Secret weapons for a successful practice

October 7, 2005

Five management consultants reveal the not-so-obvious cues they look for during a practice evaluation. You should look for them, too.

Suppose we offered a free seminar on how your group can improve its efficiency, profitability, and even its happiness-without spending a dime. Would you be interested? Well, in fact, that's just what we've done. At a recent meeting in Baltimore of the National Association of Healthcare Consultants, we asked a panel of five practice management experts to provide some diagnostic tools you might not have thought of before that will give you a picture of the health of your practice.

We asked each one to go beyond the basic business parameters and tell us one key benchmark they look at-their own special secret barometer, if you will-to assess a practice and its staff, and how you can use that information to improve your own group's performance. The consultants we gathered-most of them are editorial consultants to Medical Economics-responded with a variety of "insider" techniques that should be useful for any primary care physician who wants to run a successful practice.

In the following article, David C. Scroggins tells how to whip low-producing physicians into shape; Kenneth Bowden shows what you can learn from listening to your staff; Michael Brown tells how to figure the number of staff people you really need in your office; Virginia Martin describes an easy way to get a handle on your accounts receivable; and Keith Borglum describes how he does the business equivalent of a complete history and physical on a practice staff, including a way to measure a physician's "lifestyle quotient."

Benchmark against office visits

I'm not happy with primary care doctors who do 4,000 encounters or less a year, and I'm not too impressed with those up in the 5,000 range. I'd make that the minimum acceptable level. But what I'm really looking for are doctors with 6,000 or more.

If you figure that each office visit is worth about $50, 4,000 will generate a gross revenue of $200,000 a year; 5,000 amounts to $250,000; and 6,000 equals $300,000. Now let's say the profit ratio for your practice is about 40 percent. That means those three levels of productivity will net $80,000, $100,000, and $120,000, respectively. That leaves a difference of $40,000 in profit between the low and the high performers. Now I realize that the practice will take in more revenue from other sources, but I'm just looking at the real meat here.

In most primary care practices, low performers require the same number of exam rooms, support personnel, malpractice insurance, office systems, and other fixed overhead expenses as the high performers. So if you have two of those 4,000-visit docs in a group of four or five, they represent a serious financial drag on the practice because the pot of money they divide each year will be smaller than it should be.