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AS SEEN IN
December 14, 1998Medical Economics
THE BUSINESS MAGAZINE OF THE MEDICAL PROFESSION
Top-performing groups reveal their secrets
Cutting costs -
but not patient satisfaction
MGMA's better-performing groups have turned profits under
capitation by embracing utilization management and prevention care.
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Every group practice wants to be known as the quality group. But since employers and managed-care companies increasingly demand proof of that quality, administrative costs are rising as groups struggle to provide data on preventive-care activities, utilization, and outcomes. And woe to the group that doesn't control costs as it spotlights its wonderful care.
Then there are patients to satisfy. "Medicine is becoming much less payer-driven and much more patient-driven," says practice management consultant Jayne Oliva of The Croes Oliva Group in Burlington, MA. "Groups need to recognize that patient satisfaction is much too important to leave to chance or the goodwill of their staff. It has to be managed, or the group won't succeed."
Meeting these challenges has proven not only possible but profitable for the 16 "better-performing" multispecialty groups singled out last year by the Medical Group Management Association for stellar financial performance. Many have formal quality-monitoring and
-improvement programs that touch
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"Medicine is becoming much less payer-driven and much more patient-driven. Groups need to recognize that patient satisfaction is much too important to leave to chance or the goodwill of their staff. It has to be managed or the group won't succeed."
Jayne Oliva, MBA The Croes Oliva Group
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but financial as well. These groups report saving thousands, even hundreds of thousands, of dollars from their enhancement programs. That translates into big profits for groups with capitated and other at-risk contracts.
"Our utilization program has had a tremendous impact on practice finances," says internist Riley Hill at the 80-doctor Springer Clinic in Tulsa, OK. "Without it, we'd see physician income reduced 5 percent across the board."
Overall, capitation was more profitable for the 16 better-performing groups than for the other 337 multispecialty groups in MGMA's 1997 survey. For the top 16, net capitation revenues were 118 percent of full charges on a fee-for-service equivalency basis, compared with 87 percent for the broader sample.
Reining in costs with
utilization review
A robust utilization review program played a critical role in landing Salem (OR) Clinic on MGMA's better-practices list two years running. Salem launched its UR program after signing its first capitated contract in 1992. Today, 19
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every aspect of operations. And they involve all personnel - from the most senior physician to the newest reception clerk.
The payoff is not only clinical - lower hospital readmission rates, shorter stays, and faster recovery
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percent of the group's revenues are capitated and 42 percent more flow from at-risk contracts. The clinic is the only one in Salem set up for capitation, giving it a major edge in the local managed-care market.
Initially, the utilization review committee looked at all tests, procedures, and referrals that cost more than $75. But as primary-care physicians became more cost-conscious and uniform in their referral patterns, the threshold was raised to $150.
While the UR process was implemented specifically to rein in costs under capitation, it has also prompted primary-care physicians to broaden their clinical skills in an effort to retain cases and revenues that were previously lost to referral.
Moles and minor sprains are now routinely treated by primary physicians at Salem instead of by dermatologists and orthopedic surgeons. Internists at the practice have learned to do cardiac stress tests and echocardiograms. And a specially trained physician assistant is handling routine foot care. Among the results: Referrals to podiatrists are down 80 percent, to chiropractors almost 100 percent, and to urologist for PSA tests a full 100 percent.
The biggest savings have come from targeting high-cost cases, says Salem's administrator, Barbara Gunder, who joined the clinic in 1991 after working with capitated groups in California. Every year, Salem reviews its patient care to see where costs are highest and what can be done to cut them. For example, the clinic has only eight patients with chronic obstructive pulmonary disease in its capitated Medicare program, but they average between three and six hospitalizations annually, to the tune of about $360,000.
So those eight drew Salem's attention. In an effort to keep these patients out of the hospital, the group brought in educators to give them an eight-week course on
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managing symptoms and improving daily living. In the three years since the $1,600-per-patient course was first offered, COPD patients have reported increased functional ability - and their hospitalizations have dropped 40 percent. The clinic receives half of those hospital savings, which total about $144,000, Gunder estimates, so the program nets Salem close to $60,000 annually on its investment of $12, 800 in patient education. "That's a pretty good return," she says.
Salem's proactive approach to treating high-cost diseases has cut the number of cases that have cost $50,000 or more, its stop-loss cap for hospital costs. In 1997, three cases hit the cap, down from seven in 1996. In addition, repeat hospital admissions for the same diagnoses fell 45 percent over the same period, suggesting improved effectiveness of care.
Salem's extensive utilization management has helped make capitation significantly more profitable for the clinic than its current fee-for-service business, Gunder says. Capitation revenues run about 125 percent of fee-for-service equivalent revenue. Of course, once the cost of utilization management itself is factored in, actual profits from capitation are somewhat less - but still higher than the gain from fee-for-service.
