It’s tough out there for physician practices in the wake of the COVID-19 pandemic, and now in the face of increasing inflation and lower reimbursement. In our 2023 Medical Economics® Physician Report, we asked physicians to tell us whether their practices were faring better or worse financially in the past year.
Physicians are definitely feeling challenged. While 19% said their practices improved financially in 2022 versus 2021, 33% said things were worse while 48% said things were about the same. Common reasons for doing worse included higher overhead costs, more time spent on uncompensated tasks, lower reimbursement, lost revenue and increased expenses due to COVID-19 and greater technology costs.
We spoke with experts about some simple solutions to these common pain points.
Higher overhead costs
Many physicians have been feeling the pinch of higher overhead since the COVID-19 pandemic, thanks to a combination of lost revenue, increased inflation, supply chain shortages and record staffing shortages. How can physicians improve their finances in the face of these costs?
One silver lining of the pandemic is increased use of telehealth and contactless intake, which proved to increase efficiency, allowing physician practices to work with less staff and in-office time, says Hadi Chaudhry, CEO of CareCloud, a health care technology company. He suggests that physicians take advantage of emerging technology solutions that integrate multiple solutions.
“There are vendors providing patient engagement technology solutions as part of their overall EHR [electronic health record] and practice management systems,” he says. “All of these things together — an effective EHR and practice management system; telehealth technology and patient engagement solutions that can help collect patient symptoms, assessments and eliminate long waiting queues; and a good payment processing system integrated — can help eliminate a lot of office costs.”
Some physicians may want to look into forming accountable care organizations (ACOs) or joining existing ones, suggests Samantha Sizemore, COO of Holston Medical Group, an independent medical group. ACOs allow physicians to leverage the size of the group to build partnerships that can reduce costs. For example, Holston Medical Group works with an outside organization to embed care coordinators in their offices and speak on behalf of their physicians.
They’ve also been able to bring in laboratory staff and pharmaciststo provide services within their clinics, meeting patient care needs and reducing overhead. “By aggregating and working together we’ve been able to stratify, lower costs and streamline all workflow processes,” Sizemore says
For physicians who are experiencing higher costs associated with moving to direct primary care practices, Erkeda DeRouen, MD, a physician health technology consultant, has seen her physician clients reduce overhead by sharing space and other resources.
“Some physician co-working spaces have been popping up where groups rent together,” DeRouen says. “They get a building and share front desk staff and some of the technology to decrease some of the overhead.”
Physicians who have hybrid practices, seeing patients through telehealth and in brick-and-mortar locations, can also benefit from creating incentives to bring in more patients in person, both to optimize patient care and drive up revenue.
“Some practices are now offering wellness programs or initiatives that can support patient health in a unique way, such as an obesity medicine clinic or stress reduction,” DeRouen says.
What makes a difference, she says, is continuing to look for new ways to grow and innovate. “I feel like a lot of physicians get stuck in a box, and we should open ourselves up to more, be it partnerships, programs or technology.”
Physicians are busier than ever, attending to patient care and with many of the administrative tasks required of their jobs. And many of those tasks are not compensated, according to Krishna Kurapati, founder and CEO of QliqSoft Inc., a health care technology company.
“For example, if you go into a physician’s office, you probably have four medical assistants and a nurse primarily processing paperwork and other tasks,” Kurapati says. “So that is actually contributing to higher staff costs, particularly when you have dwindling reimbursements.”
Additionally, a lot of spend on uncompensated tasks results from inefficient workflows done by paper, fax, printer and phone that are not really automated or streamlined, Kurapati says.
He recommends that physicians use consumer-side technologies that are already available. One example is automating the intake process.
“So if the patient has an appointment, they get a link and can fill all the forms right there on the smart phone. You don’t have to come into the office and use paper and pen. The form then goes directly into the EHR, which cuts the time for the front office, but also insurance compliance.”
QliqSoft initiated a survey of customers who used their technology to automate uncompensated tasks and found they gained a roughly 18% benefit and freed up as much as 15 to 20 minutes per doctor per hour per shift.
Similarly, DeRouen suggests taking advantage of artificial intelligence-based tools. “You can create better workflows in terms of your patient intake, such as getting their information beforehand, doing the appointment scheduling and even things physicians hate, such as getting prior authorization.” Utilizing technology can reduce some of the need for staff to do these repetitive tasks. “It can help optimize people to work at the top of their licenses or job title,” she says.
Chaudhry agrees, citing the effectiveness of robotic process automation, otherwise known as bots, for many mundane tasks. Bots are especially helpful in processing denied claims: If a claim denial comes in, a bot can comb through the patient’s medical record, pull the medical documentation and fax or email it to the insurer. Bots can also check the medical eligibility of patients who are scheduled for the day and much more.
“The cost of adapting to this technology is far less compared to an actual employee that you will be utilizing. That employee can then be used for other tasks. You may not need to have two front desk people; you might need just one.”
