improving the financial performance of employed physician ......medical record completion and coding...
TRANSCRIPT
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Improving the Financial Performance of Employed Physician Networks
HFMA Arkansas Chapter Summer 2017 Conference
August 18, 2017
If we do nothing, what happens?
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Industry Trends: Medicare is leading the shift towards value
Source: Centers for Medicare & Medicaid Services, June 2015.
By 2018, 50 percent of payments will be in the form of alternative payment models
2016
30%
85%
2018
50%
90%
Goals
All Medicare FFS
FFS linked to quality
Payments linked to APMs
● Volume still critical: WRVUs are here to stay!
● But need coordination of:
o VOLUME summarizes the driver of the recent past…
o …to that we have to add CONTROL
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Shifting Model of Care and Savings Opportunities
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Coordination and management of…
• Efficient volume
• Care continuum (leakage & quality)
• Payer complexities
Past Current
Volume Volume + Control
• Minimal incentive for quality
• Lack of care coordination
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PremiseThe physician enterprise needs to be analyzed and managed
as a whole rather than as a collection of siloed deals
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● Every “special deal” and exception decreases value added to the enterprise
● Every exceptional phone call, meeting, email, VM, training is a TRANSACTION. Every transaction costs MONEY, but usually brings in… nothing?
o Policies must apply to whole enterprise: everything cannot be case-by-case
o Practitioners, like all people, need management and expectations
o Bureaucracy CAN be a very effective management tool
Positive physician and patient experience
Decreased effectiveness and loss of value to the organization
Siloed enterprise management Standardized enterprise management
vs.
Our Physician Group
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Group Structure
100 Physicians- 25 APCs
$185k Loss per physician
Total Loss of $18.5 million
Questions
Where are my losses coming from?
Is there a sustainable level of loss?
What will save our budget now and in the future?
Analysis will inform…
Strategic plans
Recruitment plans
Alignment priorities
Clinical program planning
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Unavoidable Physician Group Losses may come from…
● Off-statement benefits
● High downstream overhead
● Start-ups
● Amortized acquisition costs
● Contractual agreements
● Long-term leases
● Strategic practice locations
Avoiding Excessive Subsidies: Focus on Avoidable Losses
Optimize Performance of Physician Enterprise
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Some efforts have immediate impact, some over time.
Compensation and Productivity
Space & Staff Planning
EMR Utilization
Revenue Cycle
Care Teams
Coordination of Payer Opportunities and Needs
Internal Marketing and Loyalty
Recruiting and Onboarding
Performance Improvement Checklist
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Compensation and Productivity
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Define the Principles
Perspectives on the current
model –qualitative and
quantitative
Designing draft model(s) that
meet the objectives
Simulate the specific impact on the provider
enterprise
Define the transition plan
Finalize and formally present the final model to the provider
enterprise
The Purpose of Process
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● The process is designed to:
o Define the vision
o Define the goals of the practitioner enterprise
o Define the goals of the compensation program
o Define the services
o Define lines of responsibility
o Identify measures of success
o Communicate the why, the how, and the impact
Get the guiding principles right!!
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Volume vs. Value
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•Fee-for-service encourages productivity
•Costs to the payer are seen as revenues to the practitioner
•Leaders will not test new revenue or compensation models, fearing that change will lead to a near-term decline in revenue (fear of the “bleeding edge”)
It’s still a volume-based world
•No standard or “best practice” approach to measuring quality exists
•Cost data has traditionally been unavailable
Measuring quality and cost is challenging
•The most highly compensated physicians are typically those who are productive
•Physicians are being asked to do more for the same compensation
Physicians might not support the shift
•Recent studies raise questions about effectiveness of “quality” incentives
•Link is not yet made between process and outcome
•Requires excessive documentation
The jury is still out about whether it matters
Model Payment Basis Pro Con
Revenue Less Expense
Profit & Loss Performance
• Fiscally responsible• Practitioners are at
risk for financial performance
• Challenges related to cost allocation
• Payment for personally performed services
Panel-Based Model
An amount per patient on the panel
• Simple to administer
• Encourages APC utilization
• Work effort does not necessarily correlate with increased panel size
Salary-Based Model
A fixed salary or stipend
• Simple to administer
• No accountability for performance – can specific criteria be created?
