Now I Need to be a Practice Manager Too?

David F. Zirkle

As healthcare systems scramble to acquire and employ specialty practices and physicians, many hospitals find themselves in an unfamiliar line of business – practice management. One common assumption is that physician practices can be managed in the same way as hospitals, but in reality successful practice management requires a very different approach and skill set.

Here is a quick checklist of tips for successfully managing hospital-owned physician practices.

  • Assess the practice and current environment. Traditional planning techniques can be used to collect and analyze information to assess the current situation. This most often includes an “environmental scan” of market trends, competitive issues and other external developments along with a review of practice operations and infrastructure.
  • Monitor practice performance metrics on a regular basis. Basic performance metrics such as accounts receivable, cash flow, total charges to total collections, number of days in collections and payer mix should be reviewed to flag any negative trends. Comparison against national benchmarks such as the Medical Group Management Association can also help in identifying improvement opportunities.
  • Analyze patient flow through the practice. This provides a logical approach to improving the patient experience and operational efficiency of the practice. The analysis should begin with the primary care physician and include scheduling of office visits, diagnostic testing, ongoing clinical care, hospitalization and post-treatment follow up.
  • Review ancillary service performance. A cost-benefit analysis of all ancillary services offered by the practice such as labs and diagnostic testing should be conducted. While ancillary services have been profitable for many practices in the past, declining reimbursements and increasing costs may have shaved margins to the point where outsourcing is a better option.
  • Establish a committee to oversee business development and marketing activities. Membership should include leadership, service line administration, physicians and representatives from marketing, finance, nursing and practice administrators. This group should meet periodically to establish and review performance goals for the practice.
  • Use a formal process to prioritize geographic markets. Geographic markets should be prioritized according to growth potential since not all will produce the same return over time. Factors used to assess market potential often include demographics, competition, ease of access, referral patterns, payor steerage, etc.
  • Implement a referral development program to grow practice volume. Since primary care physicians serve as the “gate keeper” for most specialty care, organizations should develop a proactive plan to build strong referral relationships with PCPs. While the program clearly needs to retain current volume, the primary focus should be on developing new referral channels and growing business.
  • Develop an effective branding strategy for the practice. Healthcare brand research typically seeks to collect input from key stakeholders (e.g. consumers, physicians, leadership, employees, etc.) through a number of techniques such as surveys, interviews and focus groups. An effective strategy must also consider and provide direction regarding how the “corporate” and practice brands relate to and support each other.
  • Develop a detailed marketing and communication plan for the practice. The marketing plan should use a multi-channel approach to segment customer groups so that marketing resources can be allocated in an optimal fashion e.g. mass media, direct mail, telemarketing, printed materials, signage, web, etc. The plan should also include an internal marketing campaign to inform employees and the medical staff about the practice.

Identify upfront how progress will be evaluated. It is crucial to develop and monitor appropriate performance measures such as growth metrics, financial indicators, customer and employee satisfaction, etc. This process not only provides the opportunity to monitor progress but also to refine and modify practice plans as needed.