Health care has always been considered a recession-proof industry — but this time around, that isn’t the case. Hospitals and doctor practices are trying to find ways to cut costs and streamline operations.
Saving money through internal controls, billing and cutting costs are some ways doctors can ensure their practices thrive despite the stagnant economy and lower patient demand.
Studies show that the health care system is fraught with waste — with as much as half of the $2.3 trillion spent for health care being squandered.
Some experts say the way to save costs is to change the way doctors do business — but financial analysts say the best way to save money is for individual doctors to streamline their business practices.
While doctors are not always the best accountants, looking at the way their practice operates as a business can help them save money.
“You know, there’s a saying: a dollar earned doesn’t all go to the bottom line,” said Steve Hochstetter of Stockman, Kast Ryan and Co. accounting services. “But a dollar saved, that’s a whole dollar you now have. It’s the whole, ‘a penny saved is a penny earned.’”
And saving those pennies means looking at business a different way, he said. During tough times, every patient’s bill and every insurance interaction should be scrutinized.
“Doctors are seeing fewer patients now — it’s been low across the board in November, December and January,” said Penny Sayre, an accountant with Stockman Kast Ryan and Co. “It’s back up a bit in February; people can’t put off seeing the doctor permanently.”
Doctors, particularly those in individual practices, should “ruthlessly” look at ways to save costs. If they don’t need private offices, they can expand to create more exam rooms. Or, they can share rent and other expenses with other doctors who have complementary practices.
“Reducing costs can be done easily,” Sayre said. “The largest expense in most medical practices is the cost of the facility. So, doctors should make sure they are maxing out their space. Doctors can share private offices to free up space for other purposes that will make money.”
Also, efficient scheduling is a way to cut costs, Hochstetter said. The bulk of patients should be there when the bulk of the staff is there.
“You don’t want five staff members hanging around, waiting on two patients,” he said. “So doctors should schedule patients in a way that efficiently uses their other resource: their staff.”
Billing and collections also should run as efficiently as possible, Sayre said. Doctors should examine their processes to make sure that the collections at the front desk are complete and accurate.
“Something as simple as making sure you have all the complete, accurate insurance information right up front — that can save money,” she said. “Make sure that claims don’t come back; and if they do, re-file them as quickly as possible. There should be a process in place for that.”
Sayre recommends that doctors have their receptionists double check patients’ insurance information when they call to remind them about their appointments. They also should be reminded about their own responsibility to pay any co-payments or deductibles at the time of the visit.
But even during tough times, doctors should work with patients. Asking for entire deductibles up front before certain procedures — an increasing issue — isn’t always good business, Hochstetter said.
“You don’t want to drive the patient away,” he said. “I haven’t heard of many doctors doing that — but if they do, they should be aware the patient could go somewhere else. Setting up a payment plan — and making sure the plan is efficient and is actually collected on, that’s a better way of doing business. The reality is that you have to work with patients.”
Both accountants realize that there are conflicting sides in the doctor-patient relationship, at least as far as payments are concerned. Many patients sign up for high-deductible health plans — only to find they can’t pay for the high deductible when they need medical treatments.
“We’re seeing that happen more and more,” Hochstetter said. “And doctors have to write off a large number of debts. To avoid that, they should definitely consider setting up payment plans and make sure patients know what they have to pay. That way, revenues don’t fall too low. They have to make that effort.”
Relationships with insurance companies should be examined as well — there could be ways to save money simply by working with an insurance company on how claims are processed.
“Make sure contracts are reviewed, make sure that what the insurance pays is what they’ve agreed to pay,” Sayre said. “Make sure there is a follow-up on claims. If claims are rejected, analyze them to find out if there is a pattern — if certain surgeries or procedures are routinely rejected.”
Insurance should be verified twice, Hochstetter said, particularly before major procedures.
Staff should verify the insurance coverage when the procedure is scheduled, then again the day before the procedure.
“That’s a precaution to take, particularly before elective surgeries and procedures,” Sayre said. “It doesn’t cost anything but your time, and it is a way to avoid surprises.”
According to a study by the Health and Human Services’ Agency for Healthcare Research and Quality, electronic prescribing can save doctors $845,000 per 100,000 patients.
The finding has important financial implications — and as more doctors use the program, savings increase — both for the doctor and for the patient.
Switching to electronic medical records also could save money, experts say, by streamlining the billing process and the filing of insurance claims.
The industry as a whole can benefit from electronic records, according to a study by the California Healthcare Foundation, which said some doctors’ offices saw financial benefits of more than $20,000 per year per physician when they used electronic records.
“Decreased staff costs were common and varied greatly,” the report said. “More successful users decreased transcriptionists, medical records, data entry, billing and receptionist costs. Increased revenue was less common; some reported increased revenue from higher coding levels, more complete capture of services provided, and more services per visit.”