The transition to value-based care, in which physician compensation is tied to patient health outcomes, has resulted in lower reimbursement for physicians. Additionally, though telehealth visits were temporarily reimbursed more robustly during the pandemic, many insurers have returned to lower reimbursement rates for these visits, despite patients still using them in higher numbers than before the pandemic.
“The goal of value-based care is a great one, but the revenue’s in the back end, so you have to succeed for quite a while, sometimes a year or two, in order to reap the benefits,” explains Chad Anguilm, vice president of growth at Medical Advantage, part of The Doctors Company Group.
Moreover, he finds that physicians often encounter problems in how they track the metrics of their value-based care model in order to get paid later on.
“How are you tracking your metrics? Is it on paper? In your EHR?” Anguilm asks. “A lot of physicians aren’t using the right codes, or not capturing risk at the rate they need to be, thus setting themselves up for lesser payments down the road.”
Anguilm’s recommendation is to “bring on someone, whether an employee or a consultant, that understands how all the programs and technology tick. I believe you can do that much more effectively and ensure that there’s money when it’s supposed to be down the road. Bringing in expertise is huge.”
He suggests it’s equally important for physicians and their staff to be up on their risk coding, even if that means taking classes or getting course certifications in order to do it properly. “Work with your staff to make sure they’re all working at the top of licensure and not just putting all the burden on the physician to do everything.”
Another solution has to do with revenue cycle management, Chaudhry says, so that you’re not leaving money behind. “If you have a more technologically advanced revenue cycle management system, your denial rate will improve, your collection rate will improve and the practice will end up writing off a lesser amount compared to what they’re doing today,” he explains.
Lost revenue due to COVID-19
Physician finances suffered greatly the pandemic, particularly in the first year. Spending for physician services dropped a significant 40% between January and March 2020 alone, according to the American Medical Association. While revenues did rebound, it took a while for them to recover to pre-COVID levels. These immediate losses due to a reduction in patients or the physician’s inability to work were followed by staffing losses during 2021 and 2022. Health care workers were among the second highest cohort out of 6.4 million workers who quit their jobs in November 2021, according to the American Hospital Association.
“I think COVID-19 gave many physicians a little more time to reflect on what they’re getting out of their careers, especially with lower reimbursement, lack of autonomy and other issues,” says DeRouen. It may still be hard to assess the impact of the income losses and increased expenses associated with the COVID-19 pandemic, so DeRouen suggests a great place to start is to take stock.
“First, do an internal audit to figure out what your biggest loss was, where your inefficiencies were, and develop a plan to implement,” she says. Whether you do this in house or hire an outside organization to help with the audit, she says it’s an essential way to get a snapshot of your finances.
From there, she says, practices can look at ways of diversifying their offerings, whether it’s increasing telehealth offerings, adding specialty services or offering specialized programs.
Another very simple strategy, according to Sizemore, is to increase outreach to patients who likely had to put off annual wellness visits, screenings and other basic services that they might not have rescheduled.
“We’re doing more outreach to patients saying, ‘You’ve not had your annual wellness visit; let me go ahead and schedule it for you’ or ‘You’ve been identified as needing a breast cancer screening.’ In a short amount of time, we’ve already surpassed our volume of where we were pre-COVID-19.”
Greater technology costs
Technology is becoming a more pervasive part of health care, and is definitely here to stay. That can lead physicians to feel pressured to add more technology in their practices. “We’ve never had more technological capability than we do right now,” says Matt Hawkins, CEO of Waystar, a health care technology company that offers revenue cycle management solutions. Rather than feeling overwhelmed and overspent due to technology, Hawkins recommends using cloud software, which is lower cost in the long run. “We can take data, digitize it, store it at lower cost than ever before, analyze it and put it to use in smart, careful, secure ways to reduce overhead spend,” Hawkins says.
One of the problems with the way health care information currently works is what he calls a “heterogeneous technology deployment” in which EHRs and practice management systems are not connected to one another, keeping patient data siloed.
Cloud based software connects and integrates, solving the heterogeneity problem, Hawkins says. “Cloud-based platforms can deploy in days and weeks, not months and years, and we can update that software in minutes, not months. We’re not sending floppy disks out to people.”
Another solution, Chaudhry recommends, is to find a vendor who does it all with one full, end-to-end solution. “If any practice today is trying to have one vendor for EHR, another vendor for practice management and some other vendor for patient engagement solutions, costs will increase significantly.”
Vendors that offer many of these services in one, ideally in cloud-based software, will reduce technology and overhead costs, he says.
Kurapati adds that cloud-based technology is actually easier for smaller practices to adopt because they don’t have to pay anything upfront. “They pay monthly then see the value rather than a huge upfront investment without understanding the value of it.”
Regardless of how physicians feel about it, more technology will continue to be integrated into health care. It may just be a matter of when they adopt it, not if. “Everything worth having costs something, but as more people utilize it and jump on board, the cost goes down,” DeRouen says.
While many of these challenges are likely to persist for physicians, solutions abound if physicians are willing to look for them.