Capacity analysis can offer managed care insights
How many MDs do you really need?
In the increasingly data-driven environment of managed care, one consultant’s message fits right in: Success in managed care boils down to capacity.
This analysis comes from Theresa Raczak, MBA, president of Linconlshire, IL-based MedComp. Raczak says capacity analysis lets a practice see if it is employing the right number of physicians doing the right things at the right time, with the appropriate number of support staff.
Put another way, is your practice employing too many physicians — or too few — given your managed care patient base?
Raczak recommends practices measure physician productivity in several ways and compare the data with national benchmarks. Areas of measurement might include number of patient visits per physician or gross production, defined as gross charges for professional work done by each physician, calculated on the basis of relative value units (RVUs) submitted by each physician.
If a group’s patient base is at least 50% capitated, it can perform a utilization analysis per 100,000 members based on physician work components of the Resource-Based Relative Value Scale (RBRVS) measure used by Medicare.
Raczak recommends gathering one year’s worth of data for an initial measurement. Then, generate reports on a monthly or quarterly basis to update this information.
Figure 1 (see p. 37) shows how a practice can track the number of patient visits for each physician and compare this against an average for the practice as a whole and against industry averages. Raczak says two good starting points for such benchmarks are cost and productivity surveys compiled by the Englewood, CO-based Medical Group Management Association (MGMA) and the Alexandria, VA-based American Medical Group Association.
You also can compare physician productivity based on gross charges. Again, numbers can be reported for each physician and measured against the average for a practice and against industry averages.
Raczak emphasizes that it is important to look for trends across several forms of measurement rather than using data from one category. This prevents a practice manager from making assumptions based on data from only one area. In addition to gross charges and patient encounters, other good measurement categories are RVUs, patient satisfaction, and collections (for practices that are not heavily capitated).
Does productivity match reimbursement?
Among the trends practice managers need to look for are whether a practice’s reimbursement of a physician is in line with the productivity it is getting from that physician. "If you’re paying physicians at the 75th percentile but you’re getting only the 50th percentile in gross charges, you may be overpaying the physicians. Or if you have 14 physicians, this data may tell you the practice only needs 11 or 12," she says.
In the example given for Figure 1, the gastroenterology practice is measuring physician productivity in terms of patient visits compared to the 75th percentile based on a survey compiled by a national organization such as MGMA. The 75th percentile was chosen as a point of comparison because the practice has determined, again by comparing its data against MGMA’s, that its physician salaries fall in the 75th percentile nationally for its category of specialists.
Figure 1 shows that when measured in terms of patient visits, physician productivity for a specific practice only falls at 71.8% when looking at a national average of all practices in the 75th percentile.
Unless a practice is growing its business, it wants to look for productivity in the 95% to 100% range, Raczak says. If a practice is attempting to grow its business, productivity should be in the 85% range.
But the information presented in Figure 1 may not tell the whole story. In this case, a practice manager may decide to look at productivity based on gross charges in case the procedures performed by its physicians are more complex and thus take more of a physician’s time.
Remember that while numbers don’t lie, they still need to be taken in perspective and discussed with a physician leader, Raczak emphasizes. A physician’s productivity numbers may be out of whack for several reasons:
• the physician could be undercoding;
• the physician’s patient base may represent an older or sicker population;
• the physician could be referring to specialists too much;
• the physician’s patients could represent what Raczak calls "the worried well" — patients who visit the doctor for every little ache or pain.
Regardless of the reason, a physician perspective on this information is vital, Raczak says. A fellow physician is in the best position to determine whether outliers exist because of the nature of the patient base. In addition, if there needs to be a discussion with the physician whose numbers are outside the norm, the information has more credibility coming from a fellow physician.
Physician buy-in also is important when setting up a measurement system, Raczak says. If physicians have a say in what data are being used to measure productivity, they are more likely to assign credibility to the data. For this reason, Raczak recommends forming a committee of physicians in your practice in order to put the measurement system in place.
But will physicians even see the need to measure productivity? Raczak admits it can be a hard sell.
"Yes, physicians may resist this kind of measurement," she says. "But the reality is, these groups are losing money. The average primary care physician practice loses $50,000 per doctor. And at the end of the day, the money has to come from somewhere."
The good utilizers may even embrace the concept of productivity measurement coupled with incentive pay — another must if productivity measurement is going to be effective, Raczak says.
There are as many models of incentive pay as there are physician groups, she says. It could be measured on straight productivity by RVUs, or a combination of productivity based on RVUs and patient encounters. "It really depends on the group’s payer mix, the degree of risk they’re willing to take, and if they’re willing to pay just based on productivity or want to incorporate patient satisfaction as part of the mix," Raczak says.
Practices that are more heavily capitated will obviously need to measure productivity a different way. Figure 3 (see above) represents data that can be used by practices that are majority capitated. The examples shown compare productivity among a group’s primary care physicians with national benchmarks based on RBRVS. Benchmarking data like this are available from an actuarial firm such as Milliman & Robertson in Seattle.
Figure 2 shows that initial examination of productivity among a practice’s primary care physician base looks pretty strong — family practice physicians have 100% productivity, while internal medicine physicians have 95% productivity.
However, when the total RBRVS values are compared against managed care targets, a practice may be operating at 89% capacity. On the other hand, based on the number of referrals to gastroenterologists, utilization as measured per full-time employees comes out to 122%. This information shows that the primary care physicians in a practice may be over-referring cases to gastroenterologists. A physician leader in the primary care practice may want to meet with the key gastroenterologists that the practice refers to in order to identify referral guidelines. There may be procedures — such as a flexible sigmoidoscopy — that primary care physicians can handle themselves.
If the process sounds like it can be a lot of work, you’re right. Raczak admits it does take time to put a system in place — how much depends on a practice’s current information management capabilities, the number of physicians in the practice, and how much information already is available.
But many managed care companies already are measuring productivity for the practices they contract with, and in some cases are using this information to reward or penalize physicians. Doesn’t it make sense for your practice to measure these data internally to make sure you are being portrayed accurately? On the flip side, your practice could use this kind of data to show a payer that your physicians are effective utilizers capable of managing a capitation contract.
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