Two other better-performing groups have also enjoyed profitable returns from capitation, largely due to utilization management. In Tulsa, Springer intensified its UR efforts in 1997 when hospital use - which had held at 200 days per 1,000 for several years - climbed to 240 days per 1,000. The board appointed Riley Hill to review hospital cases daily and contact physicians whose patients could be discharged. The program brought utilization down to between 180 and 200 days, and could add as much as $800,000 to Springer's bottom line, according to otolaryngologist Jerry Puckett, Springer's board chairman.
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Springer also reduces hospital costs by moving patients to step-down units as soon as possible. About 20 percent of Medicare patients with chronic illnesses are discharged to step-down units now. In addition, the group admits patients requiring IV antibiotics or respiratory care but no other aggressive treatments directly to a skilled nursing facility. "We saved at least $15,000 on respiratory care for one patient alone," Hill notes.
When Alton MultiSpecialists in Alton, IL, compared its internal costs with norms published by the MGMA and other groups, it was clear that too much of its capitation dollar was going to specialists. As a result, the group rewrote its clinical protocols so that primary-care doctors did more patient monitoring before making a referral. That simple change led to a 75 percent reduction in referrals for physical therapy and a 50 percent drop for urology, says Ginger Drone, Alton's administrator. The reduction in urology referrals cut per-member-per-month costs for those patients in half - from about $1 to 50 cents.
When Alton does refer to outside specialists, the group can scrutinize those bills because it processes its own claims. Alton uses a computer program called a claims scrubber to spot unbundled claims and multiple procedures from a single referral. The claims are then reviewed to ensure they're properly discounted.
The process is expensive but worthwhile, Drone says. "An HMO doesn't have the incentive to really look at the claims, but since we're capitated we do. If we miss something, it comes out of our pocket, not the HMO's." She estimates that internal claims processing has cut referral costs by 10 percent - more than covering the nurse reviewer's salary and the administrative expense.
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Earning high marks
for prevention
An emphasis on preventive care is another hallmark of financial success - and quality - in managed care. Many of the groups on MGMA's better-performing list have saved money by improving outcomes and avoiding complications that might require expensive treatment and hospitalizations.
"Your mindset changes when you are financially at risk," notes Springer FP Richard Reinking. "You say to yourself, 'I'm not going to be a crisis interventionist; I'm going to be a preventionist."
To ferret out underlying medical conditions in its Medicare risk population, Springer established a prevention-oriented protocol for new members. It includes a battery of screening tests, such as blood chemistry, CBC, tuberculosis skin test, PSA, urinalysis, and thyroid function.
The screening process has turned up patients who were unaware that they had hypothyroidism, anemia, atrial fibrillation, or tuberculosis. Some had been seen at the clinic on a fee-for-service basis but had not been screened. Patients who are not up to date on their immunizations are regularly found. Mammograms and chest X-rays are done where indicated. The screening also help identify patients with chronic conditions, such as high blood pressure and diabetes, who have not been adequately managed.
The protocol for new Medicare risk patients also calls for assembling the medical record prior to the initial visit. While this sounds like an obvious step, it's frequently overlooked, lowering both physician productivity and quality of care. "These patients are 65 to 90 years old," Reinking points out. "I can spend 30 minutes of an initial visit just getting the relevant medical history. If I have the written record, we can accomplish in one visit what before would have taken two or three."
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Other preventive services at the clinic include diabetes- and asthma-management classes, and a flu immunization reminder program for seniors. Again, these are well-known interventions, but frequently honored in the breach. Citing statistics from The Advisory Board, a for-profit think tank that serves the health-care community, Reinking says, "ninety-one percent of physicians agree that seniors should be given flu shots, but only 24 percent have them available. We want to give flu shots to seniors whenever they come in, whether it's for an appointment, an emergency visit, or an X-ray."
Springer hasn't measured the financial impact of these programs, but research elsewhere has repeatedly proven the clinical and financial benefits. One such study showed that an HMO in Minnesota saved more than $100 per flu shot for seniors, largely because of a 50 percent reduction in influenza-related hospitalizations.
More important, the study also showed a 50 percent reduction in deaths from all causes in the population studied. "If we were to do a study and come up with different financial results, we would still do what we are doing because it is clinically the right thing to do," says Reinking.
Alton enlists its non-physician staff to help keep chronically ill patients stable. Asthma patients, for example, regularly test their lung capacity and peak flow at home and track the results on a chart that divides performance into green, yellow, and red zones. When patients call in, they report their zone color so staff can provide counseling and alert doctors to any problems. "The entire staff, not just the physician, is involved in managing patient care," says internist and geriatrician Kristen Stabell. "That's new."
In addition to developing patient-management protocols, Alton regularly reviews physician
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performance on preventive services such as immunizations and cancer screenings. Gathering such data - particularly on measures recognized by the National Committee for Quality Assurance - is becoming increasingly important as managed care plans push medical groups to demonstrate quality care.
