Latest / Off the Chart: A Business of Medicine Podcast / S1 Ep106: The realities of running a medical practice, with David N. Gans, MSHA, FACMPE
Transcript
- 0:00 It's not an easy environment to live in, but doctors are doing it. Welcome 0:13 to 0:14 off the chart, a business of medicine podcast featuring lively and informative conversations with healthcare experts, opinion leaders and practicing physicians about the challenges facing doctors and medical practices. My name is Austin Latrell. I'm the assistant editor at medical economics, and I'd like to thank you for joining us today. In today's episode physicians practice editor Keith Reynolds sat down with David Ganz, formerly the senior fellow for the Medical Group Management Association, or MGMA, someone who spent decades helping practices understand what really drives their operations. Keith and David walk through what's really happening inside practices right now, the money pressures, the staffing struggles, the workflow bottlenecks and the decisions that leaders are trying to make around technology and efficiency. David also shares what he's seeing in the data, what practices tend to overlook, and why clarity and good processes make a bigger difference than most people think. David Gant, thank you so much for joining us now. Let's get into the episode. 1:15 How you doing today, Dave? I'm doing very well this morning. Thank you. Glad to hear it. Glad to hear it. So I don't want to take up too too much of your time, so let's dig right in. So you recently retired with more than four decades at MGMA. You know what major operational or financial trends do you think today's medical practice administrators are still under estimating? 1:38 Well, I don't know how much they're underestimating, but I do expect that they're they're living the trend, and they're seeing the changes that are happening in our industry, and they're happening so quickly, and they're affecting some practices more so than others. So let's just think about what what is happening. Obviously, we're seeing costs go up. We're seeing reimbursement payment for services being static, 2:11 you know, and we're seeing that with the result is that organizations, in order to even stay, stay, even have to become more efficient. And you know, so let's look at what. What do I mean by prices going up? Well, first, you have a substantial increase in the cost of medical goods. You're seeing an increase in salaries of your staff. And of course, the dot the practice has to be competitive with other businesses for staff. And as we see minimum wages going up nationwide and the competitive wage going up nationwide, you're seeing price increases in your staff. We've seen that in the data that MGMA collects, and you see it in the data the federal government publishes so prices are going up? Okay? Static, static, reimbursement or payment. Okay? Medicare is the principal payer for physicians, Okay, second yes or or commercial insurance, depending on your specialty. So if Medicare, you know, 3:19 this year we're seeing an, actually an increase in Medicare payment of a small of a small percentage. Last year medical payments, Medicare payments for physician services, went down. Okay, so, all right, commercial insurers, anyone who contracts with United Healthcare, Humana, you know, or other, the other, you know, the the Blue Cross, Blue Shield, anthems that they know that these are large insurance companies who, when they set prices or negotiate prices, there's very little opportunity for the practice to say, well, we need more money. Well, some organizations, if they're large enough, may have some some negotiating cloud, but the typical physician group doesn't All right, so prices are, you know, and, and, and your commercial insurers typically follow Medicare, Medicaid. State payments have traditionally been only a fraction of Medicare, and they're not going up. So okay, if you're, if your commercial insurance, your Medicare and Medicaid are static, you 4:22 now want to squeeze 4:24 and doctors and their and their administrators know that. So this you know, so your prices are static. So what can you do? Well, you especially if you want to increase the payment of your physician owners, and they do, you have to be more efficient. Now, fortunately, you know many, you know most medical groups have figured out that they can. You know you can do more with less to a point, 4:51 and that doing more with less means you've automated services. You're utilizing your electronic health record. You're utilizing your. 5:00 Or electronic prescribing systems to reduce the manual labor required to refill prescriptions and to to maintain the records on your prep, on your patients. You're using scheduling systems that attempt to increase the number of patient flow, the patient flow so you see more patients per hour. So more patients per hour, more procedures, equals staying even in today's environment. I will say this, some of this is specially dependent primary care, which is much more physician labor intensive, because it's a cognitive service you have to you, you know, how many 15 minute office visits can you put in an hour? You're very you're very time dependent. Surgical specialties, perhaps a little less so because surgery, because of the skill and requirements and the training 5:58 recognition, you know, there's, there's a higher payment per hour, all right, and perhaps a little less, a little different consumption of resources. But you know, so surgical system, surgical specialties may not see the same pressures as primary care, but every doctor in every practice and every specialty is living in a new environment of how to become more efficient, how to optimize your payment that you do receive, in other words, making sure you're paid. You're coding correctly, and you're being paid for the services you perform. 