The outlook physicians have on their practices' profitability has only darkened because of the negative impact these issues are expected to have on practice finances.
The outlook physicians have on their practices’ profitability has only darkened in the past year, according to new survey results.
The 2014 Practice Profitability Index (PPI) from CareCloud and QuantiaMD tracked the operational and financial health of US physician practices and found those with a negative outlook increased from 36% to 39% year over year.
"The 2014 PPI results show that physicians are experiencing increasing strain on their practice operations as a result of healthcare reform and government mandates," Albert Santalo, chairman and chief executive officer of CareCloud, said in a statement. “This strain, in turn, affects patients—including the millions of new ones entering the system as a result of the Affordable Care Act. Nearly half of physicians say they cannot take on these patients, foreshadowing an access to care issue.”
More than 5,000 physicians responded to the survey and reported that they are focusing on patient engagement. According to the report, 40% of physicians believe patient engagement programs have the most promise to improve their practice’s operational performance. Other strategies to improve performance include new alliances (21%), fee-for-value or Accountable Care Organizations contracts (11%), and mobile technologies (11%).
Here are the major challenges physicians say are negatively affecting their practice profitability:
Electronic Health Record (EHR) adoption
There is a lot of uncertainty surrounding EHRs, according to the report. Only half of physicians with an EHR (52%) actually know if the system is certified for Meaningful Use Stage 2. Meanwhile 38% are unsure and 10% say their system is not certified so they can receive stimulus payments in 2014.
EHRs remain a point of difficult for physicians, though, as they have been mostly unhappy with the systems. In fact, the number looking to replace their existing system is growing, according to a report from EHR systems reviewer Software Advice.
In 2010 just 19% of EHR buyers were shopping to replace an existing system, which climbed sharply to 30% in 2013 and 40% in the first quarter of 2014. The majority of these buyers (56%) are from solo practices, while larger practices are happy with their EHR system and are not looking to replace it.
According to the respondents of that survey, the most common reason for looking to replace an EHR system was that the current system was too cumbersome.
Although, the ICD-10 delay approved at the end of March will defer revenue disruptions, the cost to prepare for the transition could actually increase for practices and hospitals. However, considering 44% of physicians did not know if they would be ready for the 2014 deadline and another 25% knew they would not, the delay was likely a good move.
In February 2014, the American Medical Association released survey data showing ICD-10 cost estimates were higher than expected. While initial estimates placed implementation costs for a small practice around $83,290, the new report projected costs could go be as high as $226,105 for small practices.
The ICD-10 delay is expected to only increase costs, according to Michele Hibbert-Iacobacci, a certified clinical coding specialist with Mitchell International. Status updates and contingency plans (in case of another delay) will help practices be as prepared as possible for the transition to ICD-10.
Melinda Reno, principal at Deloitte Consulting LLP, said in a webinar that despite the money organizations have already invested into ICD-10, the transition delay increases the cost for those who were already prepared for transition.
Although providers have an extra year for ICD-10, they cannot become complacent. Those who kept things on a slow burn after the last delay were the most successful at picking up where they left off, while those who paused ICD-10 operations had more difficulty rejuvenating momentum, according to Christine Armstrong, RHIA, MBA, principal for Deloitte Consulting LLP.
Affordable Care Act (ACA) requirements
The passage of time has not made physicians any more amenable to the ACA. According to the PPI report, the percentage of physicians who will not accept new patients is 47%, which is barely changed from 48% a year ago.
In the face of regulatory and industry challenges, fewer physicians are remaining resilient. While a majority of independent practices wish to stay that way, it is down to 53% from 60% in 2013. Nearly a quarter are considering selling their practices, which is an increase from 21%.
With half of physicians seeing rising costs, it’s no wonder physicians are more likely to see their practice profitability trending down in the next year. The cost of supplies and staff, among other things, are cutting into the profit margins for physician practices.
Despite hype around emerging reimbursement models, physicians believe getting closer to patients is the key to success.
A survey from Physicians Practice found that physician reimbursement has remained mostly flat or declined depending on the codes. The highest complexity code used by practices saw a 21% decrease in reimbursement pay.
The survey found that physicians are looking for ways to change how they do business without compromising care. A quarter of physicians expect to receive up to 25% of their revenue through some format other than fee-for-service reimbursement. Meanwhile 18% expect to receive more than half of their revenue through non-fee-for-service contracts.