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Super Groups: The Most Important Factors When Considering a Merge

by admin on October 10, 2013 No comments

supergroup doctorsBy: Brian Foster, Guest Contributor

We shouldn’t be surprised that physicians still talk about banding together into “supergroups.”  This has been a hot topic in South Florida for about 20 years.  There are notable examples of large single-specialty groups that have succeeded – but unfortunately, there are many more groups that have crashed and burned, with many docs left considering how to get out. It’s an old joke, but getting doctors together really can feel like herding cats. The politics are tiring, expensive and time consuming.  And there is no guarantee of success.

The best known large groups in southern Florida started out as small practices, then grew and, in some cases, became huge.  These practices share important characteristics.

Number one, all these groups had clear goals right from the beginning. There are two sets of goals to pay attention to: What does the new group aim to accomplish? And, what do the individual physicians who join the new group expect to gain?

The classic reasons for merging are to secure managed care contracts with higher reimbursements, to operate more efficiently (group purchasing etc), and to one day recognize revenues from new ancillary services. But thanks to the Affordable Care Act, clinical integration and participation in Accountable Care Organizations (ACOs) are new reasons to merge. Especially for primary care physicians who until recently have been slow to organize.

Another characteristic these successful groups share is that each has had a strong physician champion almost from day one. It’s not nearly enough to have a clear mission statement. There has to be a doctor who is willing to spend the time to get his or her peers on board, and to make important early decisions about the size of the group, legal counsel and governance, finances, etc.

Finally and perhaps most importantly, besides having clear goals and strong leadership, successful groups have a well-designed revenue cycle management infrastructure. Setting up centralized billing and collections is mission critical and it’s one of the first big decisions. Depending on what choices are made, the costs—one-time, recurring and intangible—can be significant. Remember that all the usual challenges of coding, payment posting, revenue reconciliation, and reporting that you are familiar with from your own practice will increase exponentially with each new doctor that joins the group.

The right infrastructure will ultimately build trust between physicians, leadership and administration.

Infrastructure specifics

The group’s infrastructure must be homogenous (everyone on the same practice management system – but not necessarily the same EMR, although that is ideal). And it needs to be a system that can be rolled out to current and future doctors inexpensively. It should support, not hinder, the group’s growth. And watch your costs – The “unit” cost of providing services from a central business office should go down, not up, as you add physicians to the group.

Most importantly, the infrastructure should provide all the tools necessary to track, measure and manage the physician revenue cycle:

  • Give care centers sophisticated PM tools they need to manage patients and data
  • Get claims out cleanly and quickly
  • Payments posted quickly, completely, accurately; ongoing comparison to contracted rates
  • Collections efforts are aggressive, efficient and measurable
  • Allow for robust reporting at multiple levels (office manager vs doctor vs group CEO will have different needs)
  • Guard against errors, payer oversights, theft at all levels
  • Allow for ongoing feedback and improvement
  • Hold all parties accountable: Payers, staff, patients, vendors, and yes, doctors.

You and your physician partners want to create a culture of openness, error reduction and continuous improvement that has quality patient care as its core value.

RCM Complexities

These aspects of managing the group’s billing and collections process will demand the most attention:

Reconciliation: Insurance companies only separate payments by Tax ID, so the group’s new central business office/practice management system must be able to trace the path of all charges back to their origin. Payments will come back intermingled, meaning the EOB will have a payment for a doctor X at care center Y right above the payment for doctor A at care center B. Reconciling these payments quickly and accurately is critical. Who will do the necessary work to reconcile payments?

The importance of “inheritance”: Every charge should carry all information so that when the payment (or denial) comes back, your system knows exactly which doctor at which care center it belongs to. Many have underestimated this complexity.

Standard reporting: All software has reporting functions. It is critical that all members of a group be on the “same page” – reports must be standardized, regularly generated and reliable.

Two basic infrastructure options

Option 1: In-house software and staff

The in-house model seeks to buy every part of the process (software, staff etc) in an effort to maintain control. But costs are very high and control is elusive:

Purchase: Hardware and network, practice management software

Hire: Billers, collectors, payment posters, billing manager (The MGMA estimates you will need 1.1 FTEs per doctor to get optimum results)

Fees and costs: Benefits and taxes, software maintenance (typically 18% to 28% of purchase price), annual software upgrades, IT, clearinghouse, mailing of patient statements, rent for space to house staff

Liabilities: Staffing, wrongful termination, harassment, etc.

Escalating costs: Wage inflation, new licenses if group grows/adds locations or providers, rent, continuing education for billing staff

Intangible costs: Aggravation, staff turnover, lack of outside support without additional costs

Other factors: Perceived control, manually intensive, poor reporting, no adoption of best practices, no assistance with changing payer rules.

At this level, the group practice has created a new, separate “company” under the guise of a Central Business Office, complete with all the usual costs, complexities and liabilities.

Option 2: Internet- or Cloud-based software, outsourced revenue cycle management

Robust infrastructure, billing and collections expertise and minimal upfront costs let the group focus on growth and patient care.

Internet-based software: Get the infrastructure and technology needed to bill and collect from day one.

Minimal upfront costs: Avoid license or maintenance fees, service contracts,  leases and loans.

Experienced billing and collections service: Work with a company that has specific, documented experience working with physicians in similar circumstances.

Decreased costs: No need for expensive office space for back-office staff; avoid wage and benefit inflation, turnover, human resource liabilities.

Architecture built around “inheritance” ensures all monies are properly distributed

Online access to your data at a practice or group level at all times.

Robust reporting: Uncensored, real time access to practice and business analysis; data views for the enterprise, individual practices, physicians etc.

The “Network Effect”: Join hundreds of physicians in a concentrated area, take advantage of strength in numbers.

Pay for Performance: Only pay fees based on collections – no fixed costs.

Group and individual impact

Group impact: Nothing short of mission-critical. You can do everything else right, but if you can’t get claims out, if you can’t get reimbursements in, if you can’t get the doctors paid appropriately and on time, the venture will fail. Or worse, if you make bad decisions during the formation, the group will never get off the ground and you will waste a lot of time and money.

Impact on individual docs: Huge. If the member physicians don’t have faith in the group’s leadership and their ability to create and manage an efficient billing infrastructure, they will leave, and new doctors will be very hesitant to join.

Our guest contributor, Brian Foster is the Director of Client Solutions at CareCloud, based in Miami.

He can be reached at (786) 879-9200 or BFoster@CareCloud.com

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