6:34 It's not an easy environment to live in, but doctors are doing it. Let's hope they can continue to do it, or that things ease up a little bit. All right, so for years you oversaw mgma's research and surveys. You know what data points do you think practice leaders should be paying the closest attention to in 2026 6:55 All right, well, I outlined some of it looking at what are the economic environment pressures that practices are seen. So let's, let's just think in that broad scope, what is your top line and what is your bottom line? Okay, so top line, what is your total revenue? 7:14 Yeah. I mean, that's an easy one to I mean, and this is cash in the door. Okay. Well, you may also want to look at what produces that cash, you know, the number of of encounters, the type of encounter. You may want to utilize the the the 7:33 total or work RVU value for those encounters, which gives you a stat, a a consistent measure that you can look over time and and seeing, are we being more productive? Less productive? Are we working harder? So that's so those are key variables, but that's top that's the top end. Next thing would be, let's look at total expenses, and let's break out those expenses in in key areas. In other words, what, what are you paying for staff, right? And do you have much latitude on that staffing? What is your staffing levels? Is another you know? How? How does your staffing level and what your doctor, what your staff are doing? How does that compare with other practices that are like you? And then, of course, total revenue minus total costs, says, What's your net profit, what's your net and this is, you know, and is, how does that change over time? Is your net going up? Is your net going down? And if it is going down, what are your what is your long term trend? Fairly simple business, you know, metrics is top line, total cost and bottom line. So how can small and mid sized practices improve their quality and safety standards without adding major administrative burden? Well, 8:52 years ago, I had the opportunity to work co author a text on staffing and would as we went into the the our staffing concepts, we started looking at, what are the right people? 9:08 Okay, the right, you know, the right, the right staff positions to the job they have to do. Okay? The right people doing the right things. Are they doing their job? How well are they doing it? 9:21 How productive are they? How efficient are they, you know? And of course, that's with the right incentive. In other words, we paying them the right thing, all right, you know, and the right outcomes. So now you're talking about safety and quality. It starts with the physicians and staff doing the right things, very obvious, also in the right environment. Do you have 9:46 the 9:47 the technologies that are needed in your organization, both to to focus on the care of the patient, okay, and to make sure that the you're providing a safe. 10:00 Safe environment for your patient care. Are you, you know, 10:04 you know, I'm going to think perhaps one of the few positive outcomes of the covid pandemic was a recognition on, 10:16 you know, how to maintain a clean environment in the in the practice. So we're seeing some changes in design of your of your of your examination room, for example, to minimize counter space and covered space which may harbor, you know, viruses or are 10:40 or or other you know, essentially, you know higher you know, have a have an environment that is not conducive to clean patient service. So I have had the opportunity to be on the board of the Accreditation Association for Ambulatory healthcare, triple A HC, which is Medicare, deemed accrediting entity for ambulatory surgery centers, ambulatory care and ambulatory care centers. In other words, ambulatory care meaning federally qualified health centers. 11:09 You know, freestanding ambulatory care centers, tribal health for example, where a facility fee can be charged. You know, hence, you know, getting Medicare Credit accreditation by a Medicare deemed a crediting entity. And we look at the standards we've created. We've created standards for good 11:29 patient services that enable a a practice to provide, to understand what is, what is should be their standard of care that they're providing, what is the right environment. You know that for their 11:44 you know for their patients, and to make sure they're documenting their services in a way to confirm that they're doing, they're doing the the best care for the service for their patients, and so they can look back over time to see if they're seeing some trends they need to be aware of. 12:03 Alright, you you mentioned triple HC, you know, what sort of accreditation issues or compliance gaps are you seeing most frequently in, you know, in practices? Well, I'm going to say fortunately, you know, triple HC, that they actually publish a publication 12:23 each year, and it's they're called the quality roadmap, where our Institute for quality improvement 12:31 that they go, they look at 12:35 the 1000s of accreditation site visits that occur each Year, and they look and see where are the deficiencies, 12:44 and you can then, then they publish 12:48 a, you know, a publication that looks at where are, where are the deficiencies. Alrighty. So you've written extensively about workforce and productivity metrics. What's one metric administrators often misinterpret, and how should they use it instead of the way they are? Now, I find it very interesting because 13:10 they're I'll think two 13:13 in two way, two ways. One, two areas. I should say one is what is a full time equivalent? Because, remember, we look at, what is it? How many? How many FTEs Do you have? Well, part of the issue with FTE now is that many organizations are trying to match the time service that they that they need in a skill in an area. So in other words, is everybody working the same work, work week, 13:44 you know? Is there any there are some concepts of job sharing, for example, of working of, you know. Or do you have a can you match the staff level to the work level? 