Private practice: Insights into the challenges and strategies of practice management

Still photo from video interview with Helen Mannhalter

Private practice: Insights into the challenges and strategies of practice management

As the number of physicians in private practice across the United States declines, according to surveys conducted by the American Medical Association, Helen Mannhalter shares some insights as to what may be playing a role in these statistics. She also walks us through some of the specific strategies physicians and their practice administrators can use to balance face these challenges head on and what tools and resources may be available for those navigating the business side of operating a private practice.

The following interview has been edited lightly for clairity.

Helen Mannhalter: I am Helen Mannhalter. I'm the Senior Product Manager of our analytics center here at Cardinal Health. I've spent a lot of my time with physician practice, doing revenue cycle assessments and working in physicians' offices doing revenue cycles. So, I bring a lot of that to the reporting and work that we do with our physician practices on a day-to-day basis in all our therapeutic areas.

Sydney M. Crago: The physician practice benchmark surveys conducted by the AMA have noted significant decline in fully owned private practices. What factors might be playing into this decline?

HM: A lot of that is due to a couple of things: shrinking margins in just the business of health care, as well as being able to take care of their business with the appropriate resources. There was a dramatic decline in folks working in the office, obviously, post-COVID. I think a lot of physician offices are having a hard time finding resources to help work in their physician office to do the business side of things, as well as finding people who are knowledgeable about it. Because it's one thing to hire folks to physically sit and do patient introductions, registrations, etc, but you do need a certain amount of skill to understand the billing requirements of certain types of services that are rendered to visit to patients, as well as the rules and regulations of different payers. You start factoring those things in, and sometimes, I think for physicians, it can be just easier to say, "take me out of the business side of it. Get let me be absorbed by a larger entity who's going to manage that piece of it for me, and let me just take care of the patients." I think that's why we're starting to see more and more of that particular sort of decline in physicians wanting to be their own sort of entity.

SMC: For those operating private practices now, what are some of the challenges they're facing, in addition to this maybe staffing challenge of experts in the space?

HM: Short of the staffing, it's also the payment model for their practices. Their source of income is really relying on a third party, right: the payers, to pay the claims for the services they're rendering. On top of that, you also then have the patient portion. So as more patients, get these higher deductible plans, a lot more of the burden of that payment is then on the patient. So now the physician has to to expect payments. So they're paying out invoices to buy drug, to run the building, to hire, and pay their staff, but then they have to wait for a third party to reimburse them, if you will, for the services they've rendered. More importantly, then they're also waiting for a large portion of that to come from the patient as well. So those things really factor in. And then, of course, the declining drug margins on a lot of the services that physicians render that becomes tighter and tighter. When you don't have that expertise to be able to challenge claims and get things reimbursed and get paid quickly, then you almost just have this aged AR sitting there where physicians have an expected amount of money to come in, but maybe they don't [receive it].

SMC: What benefits do you see in combining financial and operational data of private practice?

HM: I love this question, because it really has become more and more apparent why those things need to come together. You need to be able to not only take care of the patient and know the drugs that you're buying; from an operational perspective, you're treating the patient; you're doing that, but then from the financial perspective is, "how do we make sure that you build out that claim, that you actually sent that to the payer to get reimbursed, and that you're following up with that?" So, this process of rendering service, but then also making sure that you're billing for it becomes really important as well. Or if you have inventory of drug, and if we're counting the right inventory of that, how are you making sure that you're buying drugs at the lowest available price by NDC, for example. So, it's not just about that service that's rendered, but operationally, it's understanding the financial impact of certain decisions that you're making. Maybe there's rules about payers that x patients can't have a particular biosimilar; that always gets denied. So trying to understand the financial impact of picking certain regimens, treatments, biosimilars, for a specific patient population, that becomes very important. So now you're kind of merging who are my patients? What payers do they have? What do these payers support? How can I financially know the best impact if I pick certain treatment for a patient, etc? That really is an area that, from a Cardinal perspective, we really are trying to help physician offices combine those 2 things together, because you can't really look at them from a siloed perspective.

SMC: What methods might those physicians in private practice use to inform how they're making these decisions?

