Primary care practices see significant financial benefit of non-traditional hours

January 8, 2014

As primary care practices seek to increase availability to their patients, experts say non-traditional hours can significantly benefit practices financially. Here's how.

 

Non-traditional hours can significantly benefit the practice financially.

Once the fixed overhead of the practice has been met, every additional patient seen becomes profitable. For example, if typical overhead is $20,000 monthly, or $1,000/workday, it takes approximately 12 patients at $90 average reimbursement per patient to pay the office overhead prior to the first dollar of income to the physician. Every patient beyond 12 only incurs a variable cost, mostly for medical supplies and billing costs.

The annual Statistics Report of the National Society of Certified Healthcare Business Consultants shows these variable costs run about 12% to 18% of collections on subsequent patients, or about $80 per patient. Therefore, a practice averaging four patients each hour nets at least $320 per hour on those extra hours, prior to paying for the providers.

Physician labor costs at $100/hour ($180,000-$220,000 per year) shows that it is financially worthwhile to extend hours, even if a part-time additional physician is employed to see the patients. That’s an $880 per day, pre-tax net income each day above-all-costs by staying open from 5PM to 9PM, assuming there is patient demand. If a nurse practitioner or physician assistant is employed, the provider labor costs are halved, and profitability increases even further, even if subject to “incident-to” non-physician Medicare billing penalties. Those penalties are easily avoided by just not seeing Medicare patients during those non-traditional hours that are most popular with employed, insured patients and least-popular with the elderly retired population.

In addition, expanded-hours may generate more quality bonuses for accessibility. I’ve already seen a solo family physician with one nurse practitioner earn an additional $40,000 annually in quality and accessibility bonuses.

However you do the math, nontraditional hours can work for the patient and for the practice.