14:02 I Hey there. Keith Reynolds here and welcome to the p2 management minute in just 60 seconds, we deliver proven, real world tactics you can plug into your practice today, whether that means speeding up, check in, lifting staff morale or nudging patient satisfaction north. No theory, no fluff, just the kind of guidance that fits between appointments and moves the needle before lunch. But the best ideas don't all come from our newsroom. They come from you got a clever workflow, hack an employee engagement win, or a lesson learned the hard way. I want to feature it. Shoot me an email at kreynos, at mjh, lifesciences.com, with your topic, quick outline or even a smartphone clip. We'll handle the rest and get your insights in front of your peers nationwide. Let's make every minute count together. Thanks for watching, and I'll see you in the next p2 management, minute, 14:54 telehealth, AI, automation. All these are really transforming the way that practices operate. 15:00 Kate, what advice would you give to administrators trying to evaluate which technologies are worth the investment? Well, 15:09 this is not a new problem, 15:12 alright, and in fact, very interesting. The Medical Group Management Association is going to have its 100th 15:20 anniversary of an organization next year, because it actually goes back to 1926 15:28 when 15:30 I think there was 32 practice administrators in this new concept called being a medical group, doctors practicing together. 15:38 They got together in Madison, Wisconsin, and they talked about current what are their problems? You know, what are the role of the administrator? And among the things they talked about was technology. How do you best use the technologies at hand to become more efficient and provide better service to your patients? And, of course, what were their technologies? They were talking about the telephone. 16:05 Okay, how do you how do you best utilize a telephone to communicate to your patients? And could you talk on the phone and your your doctors provide care? Because remember, this is before insurance, before coding concepts. When you know doctors, many doctors still did house calls, you know. So could you, you know? How do you, how do you integrate the telephone into your practice as a new technology? 16:31 Okay, there were some practices talking about the concept of an electronic medical record, what we call today an EMR. They were talking about on a about a computer record, and these were punch cards, because the census, for years had been using cards to to tabulate the census. So practices for 100 years have been looking at what new technologies can they address when I first came to work at the Medical Group Management Association now, 45 years ago, organizations were looking at the concept of electronic health records. They were looking at automated billing systems. Since many practices in the you know, we're in small practices, especially we're still doing manually billing processes. Now, of course, we have newer technologies today than we 17:22 anyone had ever visualized. You mentioned use of artificial intelligence. How do you how do you assess the use of artificial intelligence to to make a practice more more efficient, or to provide a better service to the to the patient? You know, we're, we're seeing many clinical services that are using augmented intelligence. In other words, the doctor, you know, the the you have a an AI in environment, use of an artificial intelligence to assess the patient's 18:00 you know, past medical record and current presenting problem and current 18:08 you know, laboratory tests and and observations to work, to to give suggestions for potential diagnosis for The doctor to assess. You're also seeing use of AI to evaluate what happened during the procedure and provide a coding recommendation. Technology is the use of technology is not new. Certain technologies are new, such as AI. So where we're trying to find is that from a practice perspective, from that practice executive or practice leader and Doctor, what services? What can they do to make their their services better for the patient and a lower cost? So yeah, and that's the evaluation of the technology. Technology has a cost, so you look at how how often will it be used? Is it being used with every patient, or is it being used on only rare occasions? You know, does it enhance patient services? Does it provide a opportunity for the practice to to move into a new niche market of providing services that other practices don't provide, and therefore get better patient flow and perhaps better reimbursement for services that other that are other practices are not performing. So again, it is a complex process, but one that has been going on for 100 years, from your military and healthcare leadership experience. What leadership traits do you? Do you think matter most for guiding a practice through uncertainty and constant regulatory change, much like we're seeing right now. 19:49 Well, the, 19:51 I think the maybe the most important is, you know, are you take are you as a health as a leader? Are you looking out for. 20:00 Your staff. 