ProductionBased Models
Dollar amount per WRVU, per visit, encounter, etc.
• Encourages productivity
• Is productivity encouraged at the expense of other priorities?
Hours-BasedModel
Dollar amount per hour
• Appropriate for many activities
• The “quality” of each work hour• Need a mechanism to track
hours
Value-basedmodels
Identified metrics • Aligns incentives• Flexible
• Challenging to identify metrics and agree on performance levels
• Must adjust over time
Pros and Cons of Various Models
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System flexibility to use different models for different roles
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Types of Metrics
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Patient Experience
● Patient satisfaction
● Access to care and information
● Practitioner communication
Process
● Use of clinical pathway
● Safe procedure checklist utilization
● Clinical disease care indicators
Operational Efficiency
● Utilization of block time
● Schedule utilization measures
● Timely completion of revenue cycle
Practitioner/Employee Engagement
● Citizenship and leadership
● Employee engagement scores and retention
● Meeting attendance (practice management)
● Medical record completion and coding accuracy
Care Management
● Care plans
● Receipt of specialist report
● Potentially preventable ED visits
Population Health ● PCMH indicators
Outcomes● Admissions/24-hour post procedure holds
● Unplanned 30-day readmission rates
Financial Performance● Performance against operating expenses
● Performance against capital budget
Our Physician Group: Compensation & Productivity Opportunity
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● Overall physician cost is approximately 99% of the median benchmark while WRVUs are approximately 86% of the median benchmark
● Closing this gap could reduce losses/subsidies by up to $3.6 million per year
o Correlate production and compensation, tier compensation favoring high producers, and/or implement a performance improvement compensation plan
Impact of Aligning Employed Physician Cost with Productivity ("000s")
Practice
FY 15 Employed
Physician Cost1
Median
Physician Cost
Benchmark
Physician Cost to
Median Benchmark
Ratio
WRVUs to Median
Benchmark Ratio2
Adjusted
Physician
Cost
Change in
Physician
Cost
Primary Care 1,657 3,354 49% 68% 2,271 614
Medical 8,662 8,908 97% 100% 8,950 288
Surgical 10,574 10,735 98% 72% 7,714 (2,860)
Behavioral Health 1,035 1,093 95% 83% 909 (126)
Hospitalist 5,102 3,210 159% 111% 3,579 (1,524)
Total 27,030$ 27,301$ 99% 86% 23,422$ (3,608)$
1) Includes compensation, benefits, and other physician expenses (e.g., CME, licenses, dues, etc.).
2) WRVU ratio is based on Calendar Year 2015
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Payer Management & Revenue Cycle
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Clinically integrated providers are finding new processes to manage these innovative contracts
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Contract Effectively
Measure Contract Opportunities
Analyze Performance
Understand Specific Targets &
Understand Payments
Engage Practices and Practitioners
Determine Net Impact on Hospital
Determine Physician Performance
Distribute Rewards
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Developing Clinical Integration
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CINs assess which contracting approaches are appropriate given the degree of clinical integration achieved
Care Delivery Model Contracting Method
P4P ContractingCommercial Payers Medicare Advantage
Hospital’s EmployeesSelf-insured Employers
Direct Contracting
Shared SavingsCommercial Payers on Insurance Exchange
Renegotiated FFS with Shared Savings
Medicare AdvantageCommercial Payers
MSSP ACO Traditional Medicare
Global Risk Arrangements
Commercial Payers
Clinically Integrated Model of
Care
Potential Population Served
Our Physician Group: MIPS Payment Differentials
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MIPS Payment Example - Intermediate Office Visit
2016 2017 2018 2019 2020 2021 2022
Fee Schedule 73.45$ 73.82$ 74.19$ 74.56$ 74.56$ 74.56$ 74.56$
Top Performer 73.45 73.82 74.19 77.54 78.29 79.78 81.27
Bottom Performer 73.45 73.82 74.19 71.57 70.83 69.34 67.85
2016 2017 2018 2019 2020 2021 2022
Fee Schedule 200,000$ 201,000$ 202,005$ 203,015$ 203,015$ 203,015$ 203,015$
Top Performer 200,000 201,000 202,005 211,136 213,166 217,226 221,286
Bottom Performer 200,000 201,000 202,005 194,894 192,864 188,804 184,744
MIPS Practice Revenue Example if $200,000 in Medicare Revenue
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What has made some ACOs more successful than others?
