Model for Success

Elyas Bakhtiari, for HealthLeaders Media , October 13, 2008
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"In all of my executive roles, when we've compared the service performance of large physician practices versus small practices, historically the small practices tend to fare better and have higher satisfaction," Samitt says.

The challenge for medical groups as they progress will be to retain some of the service orientation of a smaller practice while continuing to grow. "Large practices are inevitable, but they will try to feel more like smaller practices to the patient," Samitt says.

As groups expand geographically, the trick is to keep some of the decision-making local. Physicians in satellite offices or newly merged groups know better what their patients want and need than executives charged with running the entire organization. Balancing local autonomy with the need for centralization and integration is a leadership headache, and figuring out how to offer the best of both worlds may be the next big challenge medical groups face.

Ultimately, that balancing act goes back to business principles and recognizing that patients are like customers in any other industry—if they aren't happy, they'll go elsewhere. Some leaders have been lulled into thinking that service is only a tangential concern in a medical practice because healthcare is a necessity and demand for services is so high, Jessee says. But as consumerism takes hold and the financial climate worsens, smart groups understand the importance of patient satisfaction to the bottom line and overall health of the group.

Keeping patients happy can be as simple as sending reminder postcards or improving doctors' communication skills—anything that helps build a relationship with patients. "Medical practices are rediscovering service and realizing just how important it is to patients," Jessee says.

Elyas Bakhtiari is an editor with HealthLeaders magazine. He can be reached at
Spending Money to Make Money

When being squeezed by rising costs and a competitive market, many practices' initial instinct may be to play defense—cutting expenses and weathering the storm. But a stronger offense may be the best strategy. For 10 years the Medical Group Management Association has been sifting through the compensation, cost, and productivity data it collects, looking for common traits in the highest performing medical groups. Year after year, the groups that invest in growing and improving their practice tend to be more profitable and productive than their peers, says David N. Gans, vice president of practice management resources with MGMA. The top performers implement the following strategies:

1. Adding ancillaries. Diversifying revenue sources is a sound business strategy when the primary source of reimbursement is so unreliable. Better-performing groups are more likely to have invested in ancillary services—27% for high-performing groups to 15% for other groups—according to MGMA's 2007 data.

2. Investing in the facility. Roughly one-fifth of the most successful groups have recently built new facilities or expanded existing ones. Fourteen percent of better-performers have purchased new lab equipment, compared to 6% of others.

3. Implementing EMR technology. Many physicians remain unconvinced that an investment in an EMR system is worth the cost, but the numbers don't lie. While the adoption rate hovers around 13% in the overall physician population, nearly 29% of the better-performers have fully implemented EMR in all practice locations.

4. Incorporating nonphysician providers. Groups are looking for ways to increase productivity and see more patients, and increasingly, that means expanding the patient care team to include nonphysician providers to handle routine care or ancillary services. The result is usually an increase in physician productivity and a boost in overall group revenue.

5. Targeted marketing. Physician practices are slowly developing more advanced marketing tactics, although the return on investment is elusive to measure. MGMA's data did show, however, that better performers used a few strategies more regularly than the average group: Internet (i.e., a practice Web site), Yellow Pages, letters to referring providers, and radio ads.

Elyas Bakhtiari

The Medical Home

No examination of changing medical practice business models would be complete without a look at the patient-centered medical home concept. The concept of modeling care around an ongoing relationship between physicians and patients is being embraced across the board. In theory, it holds a lot of promise: The team-based, continuous approach has the potential to improve physician efficiency in a time of growing shortages, revitalize primary care, and connect the dots in an increasingly disjointed system.

But can it live up to its promise? Patient-centered care is difficult without the right technology, and today's medical groups have a lot of catching up to do. "To have a fully integrated medical home, the electronic medical record is going to be a large part of the practice," says Rick Kellerman, MD, board chair of the American Academy of Family Physicians. Payment reform, however, may be the bigger obstacle. The medical home hinges on activities like patient education and monitoring that aren't reimbursed well (or at all) under the fee-for-service system.

The medical home is currently in the "demonstration" phase of the transition from theory to practice, Kellerman says. Medicare, as well as many major private payers, have set up pilot programs to determine the best way to move forward. "It's not an easy transition," Kellerman says. "Practices have to think differently, individuals have to think differently—and change for any of us can be difficult."

—Elyas Bakhtiari

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