20:02 In other words, you know because, because you're, you know that your staff are the and your physicians in the practice. You know, are they? Do they have a good work environment? You know are do they look forward to coming to work? You know. You know. Do you have, 20:20 you know, the the right incentives for your for your staff, and you know that, so they being efficient, and are they providing the best possible service? So that's that, that I, that I'm going to say is number one, that they have, that you're that you're taking care of your staff and your and your and you're making sure that your staff, you know, it's a good work environment, and, you know, and that work, and that workplaces is where they want to spend their time, okay, that, because that, that mean that that actually increases, can increase your efficiency by, You know, 15 to 20% easily, just just by having, you know, a a good working environment and practice and and staff that work well together and coordinate their services so you keep writing the data mind column for MGMA, what recent data insights have surprised You, and what's your practice administrators take away from that data? Well, the most recent column that I wrote was in published October this year, in other words, just last month. And the title was as private practice reached peak profits. 21:41 And this has a 15 year timeline. 21:46 So looking back over time, and in this case for profit, we're referring to a metric called revenue after operating expense, now per FTE physician. So again, it is we standardized the the 22:03 revenue by the number of doctors in the practice. And that a revenue expense, and expenses, I should say, So cost is cost per doctor, revenue per doctor. So you can compare a small practice and a large practice because they have the same they've standardized the data so it's compatible. We're looking at multi specialty groups with primary specialty care, which does have a there a somewhat similar type of practice, okay? And these are practice, these are physician owned practices, because health systems have, 22:39 they have the same metric, and I compare that as well, but the metric for but they have a little bit different environment. I'll talk about that. So for the private practice revenue after operating cost, is the amount available to pay your providers, your non physician, your your advanced practice providers, your nurse practitioners and PAs and your doctors, 23:04 okay? And so this, so it becomes a metric that you can look and says, This is the profit from the organization All right. Now, regardless of the type of compensation methodology you have for your doctors, this is the pool of dollars that are available. So is it going up or is it going down? And we and practices, even though 23:27 they have constraints on payment and increase costs due to efficiency gains and productivity gains, they've been seeing an increase in practice, in revenue after operating cost every year, until recently, and also, what? Because this is a 15 year 23:51 view, we you say, well, we need to standardize the data, or the financial data as well, so utilize the consumer price index to normalize the financial data. So in other words, $1 of revenue 15 years ago. 24:10 How does that compare to $1 revenue today? Well, because of inflation, you know, and cost increases you've seen, you know, but when you hold it constant by the CPI says, so now we have comparable data. So looking at this standardized 24:27 data, we can go back and say, All right, practices, through efficiency and productivity gains, have seen this bottom line go up, which means doctors, until very recently, have been being paid more than they were in the past through hard work, the old fashioned way, hard work and good efficiency and good staffing, doing the right things. However, three years, two years ago, this, this plateaued, and it's not, and the last year's data showed it actually went down. And I think this. 25:00 Is the effect of the constraining, constrained payment by Medicare, especially, and issues that are still residual from the covid pandemic, with supply chain problems and shifts in patient services, you know? So we're, so So this is a real concern, obviously, if you're a private practice, all right, Dave, it's been fantastic chatting. My pleasure. If you want to do this again, we can do it absolutely it's, I'm going to be, I'm going to call you up in January after your next column comes out, and have you explain it to us, because that's, it's fantastic. Oh yeah, I've already pulled the data. We're gonna It's okay. It'll be an interesting topic. All right, and it sort of follows on for what, what on that peak profits? All right, yeah, interesting. Take a look at the peak profits. I mean, charts and graphs. All right, Dave, it's an absolute pleasure. So, yeah, thank you. I'll definitely get you up again. We'll talk again, once again. That was a 26:16 conversation between physicians practice editor Keith Reynolds and David Gant, retired senior fellow at MGMA. My name is Austin Latrell, and on behalf of the whole medical economics and physicians practice teams, I'd like to thank you for listening to the show and ask that you please subscribe so you don't miss the next episode. Be sure to check back on Monday and Thursday mornings for the latest conversations with experts, sharing strategies, stories and solutions for your practice. You can find us by searching off the chart, wherever you get your podcasts. Also, if you like the best stories that medical economics and physicians practice published delivered straight to your email six days of the week, subscribe to our newsletters at medical economics.com and physicianspractice.com off the chart a business and medicine podcast is executive produced by Chris mazzolini and Keith Reynolds and produced by Austin Latrell. Medical economics and physicians practice are both members of the MGH Life Sciences family. Thank you. 27:20 You.