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Focus on transforming PCP practices
Prevention of unnecessary ED visits
Management of transition of care
Patient engagement
Read Veralon’s article titled “Orchestrating ACO Success: How Top Performers in the MSSP Achieve Shared Saving” featured in HFMA Magazine’s March 2016 issue.
Practice Strategies:
What has made some ACOs more successful than others?
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Action-oriented leadership
Effective data analysis
Share performance results
Read Veralon’s article titled “Orchestrating ACO Success: How Top Performers in the MSSP Achieve Shared Saving” featured in HFMA Magazine’s March 2016 issue.
Administrative Strategies:
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Revenue Cycle ManagementShared responsibilities with practitioners and practices
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ITPhysician
Practice Manager
Managed Care
Key Factors Considerations
Closed EncounterRatios
� Report by physician and practice
� Set threshold targets: 90% closed within one week? 95%
Copay Collection Rate� Percentage of $ collected
(sliding average or monthly?)
Charge Review� Days and $ in charge
review� Above 1.5? 2.0 days?
Credentialing Holds
� Days and $ held pending active status or fix?
� Both for new practitioners and payer problems
Claim Denials� Edits, Front-end, and Total� Days and $
A/R Over 90 Days � Total, $ and percentage
Our Physician Group: Improve Revenue Conversion
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● Overall net patient revenue is approximately 60% of the median benchmark while physician productivity is approximately 82% of the median benchmark
● Opportunity of $7.7 million per year; closing half of the gap would translate to $3.7-3.9 million per year in additional revenue
● Negotiate more favorable fee schedules, improve billing/collections improvement, and/or optimize coding performance
Impact of Aligning Net Patient Revenue with Productivity ("000s")
Practice
CY 2015 Net
Patient
Revenue1
Median Net
Patient Revenue
Benchmark
Net Revenue to
Median
Benchmark Ratio
WRVUs to Median
Benchmark Ratio
Adjusted
Net Patient
Revenue
Change in
Net Patient
Revenue
Primary Care 2,135$ 4,666$ 46% 68% 3,159$ 1,024$
Medical 6,603 10,051 66% 100% 10,098 3,495
Surgical 7,849 15,002 52% 69% 10,340 2,491
Behavioral Health 515 1,442 36% 83% 1,199 684
Hospitalists 3,224 2,937 110% 111% 3,274 50
Total 20,326$ 34,098$ 60% 82% 28,070$ 7,743$ 1) Source: Activity by Provider reports. Urology data is annualized based on three months ended December 31, 2015.
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EMR & IT
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Key elements of a physician report card
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Report cards alone are not enough; feedback from a strong physician
leader is critical to develop a culture of
change
�Meaningful information
�Transparent process
�Easy to understand format
�Quality and current underlying data
�Risk-adjusted
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Provide drill down capabilities and ability to custom build reports
Many data tools do not meet these basic requirements
Many missing capabilities in existing data tools
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Data tools should….
Provide ready-made, risk-adjusted reports by patient, physician, practice and setting
…to empower end-user and decrease need to ask vendor for new reports
…so time can be spent on performance improvement rather than data analysis
Space Planning
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Consolidate Some Practices to Better Utilize Staff & Overhead
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Potential candidates:
• Primary care (minimum “best practice” is 3-5 physicians per location)
• Non-procedural medical specialties (the “ologies”)
• Surgical specialties (orthopedics with orthopedics; combine other surgeons)
• There may be economies of scale (consolidating “site fill” positions such as receptionists, patient flow coordinators, nurses, and MAs).
