shared monthly financial statements with simple bar graphs showing number of office visits, net collection per visit, against goal Invested in an electronic health record in 2008 Enabled us to capture wrvus but lacked methodology to use this information Introduced individual and group dashboards
53 Quality Management Reviewed Claims errors by Physicians by month. Established use of Physician Quality Reporting Initiative (additional 2% increase in Medicare reimbursement effective second half 2009) and E Prescribing.
54 Risk Management Ongoing monthly chart review program. Audit a minimum of 15 medical records for each physician at least once a year effective May Reviewed and implemented practice changes in response to Red Flag Rules to protect against identity theft.
55 Success! Year FTE Physicians Net Income Net per Physician ($1,529,000) ($254,884) ($1,445,000) ($206,414) ($2,266,000) ($323,691) ($1,921,000) ($213,481) ($2,415,000) ($268,333) ($2,789,000) ($253,545) ($2,446,000) ($212,695) ($1,998,000) ($177,600) June ($830,000) ($73,778)
56 Today With the exception of the Primary Care Physician who works in our Community Clinic all other physicians are on a productivity based contract. Recent renegotiated contracts now have some compensation at risk, at least 5% in addition to the productivity clause Share proforma s and wrvu calculations in our contract negotiations
57 Participation in PQRI initiative 25.00% $3,125 Sample review 15 charts 80% have current medication & allergy recorded at time of office visit 25.00% $3,125 Timely reporting (monthly) cases to cancer tumor board 25.00% $3,125 E & M coding accuracy equal to or better than 80% on sample review of 15 charts 25.00% $3,125 Participation in 90% of Tumor Board, Breast, Cancer committee meetings 50.00% $3,125 Complete 4 brown bag education luncheons 50.00% $3,125 Open schedule for new patients < 7 days 50.00% $3,125 Quarterly Patient Satisfaction Survey scores 85% - 95% 50.00% $3,125 Quarterly Patient Satisfaction Survey scores 80% - 84% 25.00% Quarterly Patient Satisfaction Survey scores 75% - 79% 10.00% Quarterly Patient Satisfaction Survey scores 70% 0.00% $25,000
58 Ortho Base Salary $0.00 Budgeted wrvus 900 Monthly Annually Bonus Compensation Productivity $46.75 per wrvu above wrvus Percentage Bonus Quality $ 50, Maximum Potental Earned based on below criteria Operating Room Metrics Performance 30% $ 15, % or better start on time 10% 3 or less room cancellations w/prior notice 5% 95% H&P completion before PAT 15% Patient Satisfaction 20% $ 10, Quarterly Patient Satisfaction Survey Score of 90% or Better 10% Quarterly Patient Complaints Less Than 3 10% Quality of Work 30% $ 15, Quality Assurance Plan: 95% or greater compliance with payer documentation stds 5% Paricipate in Medicare PQRI Reporting 10% Timely signed off on medical record documentation 15% Administrative Participation: 20% $ 10, Attends more than 70% of scheduled meetings 5% Active participation in OR CQI process making progress 15% Quality Bonus Compensation $ 50,000.00
59 Questions? Thomas Ferkovic, R.Ph. MS Managing Director SS&G Healthcare Ray Chorey President and CEO Southeastern Ohio Regional Medical Center