Business office expenditures for providers are on the rise
As the MGMA recently reported in its Cost Survey: 2014 Report Based on 2013, total business operations spending increased 4.6% (BO operations staff per full-time-equivalent (FTE) physician) since last year. Multi-specialty practices reported $52,009 per FTE physician “in media costs associated with total business operations staff.”
There are several contributing factors. First, as we’ve discussed in previous blogs, competition in healthcare has increased significantly and, with patients responsible for larger portions of their own healthcare costs, providers are doing everything they can to attract and retain patients. One of those things is to enhance operations through increased spending on business office staff.
As Denine Ledyard, Chief Effectiveness Coach at Show and Tell Health recently told MediRevv, her physician practice employer had added higher paid employees to their staff versus bringing on a higher number of employees, because competition was increasing. “Our patients liked to see doctors with EHRs, coffee in the waiting room, full referral management programs, one trip to the pharmacy and shorter wait times,” she said. “We had relatively young doctors who were not part of an IPA or ACO, so getting referrals was difficult. We had to up our game and differentiate ourselves by providing higher value.”
MGMA Senior Industry Analyst Laura Palmer, FACMPE, agrees. In a recent MGMA article, Ms. Palmer was quoted as saying: “Medical practice executives are an integral part of the healthcare framework and are playing an increasingly important role in serving patients, as there is an entire business and structure behind effective care-delivery models. Employing staff with expertise in medical practice management can position the practice for long-term success.”
In addition to increased competition, healthcare legislation is playing a significant role in driving up business office costs, as Amanda Hopkins Tirrell, COO at Georgia Regents Medical Associates, recently told MediRevv.
ICD-10 is one example, she says, “forcing hospitals and physician practices to hire certified coders with a higher level of education, and this level of expertise is more expensive. Additionally, the provider relationships with health insurance companies have become more complex and rigorous, and it often takes a cadre of new, specially trained experts to manage those payor relationships.”
In a general sense, as MediRevv’s Dee Rountree, sales director for their Southeast region states, “Managing the continuum of care, which is, in turn, directly related to reimbursement models under ACO’s and other quality and outcome-driven models, requires not only clinical staff but more sophisticated technology. That calls for additional, more highly skilled IT staff and general administrative, financial and business intelligence support staff.”
Incurring these increased business office expenses are less of a strain on the bottom line for some providers than they are for others. Many larger providers can staff up appropriately without feeling much of a pinch, but for small-to-mid-sized hospitals and physician groups, these costs can have a significant negative financial impact. So the question becomes: Staff up internally or bring in an experienced outside firm as an extended business office (EBO)?
In our next blog of this two-part series, we’ll examine the pros and cons of each approach. See you then.