6 New Rules Of Practicing Medicine
For the past 5 years medicine has seen an attack on its business model from all fronts. From falling reimbursements, higher labor costs, higher patient deductibles, more non-covered services have brought many if not ALL practices to a cross road, that’s demanding their full attention as business owners. All of us in business have been subjected to relentless attack over the past 15 years. First it was the need to invest in technology, then it was the need to get on the internet or be a part of the internet in order to remain competitive, then it was the outsourcing of work to countries with lower cost metrics. Last but not least we faced the “Real Global Economy” whereby we truly were competing with businesses in Vietnam, China, Phillipines, Eastern Europe not to forget India and others who started 10 years ago.
All these changes have forced all business verticals to reexamine how they conduct business in order to stay profitable. Look at what is happening to Blockbuster, once the most dominant company in the pre-recorded video business has been forced into bankruptcy… by what? A new business model called NetFlix. But now there are signs that even Netflix are facing new threats to their business model.
So what needs to be done in the medical field to avoid those fates? Throw out the old rules and bring in the new. Take a moment to review the following which were published in a recent blog about the “status” of health care and the business side of it. They listed out the “old” and “New” rules for practices today. Do any of these apply to how you think about your practice?
• OLD RULE: Physicians could make a good living without having much business experience; just being a “good doctor” was enough for practice success.
• NEW RULE: Those days are gone. Change is the “new normal”. Physicians will need to be astute observers of healthcare and business economic conditions and determine how they need to respond to change from a business practice standpoint.
• OLD RULE: Enough healthcare dollars were available to allow physicians to make their fair share of the pie.
• NEW RULE: The per-patient healthcare dollar available will decline for the remainder of today’s physicians’ careers. Smart physicians will find ways to gain more control of the healthcare dollar they produce and in particular go after the patient portion of the health care dollar.
• OLD RULE: Managing a medical practice could be handled by administrative people with general administrative skills.
• NEW RULE: The complexity and risk of managing a medical practice has skyrocketed, requiring highly specialized expertise. 4,000 new regulations per year are created that affect physicians. Physicians cannot find the required level of expertise in one or two administrative persons. Outsourcing to specialized firms will become the norm.
• OLD RULE: Doctors could get away with being “low-tech”.
• NEW RULE: Patients, insurance carriers and the government will expect physicians to be high-tech. Physicians who are not high-tech will be limiting their income and value to patients AND become employees of systems that are.
• OLD RULE: The billing function of a medical practice could be performed by regular administrative staff.
• NEW RULE: With unintentional billing fraud* on the increase, identity theft running rampant and regulatory fines on the increase, physicians must ensure that their billing is done professionally by certified coders with multiple layers of protection in place.
• OLD RULE: A healthcare practice was not considered a “business”.
• NEW RULE: Structuring a practice around sound business principles and an understanding of healthcare economics will become increasingly important in order to survive. Those physicians who run their practice on business principles will survive. Those who don’t will be absorbed by those who do.
In summary, the administration of healthcare practices has become increasingly sophisticated. The post-healthcare reform system will increase in complexity. Success of physician practices will depend largely on the talent managing it. Embracing and deploying the right business process and technology will enable doctors to stay INDEPENDENT as oppose to becoming employees of a larger organization. Medical practices can MAKE money and can deliver world class health care. The paradigm needs to change in order to do that.
CRT Medical Systems is the largest medical billing company in Michigan. It is also one of the oldest having flourished in the industry for over 30 years.
* – The “New Rules” for Survival for Physicians in Private Practice Part 2 in a 4 part Series (December 07, 2010)