Georgia Scroll
July 1997
Physician practice management (PPM) may be depicted as a pinwheel with contrasting bold colors differentiating its sections Each section of the pinwheel is analogous to a major functional category, each being critical to the successful progress of thi5 organizational machine known as "physician practice management Each uniquely colored section vies for attention and could consume the undivided focus of management Administrators and office managers, therefore, must have a highly trained and conscientious staff to whom they can delegate oversight and implementation of these major functional categories the various sections on the PPM pinwheel. Such a complete staff or the equivalent capability through alternative sources such as a PPM consultant and project implementation is a vehicle for providing each section the top-of-mind attention required. To carry the pinwheel analogy further, if a section of the pinwheel is missing or "inactive"' the pinwheel will not turn smoothly and rapidly. It could in fact, jam and cease turning completely. Conversely, when the pinwheel is in balance, all sections working with fluid efficiency, its colors blend harmoniously as it briskly spins from inputs of air currents - synonymous to the inputs of patient referrals and cash flow.
This article demonstrates a pinwheel which is constructed of a medical practice's internal management functions. A flip side of the same pinwheel might also depict the set of external management functions necessary to navigate the practice for growth, to develop strategic alliances, and to manage its multitude of stakeholders. All individual sections of the PPM pinwheel will require keen attention and compliance with current healthcare legislation, tax legislation, anti-trust legislation, labor legislation, fiduciary legislation - "'Wait a minute," you say, "this sounds as complex as running a hospital or a lot of commercial businesses. It's just a simple physician's practice." Not so. The scope and complexity of managing physician practices require study and understanding as a unique subject and not simply as an extension of the hospital, easily incorporated into a hospital's existing management structure.
Now to label the sections of the pinwheel, we identify an array of internal functions in any given medical practice:
- Practice Governance: Management meetings and reporting, planning, implementation, physician communications, after-hours rotation schedules;
- Clinical Services: Patient visits, lab, telephone practice, interactions with referring physicians precertification processes, QA and UR processes;
- Patient registration; Patient reception, account set up, new patient services;
- Scheduling: Physician's office and hospital scheduling, outpatient testing and results gathering prior to next appointment;
- Telephone Reception: Fielding calls, relaying responses, follow-up, documentation;
- Medical records management; Transcription, documentation, filing, copying, authorizations, organization of paper records, automating medical records, archiving of inactive records;
- Accounting Functions; Accounts receivable, insurance claims filing, CPT/1C09-CM coding, billing, bank deposits, end-of-day reconciliations; accounts payable, payroll, refund processing, inventory control, quarterly returns, business insurance, liability insurance;
- Patient services; Disability insurance claims, patient requested letters, forms; referrals;
- Internal Marketing: Patient satisfaction programs, collateral literature, grievance processes, new service departments, satellite offices
- Managed care and network contracting; Enrollment, credentialing, recredentialing,
- Human Resources; Management, planning, and benefit/incentive plans
- Information Technology: Electronic equipment and maintenance, management reporting, system integration with other entities in an MSO environment.
With this basic set of functions, the pinwheel now displays twelve colored sections identifying major internal management functions, all of which require expertise, detailed attention, and much documentation If any one of the above sections are mismanaged, the practice can suffer loss of good will, patients, and revenue; and with an ever-widening ripple effect, the hospital may miss gaining an admission or delivering an ancillary service.
With the advent of prospective payments under managed care and large blocks of patients being directed to competing providers (who may have been more astute in negotiating contracts with third party payers) many physicians have lost large sections of their patient population. The physician who may have been a hospital's highest revenue producer may now be slipping in that regard due to a variety of influences mostly traceable to managed care. The predictability of admissions, utilization of hospital services by physicians, and the volume of patients seen by a physician may have changed drastically over the last year with greater effects to come.
Therefore, the viability of a hospital is directly impacted by the economic success of its physician staff members and its physician employees, Under managed care, physicians are likely to need more external support to carry out the many functions necessary to successfully operate their practices. The principal economic reality impacting a physician's practice is that overhead costs must decrease while quality of services must hold fast in order to meet the quality assurance standards of managed care organizations. Such a situation presents an opportunity for hospitals to provide needed assistance to their staff physicians. As hospital administrators get a visual image of the pinwheel of physician practice management, acknowledging that there is an arena of healthcare regulation unique to the physician side of healthcare delivery (requiring the counsel of those experienced and trained in physician practice management), then the goal of an integrated healthcare delivery system will begin to prove less frustrating and less costly for the hospital partner.