The Survival of Physicians

On January 6, 2012 the CNN website posted an article titled "Doctors Going Broke". It described several cases of independent physicians who are near bankruptcy although they once were quite well off. For instance, the article detailed the case of Dr. William Pentz, a cardiologist in a small group practice, who had to borrow money last month to make payroll. He and the other cardiologists have cut their salaries in order to meet overhead. Dr. Pentz ascribed the budget problems of the practice to the 35% to 40% cut in Medicare reimbursements for certain tests, such as stress tests. The practice overall saw a 9% decline in income compared to 2010. The article did say that there is a worrisome rise in the number of physicians experiencing financial difficulties. Although some point to new regulations and declining enrollment as the source of the troubles some financial experts point out that the problems may be due to the lack of business acumen of physicians and their staff.

A day after this report the Wall Street Journal posted an article about the bankruptcy and decline of several large corporations, including Kodak and Barnes & Noble. It compared these organizations to successful ones such as IBM and Johnson and Johnson. Briefly, it emphasized that the successful organizations were willing to take some risks on future developments and invest some of their capital into these risks. Not all such investments were successful but enough were to insure the success of the business.

With a bit of insight and some reasoning skills I believe I see in these patterns similarities to Darwin's theory on the survival of the species. Businesses and physician practices that adapt to their changing environments succeed where others languish or subside or sell their practices to hospital groups or insurers.

What are some of the common challenges that independent physicians as well as those that are part of hospital groups must face that directly affect income? Doctors face a 1% cut in Medicare reimbursement this year if they have not successfully demonstrated that they are using e-Prescribing in their practice. Practices must start using the new HIPAA security protocols this year or face cuts in reimbursements. This is the last year that physicians can receive the full $44000 for the adoption of EHR's. These are the most prominent challenges facing physicians but there are many others as mentioned in the opening paragraph.

What are some of the opportunities for independent physicians? Some independent physician practices are doing well in spite of the challenges. Many have looked at the changing landscape of reimbursement and have altered the way that they provide their services to maximize these new sources of income. To me it seems that many of the increased sources of income are for primary care groups and others who provide primary care services. One such example that comes to mind is the Patient-Centered Medical Home. Although CMS is not reimbursing groups for becoming PCMH's yet, some private insurers are. Blue Cross Blue Shield of Michigan is rewarding practices financially that become qualified as PCMH's. The January 27 edition of the Wall Street Journal stated that WellPoint and Aetna are beginning to reward primary care physicians for becoming certified a PCMH.

Another example is the formation of Accountable Care Organizations by physician groups. Although it seems that most medical professionals think about CMS's rules for ACO's several physician groups are contracting with private payers to form ACO's. Advocate Care in Illinois has successfully done so. The final rules from CMS on the formation of ACO's has made it much easier for physician groups to contract with CMS in the formation of an ACO without the inclusion of a hospital group as a partner.

I have found some very good resources that describe in some detail pathways for physicians to adopt in order to improve their income and outcomes for patients in light of the new landscape for reimbursement. One in particular that I like is Pathways for Physician Success Under Healthcare Payment and Delivery Reforms; it is posted on the AMA website. It describes in some detail the major new initiatives in payment reform, including PCMH's and ACO's. It also describes in some detail the skills needed by physician groups to successfully accommodate the new payment models. Among the skills are the ability to improve the delivery of the quality of service and the ability to be able to read and interpret data for the improvement of the quality of services delivered. The AMA also has a webpage that has many other resources for the successful adoption of new payment models. The American Society for Quality also has resources for healthcare that help develop the skills necessary for the adoption of the new payment models.

What are some of the change processes physicians can adopt in order to change their practices effectively? There are several, such as Lean Healthcare, Six Sigma and Total Quality Management. At the heart of most of them is the Plan-Do-Check-Act cycle, a skill which most professional healthcare providers can learn. At its heart are teamwork and effective leadership.

Looking ahead to 2012 for your healthcare business, which pathway will you take? It seems manifest to me that continuing on the traditional pathway of the fee-for-service model exclusively only will result in a steady decline in income for most sites. Adapting to new payment models gradually but with a willingness for some risk more than likely will reward providers with new revenue sources and stable incomes.

Locating Good Sources for Hospital Medical Supplies and Medical Equipment

Hospitals have a obligation to give their patients quality healthcare. This means not only providing excellent service from doctors, nurses and staff members, but also to make certain the medical equipment used is up-to-date and fully operational. Locating sources of medical supplies is one of the most important functions of a hospital's administrators.

A good place to start the search for medical supplies is by contacting the purchasing managers of other medical centers. These people have experience in obtaining medical equipment for their institutions and can usually offer sound advice on what manufactures and distributors offer quality supplies at reasonable prices. You can simply call the hospitals in your area and tell them your looking to locate a new supplier.

An even easier way to find suppliers is to go online and perform a web search. Just type in "medical supplies" into the search box of your search engine and visit the various websites of the distributors. Virtually all of the major hospital supply companies have websites that showcase the types of products they sell. These websites will also provide contact numbers so that you can contact them directly to ask for more details, such as whether the distributor rents hospital equipment in addition to selling it, and also for pricing information.

If you are looking for a supplier who focuses on a particular need, such as acute care, for instance, you can type this phrase into the search box and discover companies that specialize in a particular field.

After finding a company that seems to offer the type of quality supplies you need at a price you can accept, its time to do further research to make sure they are reputable and have a history of customer satisfaction. You can check with your state's consumer safety agency or Attorney General's office to find out whether they have any complaints against them. You can also contact the supplier directly and ask him to provide a list of recommendations from hospitals or medical centers with which he has done business.

Another good resource to ensure that you are purchasing from a business with a good reputation is to check with the Better Business Bureau, or BBB. You can do this easily online at the BBB website, which grades businesses from A to F depending on the numbers and types of complaints that have been lodged against them.

For hospital purchasing managers looking to obtain quality supplies, another option is to utilize the services of a group purchasing association or co-op. These organizations have staff who are skilled in getting discount prices from manufacturers in exchange for doing a large volume of business. Hospitals can take advantage of their expertise and experience and allow the purchasing group to find the suppliers themselves. This will free up the time of hospital staff for other functions. The purchasing group knows what companies offer the best quality equipment for specific areas, such as surgical instruments or wound care supplies, and can simplify the overall process considerably.