HM: In order to run the practice, they have physician practice management systems that are responsible to help them track their bills, their payments, patient responsibility balances, and statements, etc., but the the cumbersome sort of process to get to that data is where, where things fall short. Or [physicians] have a practice administrator who's spending hours and hours and hours a week creating Excel spreadsheets to be able to identify certain information. So, it's really access to key information as quickly as possible. Being able to kind of very quickly look at something and know the result of last week's performance right now versus, "let me run a report, and the let's put it in Excel, pivot it, and do all the other good things to find it." That data needs to be available so that they can see the impact of something right away to be able to pivot, to make a change. If there are some denials that came in that are all being denied because of patient eligibility, then now we have front desk issue. Somebody at the front desk may not be collecting the appropriate insurance information; we need to sort of button that up. Or all of a sudden, we're getting denials for pre-authorizations from this one payer for this type of service. From now on, before we schedule the patient, we're going to get the pre-authorizations. So being able to easily get to that data as quickly as possible helps them pivot in their business so that they can make changes and stay ahead of any potential issues that may come up. So my big thing with that is, really, how easily can you get an answer to a question or to a problem? And that will be the important thing: having access to that information.

SMC: What strategies or tools might physicians use to set their practices up for long term success?

HM: It's difficult, because sometimes it's not the physicians, per se, that may be looking at a lot of the detail. They want the information relayed to them at a high level or overall level. They may not belooking down at the minutia of information. But practices have access to tools and reports, etc, from their distribution partners. Some folks that are already trying to support them, in any way, either drug sales or GPOs or whatever. Being able to leverage any tools that are available from those practices, because our whole goal, from a Cardinal perspective, is, "how do we support the physician office? What can we do to make that easier for you? Do we have tools that you could use?" I'm sure there's other distributors that have tools that you can use. So you need to leverage the information that people are already gathering for you, or that people could have available for you. And I think also a lot of physicians participate in industry type meetings or ad boards, or anything that where they're getting shared experience, if you will, from other physicians and from other practice administrators. To be able to share that information, that's key. As well as where they can have this dialog among their peers, to be able to say, "how is this being how are you being treated this way by this payer?" Maybe they're in the same state, and everybody knows this payer in Wisconsin is driving everybody crazy, for example. So being able to share those experiences really allows, I think, sort of this collective mind, to be able to all move towards being successful in their practice, if they can leverage how one person has solved the problem versus the other.

SMC: And then as we look to the future and we talk about those tools and developing strategies, is there anything that physicians should keep their eye on, both in terms of patient care and practice management?

HM: Well, I know for us, what we're trying to make sure, is: how do we leverage something like AI? And of course, we see it all just as a day-to-day user on Google. You Google something, and now AI is trying to help you answer that question. So based on the reporting and the information that we have, how do we make it easier for a physician, a practice administrator, to just be able to ask the question versus necessarily reading through a report? Can they ask a question about something and get an answer? Have my X patients with this diagnosis increased in the past 6 months? Get an answer to that question, so they can make some decisions there, or if they can easily see if their drug margins are falling. Or, more importantly, another area is trying to let us provide insights. Different folks that are doing different things in practice management, is there a way that we, instead of somebody waiting to be told, that we're just kind of floating that inside up. For example, based on what we're seeing, here's a change that has happened to kind of alert somebody in the practice that this is happening. So really, I think the 2 themes there are easier to get information right, make it easier so it's not so cumbersome, so somebody who might not have a lot of experience in financial spreadsheets, accounting, and etc., can still ask a question in a way that they understand the impact. I think that becomes really important, as well as being able to not only give them easy to read information, but quickly to get that information.

SMC: Is there anything else that you feel is important to share with our audience, those who are maybe considering private practice, or even residents looking into what they want to do in the future?

HM: That question always makes me think about physicians, as far as,the whole purpose of the physician when they get into medicine is to take care of that patient. So, I think an area that becomes almost a gray area for physicians, is, "how do I take care of patients, stay in business, but also understand that some patients just can't afford to have the care?" Or am I making a decision based on this patient's financial sort of liability, for example, with these high deductible plans. So, do physicians have a way that they can still take care of a patient but also stay viable from a financial perspective? And I think I would say to residents and new folks coming in that you're going to have to balance that, for sure, but also know that you have additional resources to support that.We have patient assistance programs. We have copay cards, for example, that can help patients. But I think that that is an area that also is challenging for physicians now in private practice, as well as, you're not only relying on a third-party payer to help you pay those things for your practice, but you're also relying on that patient. Then it becomes very hard to make determination on caring for the patient, which should always be the first thing. Your care of the patient is the first thing. Unfortunately, the financial aspect of that really does float to the top for a lot of folks sometimes. I think I would encourage any physicians that are looking at that to really consider those other resources potentially that they have as well.