Re-engineering Your Practice

Will all that effort really pay off?

The bottom line is more income, happier patients and staff, and shorter hours for physicians, say doctors who've adopted the techniques described in this series.

By Ken Terry
Managed Care Editor

FP Paul L. Schmidt of Sun Prairie, WI, started re-engineering his practice nearly two years ago. At that time, he had 2,200 patients. Now, he has 2,500, and he gets home earlier most days than he used to. "The person who's really noticed a change is my wife," he says. "She's shocked that I'm home at 5:30."

What made this possible for Schmidt and his seven colleagues at the Sun Prairie Family Practice Clinic was their move to open-access scheduling. Schmidt now sees all patients within two to four days after they call for an appointment, and offers a physical exam within three weeks. Prior to re-engineering, patients waited an average of 19 days to see Schmidt for a nonurgent reason, and 76 days for a physical.

Before the scheduling shift, Schmidt handled a much higher percentage of patients with chronic diseases, because people with other nonurgent problems didn't want to wait so long to see him. Now that access has improved, those patients are coming in. "You can see patients with acute problems much more rapidly than you can see those with chronic problems," notes Schmidt. That allows him to see more people without working longer hours.

Open access and other re-engineering changes have improved the financial basis of his practice, says Schmidt. While he doesn't know how much more he's earning, the Sun Prairie clinic as a whole increased production by 4.3 percent in 1999, and its overall patient count rose by 8 percent.

Sun Prairie is one of 39 practice sites across the country that are participating in a three-year re-engineering project led by the Boston-based Institute for Healthcare Improvement. This program, called the Idealized Design of Clinical Office Practices (IDCOP), has developed practical methods for redesigning office processes rapidly in both large health care systems and small private practices.

Two years into the IDCOP project, average revenue from new-patient visits and mean cost per visit for all patients haven't changed much, says Ann Marie Hess, a senior analyst for IHI. But the average site has halved the number of days that a patient with a nonurgent problem must wait to see a doctor, increasing the capacity to see new patients, she adds. The outpatient clinics of the Cambridge Health Alliance in Cambridge, MA, for example, have increased their primary care base by 12.5 percent in the past year. Appleton, WI-based ThedaCare has seen double-digit increases in income, revenue, and RVU-based production at its two re-engineered sites.

"Those organizations that have tracked their financial course have found that their revenues and margins are higher," says physician Kenneth Smithson, vice president of VHA, a purchasing and consulting organization for more than 2,000 nonprofit hospitals. (VHA provided the seed money for IDCOP, and many of the participating health care systems are VHA members.)

These higher profits, he adds, are being realized despite that fact that the practices are seeing fewer patients. Fewer patients while increasing your patient base? It's not as paradoxical as it seems. Especially in practices that are predominantly fee-for-service, some patients may be seen more often than necessary, while others don't have access to care when they need it. By dealing with as many issues as possible in each visit (known in re-engineering circles as "max-packing"), doing more nonvisit care, and eliminating follow-up appointments for such things as normal lab results, say redesign advocates, practices can serve more patients with fewer visits overall.

Although re-engineering promotes efficiency, none of the practices interviewed for this article has cut staff. The improved financial performance of these groups springs from increased revenues rather than decreased overhead.

This isn't true only of practices that belong to big groups or health care organizations. In 1999, solo internist Allyn M. Norman of Buffalo, NY, received hospital and ancillary surpluses equal to 110 percent of his capitation payments from the HMO that supplies the bulk of his capitated patients. He also got an extra "quality management fee" of $14,000 that was based on the number of patients seen, ER utilization, patient satisfaction, and preventive care. Norman expects this year's compensation to be even better, and he attributes much of his success with capitation to re-engineering.