The practice achieves more than 90 percent compliance with immunization and cancer-screening requirements for its managed-care population, says Stabell. That's considerably better than most health plans do: A national NCQA survey showed that plans averaged about 65 percent compliance for childhood immunizations and 71 percent for breast and cervical-cancer screenings in 1997.
Alton's performance on these measures is audited by managed-care firms, which must report the figures to maintain NCQA accreditation. "Health plans are looking for groups that perform well," Drone notes. "It makes them look good to their customers. And it definitely gives us leverage in contract negotiations."
Learning to listen
and talk to patients
When primary-care doctors at Salem first began acting as gatekeepers, they had problems with patients demanding expensive tests or referrals to specialists that weren't medically necessary. Often these requests were spurred by news reports that HMOs were denying care. "Patients who didn't get referrals sometimes suspected that they weren't getting appropriate care," says Ob/Gyn John Alsever, one of two part-time medical directors at Salem.
That tension was significantly reduced after Salem started providing communication training for doctors, nurses, and physician assistants, including sessions on handling difficult patients and improving patient compliance. Doctors were taught to circumvent
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the confrontational gatekeeper role by explaining the disease or injury process and the treatment options."Once patients understand the nature of their problems, they are more likely to accept conservative treatment," Alsever says. "The patient and the physician become partners in stabilizing the bad knee. The patient says, 'Yeah, I'll try the ice and the strengthening exercises, and if they don't work we'll go to the next step.'
Salem also educates patients about its physicians by developing a practice profile for each doctor. The profile includes office hours, when the physician returns telephone calls, and turnaround times for lab tests. "This helps patients know what to expect," Gunder says.
Salem's receptionists, billing clerks, and technicians are also trained in basic people skills. In lunchtime classes conducted by clinic staff, participants learn to make eye contact, wait for patients to answer questions completely, and paraphrase back what they've heard. "I want every patient to be treated as my wife or mother would be treated," Alsever says.
Communicating effectively with patients also involves listening to their complaints. This not only builds patient loyalty, it can result in practice improvements that increase profits.
When patients grumbled that they couldn't reach the Baton Rouge Clinic via phone, the 78-doctor group installed a voice mail system. Now, instead of getting a busy signal, patients can choose from a menu of options, including urgent and emergency calls, requests for calls back and lab results, and billing questions. If the patient chooses the "urgent" option, a light flashes on a nurse's phone, allowing her to break off and take the call immediately. Other calls are returned within one hour.
The result has been a jump in phone volume of about 70 percent, and the virtual elimination of
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complaints about telephone access, says administrator Edgar Silvey. The group added three full-time equivalents to handle the added calls. While that's a significant additional cost, it's been more than offset by additional revenue, savings, and patient goodwill the system has generated.
By allowing patients to get through with urgent complaints, Silvey estimates, the system has reduced unnecessary emergency room visits by 50 percent. "If we can treat them in the clinic, we might avoid a hospital admission. But if they get a busy signal, they just head to the emergency room." Silvey believes the voice mail system has helped bring in new patients who otherwise might not have been able to reach the clinic.
Before purchasing the phone system, Silvey personally called many of the patients who had complained about getting busy signals. Not surprisingly, seniors were less receptive to the idea of voice mail than were younger patients, but they agreed to try it if it meant quicker returned phone calls.
Before the system went live, Baton Rouge Clinic sent letters to all patients explaining how calls would now be handled. "At first we had some people trying to game the system by pushing the urgent-call button," says Silvey. "But that has mostly stopped."
To get routine lab results through voice mail, patients punch in a personal ID number. In some cases, the recording asks patients to call for a follow-up appointment. "This saves time for both doctors and patients," Silvey says.
Salem Clinic takes patient complaints so seriously that, three years ago, the practice hired a staff member specifically to track and resolve patient complaints. According to Barbara Gunder, this approach increases overall staff efficiency by giving staffers a place to refer complaints, and it reduces negative interactions with patients.
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And it appears to have worked: From 1996 to 1997, patient complaints related to physician communication s and referrals dropped 60 percent, Gunder says.
The practice is required to submit reports on how many complaints it receives and how they're resolved - so fewer patient complaints help the practice at contract negotiation time. "The HMOs don't require us to have a separate person to handle patient satisfaction," Gunder says, "but they view it as going the extra mile to improve service."
Formal training in customer service, including delegation of specific duties and responsibilities, is essential to delivering high-quality service, consultant Jayne Oliva says. "It's not enough just to be nice. You also have to have systems in place to manage satisfaction."
By Howard Larkin, a freelance writer in Oak Park, IL, specializing in health-care financing, management, and policy issues.
From its 1997 cost survey of 353 multispecialty groups, the MGMA singled out 16 groups for their stellar financial performance. The criteria the selected groups met: total physician compensation that's equal to or greater than the median compensation for all multispecialty practices, and below-median operating costs per non-surgical procedure. This is the third article in a four-part series. The first installment, "High incomes, low costs: How do they do it?" appeared in the Sept. 7, 1998, issue. The second, "How successful practices plan their success," appeared Oct 5, 1998.
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