Options for Solo/Small Practices
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● Options
o Become an APM
o Focus on MIPS performance
o Become hospital employed
o Join a larger practice
o Shift towards more self-pay patients
o Stop taking Medicare
o Retire
● Adapt to payer and reporting needs: Small practices often lack the staffing and infrastructure
● EMR training: often limited and insufficient, leaving office staff to create time consuming workarounds
● Measurement/Reporting: Expectations of cost and quality performance transparency and care coordination have grown
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Our Physician Group - Overhead Cost per Practitioner
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● Economies of scale are maximized with ~5 practitioners
● Benefits may level off after ~5 practitioners as ancillaries and procedures are added
● Most inefficiencies arise from multiple locations
1 2 3 5 6-10 11-20
Relative Overhead Cost per Practitioner
# of Practitioners
“Sweet Spot”
Care Teams
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Identified initiatives must be developed by team, including financial and clinical experts
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SNF
• Create preferred network to decrease readmissions, LOS, and shift admissions to lower cost settings
ED Utilization• Increase access to primary care
services• Intensely manage super-utilizers
High Cost Practices• Target highest cost practices to
reduce spending per patient
InitiativesIdentified Areas for
Improvement
• Lower cost of care
• Effective utilization of APPs leads to better financial performance and higher
physician income
• Assist in meeting quality and incentive metrics
Focus on controlling costs and boosting productivity
• Medical groups providing the appropriate training to fill role of population
health coordinators
• Significant roles in emerging models such as telemedicine, urgent care
centers, retail clinics, and other remote sites
• Physicians provide support and supervision, changing the supervisory
dynamic
Changes in Care Delivery
• A perceived shortage of 90,000 physicians is projected for both primary care
physicians and specialists by the year 2025
Physician Recruiting Challenges
Increasing Prevalence of APPs
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Source: Association of Staff Recruiters. “Physician Compensation, Benefits and Recruitment Incentives Report.” 2014.Source: Medical Group Management Association, “NPP Utilization in the Future of US Healthcare.” 2014. Source: HFMA, “APPs: An Important Primary Care Resource for Value-Based Care.” 2017.
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● Based on MGMA Cost and Revenue Survey respondents, practices employing more than one APP increased from approximately 10% in 2008 to approximately 50% in 20161
● Average growth in NP and PA staffing was approximately 10.5% in 2012 to between 12.0% and 16.7% in 20132
● Between 2012 and 2014, APP utilization increased approximately 25%3
A growing APP workforce requires more supervising physicians and increased time spent on supervisory
activities.
The Prevalence and Demand for APPs is Increasing
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1Source: Medical Group Management Association, “Cost and Revenue Survey: 2017 Report based on 2016 Data” and “Cost and Revenue Survey: 2009 Report based on 2008 Data.”2Source: Integrated Health Strategies. “Advanced Practice Clinician Survey.”3Source: Medical Group Management Association, “Physician Compensation and Production Survey: 2016 Report based on 2015 Data.”
APPs per FTE Physician Market Data1
All Practices
Specialty
2008 Median
Market Data
2016 Median
Market Data
Total FTE
Increase
Anesthesiology 1.15 1.50 0.35
Cardiology 0.29 0.44 0.15
Endocrinology/Metabolism N/A 0.66 N/A
Family Medicine 0.28 0.62 0.34
Gastroenterology 0.25 0.53 0.28
Hematology/Oncology N/A 0.45 N/A
Hospital Medicine N/A 0.23 N/A
Internal Medicine 0.36 0.40 0.04
Neurology N/A 0.40 N/A
OB/GYN 0.43 0.44 0.01
Orthopedic Surgery 0.63 0.77 0.14
Otorhinolaryngology N/A 0.39 N/A
Pediatrics 0.37 0.38 0.01
Psychiatry N/A 0.60 N/A
Pulmonary Medicine N/A 0.49 N/A
Surgery: Cardiovascular N/A 1.00 N/A
Surgery: General N/A 0.32 N/A
Surgery: Neurological N/A 1.05 N/A
Urgent Care N/A 1.03 N/A
Urology 0.17 0.49 0.321Source: Medical Group Management Association, "Cost and Revenue Survey:
2017 Report based on 2016 Data" and "Cost and Revenue Survey: 2009 Report
based on 2008 Data."
Triage and Intake
Advanced
RN
Patient Experience
Panel Shared
with Physician
Discrete Panel
● How will APPs be utilized within your system?
● Who manages team based care?
● APP capability and physician comfort?
