By Aaron M Giltner
Medical practice management is an increasingly complex subject, often overseen by physicians lacking formal business training. Practices have evolved from small groups, often with one or only a few physicians, to large single- and multi-specialty organizations. Though it is typical for large groups to employ business managers, physicians remain heavily involved in day-to-day and financial affairs. Those physicians most heavily involved in practice management often continue to maintain busy clinical schedules, carving out only small blocks of time to focus on practice management. Management decisions are often made on the fly. This informality necessarily injects a large dose of subjectivity into the process. Practices that lack formal evaluation processes risk inefficiency, poor productivity, billing and coding errors, lost collections, and staffing errors. An additional, more recent, concern is the need to ensure patient adherence to standard treatments, as this is increasingly tied to reimbursement.
Measuring performance is a necessary component of self-assessment. For medical practices, this applies to both clinical and financial performances. In fact, there is ever-increasing overlap of these two traditionally distinct components as pay-for-performance schemes replace traditional fee-for-service reimbursement contracts. Benchmarking is a process by which medical practices review clinical and financial data and compare them to available standards, both internal and external. Doing so allows objective assessments of performance and sheds light on scheduling inefficiencies, quality care measures, coding errors, compliance issues, billing and collections problems, over- or under-staffing, and patient adherence to physician recommendations.
In reality, many practices never adopt benchmarking practices. Physicians are taught to practice evidence-based medicine, but comparatively few appreciate the value of evidence-based management. Organizations that fail to properly measure and respond to their successes and failures are more likely to deal with staff and physician productivity problems, have trouble achieving necessary clinical quality standards, and underperform financially. As physician compensation is tied to these performance measures, those in groups that do not employ benchmarking are likely to be paid less. When a practice fails to effectively manage these issues, it is unable to consistently provide high-quality patient care. Under these circumstances, practices are at risk to collapse.
Meeting clinical benchmarks is a high priority for physicians. In attempts to improve the overall quality of care, medical societies have developed and published practice guidelines. Measures accepted as standards of care are typically those shown to significantly improve patient outcomes and reduce complications. Advances and widespread adoption of electronic health records (EHR) have simplified organization and collection of clinical data. In many cases, these data are reported publicly via consumer websites. Internal benchmarking enables physicians to monitor their own practices, where external benchmarking allows comparison to available data from larger national and specialty-specific databases. An important aspect of meeting clinical benchmarks relates to how third-party payers are redesigning physician reimbursement. Payers are now able to track utilization patterns and achievement of quality benchmarks by practices as well as individual physicians. Those considered over-utilizers or not meeting selected quality benchmarks will receive lower compensations as payers adopt pay-for-performance measures.
Financial benchmarking is equally important to the health of medical practices. These organizations deal with many of the same issues faced by businesses in other industries. As service providers, inventory management is a comparatively small piece of the accounting pie. Profit and loss statements should be reviewed regularly in order to identify waste or overuse of supplies. Of critical importance is regular review of coding and billing patterns. Because this is such a complex area for physicians, significant provider-to-provider differences are common. Physicians are prone to develop personalized patterns of billing, so significant variation may exist within a single group. Moreover, the complexities of care may lead to confusion and coding errors as information is passed from physicians to billing staff. Such variations and inconsistencies serve as red flags for third party payers, who have increasingly enlisted auditors to review practice data with the intent to reclaim inappropriate payments.
A final focus of benchmarking should be physician practice patterns. Patient encounters, procedures performed, and revenue generated are important measures of physician productivity. Differences in productivity, both real and perceived, can trigger conflict within practices. Review of the real data, with application of revenue value units (RVUs) where appropriate, facilitates effective interaction on these subjects. Ultimately, it is the ability to review available real data- both clinical and financial- that is the value of benchmarking. It is the responsibility of the physicians and business managers to utilize it.