● Policy or practitioner driven? System consistent or practice latitude?
APPs and the Role of Team Based Care
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Note the compensation difference between physicians and APPs
Business Case for APPs
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Hypothetical Profit & Loss Statement Based On
Median Market Data for Internal Medicine Practices
PCP
PCP w/ 2nd
PCP PCP w/ APP
Collections 404,969$ 809,938$ 618,887$
Expenses
PCP Compensation 233,000$ 466,000$ 233,000$
APP Compensation - - 108,000
Benefits 42,000 84,000 72,240
Malpractice 18,256 36,512 24,781
Contribution to Overhead 111,713$ 223,426$ 180,866$
1Source: Medical Group Management Association ("MGMA"), 2017 Cost Report
based on 2016 data.
($42,560)Incremental PCP vs. APP
● Many situation-specific variables:
o Physician ramp-up
o Intended role of the APP
o Patient acceptance
o Staff training for patient choices
● APP integration into the practitioner team
Internal Marketing and Loyalty
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Dr. John Doe (Gastroenterology)
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● Top Five:
o John Davis (FP)
o Jane Kelly (IM)
o Nancy Smith (FP)
o Marshall White (FP)
o Michael Meyer (IM)
Referrals In (2,415) Referrals Out (2,529)
Dr. Alfred Jones
● Top Five:
o Diana Gunter (Pathology)
o James Holland (Pain Medicine)
o Anna Stone (Anesthesiology)
o Julia Weiss (Radiology)
o Angelica Tucci (Radiology)
49%51%
Out of Network Referrals
In Network Out of Network
Our Physician Group: Who knows who?
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● Internal practitioner meet-n-greet
● Routine internal physician conferences
o Updates on the financial state of the union
o EMR how-to demos
o Specialty chair presentations
o New quality programs
o New hires
Why not refer to my old friend?
Physician Engagement Ideas
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Recruiting & Onboarding
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Employed Practitioner Performance Improvement
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Practitioner Enterprise
Productivity & Compensation Practitioner
Loyalty
Team Based Care
EMR Utilization
Revenue CycleInternal
Marketing
Coding Optimization
Payer Management
Priorities
Onboarding & Policies
Practitioner Governance
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More than just a signed contract…
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● Due diligence must include hard look at demand and payer mix
● Engage onboarding team early during negotiations
● Identify problematic payers and products
● Offer the entire physician enterprise model, not just a compensation package
● Build vs. buy decisions: buy and integrate may be more expensive than you realize
Circling the Wagons
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Our Physician Group: Illustration
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Loss Drivers
Compensation/Productivity
Incentivizing the RIGHT volume? High cancellation rates and empty appointments?
Are our physicians burdened with other administrative responsibilities?
Do we have established front and back end patient workflows? Do all of our staff know/follow them?
Revenue Cycle
What are our collection rates? Billing education session for physicians?
EMR/IT
Have physicians had sufficient EMR training? Does each office have a designated EMR super-user
Does our care management tool meet our needs? Do we have long wait times for reports we need?
Space/Staff Planning
Offices co-located and easy to access? Right services in the right locations?
Care Teams
Do our clinical staff work to top of license? Do we have care managers/nurse navigators to manage patients through the care continuum?
Coordination of Payer Opportunities
Are we taking advantage of all the opportunities provided by payers?
Are our care management services overlapping with payers and confusing our patients?
Dedicated liaison from each of our major payers with whom we meet regularly?
Confusion on verifying provider eligibility?
What is an acceptable loss?
Our Physician Group: Illustration
44
Loss Scenario
Current Loss per Physician $185,000
Total Physicians 100
Current Annual Loss $18.5M
What improvements can we realistically expect?
Decrease $ loss per physician by… Annual Savings
$50k $5,000,000
$75k $7,500,000
Realistic EPPI Targeted Savings (1-2 Years?)
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Practitioner Enterprise Impact on Patient Engagement
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Practitioner Enterprise
Patient Experience
Payer Relationship
“Why are patients experiencing long wait times and rushed visits? The short answer is inefficiency.”
--JAMA, May 16, 2017
Q&A
Rudd Kierstead, MBA, MPP [email protected]