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* From Alexian Brothers Health Network, Suburban Lung Associates (Ms. French), Elk Grove Village, IL; and Aspen Financial Services, LTD (Mr. Bauer), Strongsville, OH.
Correspondence to: John S. Bauer, FACMPE, MBA, CPA, Aspen Financial Services, LTD, 11351 Pearl Rd, Strongsville, OH 44136; e-mail: jbauer{at}aspen-ltd.com
Abstract
Objectives: Physician productivity, practice expense, resource allocation, facilities, staff, and malpractice are variables in medical practice profitability. The ongoing challenge of collecting reliable and consistent data created an opportunity in 2001 for the American College of Chest Physicians (ACCP) Practice Administration Network (PAN) to develop a practice-based survey that measured the variables most related to the bottom line.
Methods: The PAN designed a comprehensive practice survey in 2001 that has been distributed to > 2,000 ACCP members each year. The specialty-specific survey differed from those offered in the market, as its aim was to capture information about pulmonary, critical care, and sleep practices. The single-answer survey included practice expense categories and those related to accounts receivable management. An on-line survey vendor (www.surveymonkey.com) was selected as the platform based on broad functionality and a flexible architecture.
Results: The survey was conducted each June for 5 consecutive years. In 2001, survey respondents represented 68 pulmonary physicians. By 2005, 229 practices responded representing 774 individual physicians. Participants included members of ACCP Leadership, ACCP Committees, and related networks, and past survey participants. The data are presented in graphic format as a percentage of total respondents.
Conclusion: The survey offered participants a mechanism to contrast and compare specialty-based trends in practice expense, staffing levels, clinical services, malpractice cost, facilities utilization, and financial management strategies of "better performing" practices. It has served as the groundwork for related Practice Management Committee and Practice Management Department initiatives. The ACCP anticipates future survey collaboration with the Medical Group Management Association.
Key Words: practice management • revenue cycle management • survey
Measurement of practice expense, resource allocation, facilities and staff utilization, malpractice trends, and "better performing practices" in accounts receivable (A/R) management have been studied as independent variables in medical practice profitability. As reimbursement for health-care services continues to decline and is subject to reallocation strategies, physicians and administrators need to gain a better understanding of how controlling costs and increasing productivity improve profitability. The ongoing challenge of the collection of reliable and consistent data is one that deserves further investigation.
In 2001, the American Thoracic Society published a clinical commentary in the American Journal of Respiratory and Critical Care Medicine1 that summarized the results of a nationally administered practice expense survey. Teams of accountants visited nine pulmonary practices and gathered detailed cost data. The purpose was to determine whether Medicare reimbursement actually covered the cost of certain current procedural terminology codes. The study concluded that Medicare reimbursement may not cover the cost of providing care, and emphasized the importance of managing cost.
Similarly, the AMA News published like findings in its November 2005 article,2 "Doctors’ Costs Going Up Faster Than Revenues." The Medical Group Management Association (MGMA) cost survey data from 2004 and 2005 were cited. These data inferred that doctors would need to increase productivity and cut costs if they expected to maintain their current compensation. Multispecialty practices reported an average increase in 2004 of 1.3% in operating costs, with a 0.7% decrease in total revenue.2
The MGMA Cost Survey for Single or Multi-specialty Practices is professionally regarded as one of the most reliable and valid sources of cost data. Unfortunately, pulmonary and critical care participation has declined dramatically over the past 10 years. This limitation created an opportunity for the American College of Chest Physicians (ACCP) Practice Administration Network (PAN) to develop and implement a national survey that would capture specialty-specific data about practice operations, revenue, and costs. Survey data have been presented in a plenary session at CHEST since 2001. During its inception at a prior CHEST meeting, survey volunteers discussed the project purpose and implementation strategy, and have remained involved in improvements in design and administration for > 4 years.
Purpose and Participant Selection
The purposes of the survey were to establish a data repository of better performing practices, and to identify resources that would address the specialty-specific needs of physicians and administrators working in the field of pulmonary, critical care, and sleep medicine. The ACCP approved the inaugural paper version of the survey in May 2001. The survey was originally titled a "Practice Benchmarking Survey." It has become the "Practice Profiles Survey," demonstrating that validated benchmarks may not exist, but trends in the specialty are reproducible. An on-line version of the survey quickly followed (www.surveymonkey.com) and has been sent to > 2,000 ACCP members annually for 5 consecutive years. Participant selection typically includes members of the ACCP Leadership, the Practice Management Committee, Government Relations Committee, PAN, Private Practice Network, Allied Health Network, and past survey participants. Geographic diversity was attempted but could not be well controlled. The amount and quality of data submitted have increased exponentially as the survey continues to gain support from the College. The creation of the Practice Management Department has further developed a focus on practice management, committed resources to the project, and gained survey administration expertise.
Overall survey participation has increased each year at a minimum of 100% during most years (Table 1 ). Survey participation has also varied between smaller (one to five physicians) and larger (six or more physicians) groups (Fig 1 ). Demographics do not seem to have had a substantial impact on survey results.
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Design of the questions was challenging as simple, single-answer questions were desired. The authors combined criteria used in prior MGMA surveys, the American Thoracic Society Practice Expense Survey, and proprietary surveys used by management consultants in industry. Using these as templates, the PAN collaborated with the Private Practice Network to design a comprehensive on-line survey (www.surveymonkey.com) that included scheduled e-mail invitations to participants, a Web-based link, dropdown answers, and a free-text comments section. Typical survey instruction and completion time was estimated at 30 min. In the most recent versions, survey answers were able to be corrected for error by either the respondent or survey administrators. These limitations in design are comparable to the ones described by Stephanie M. Levine, MD, FCCP, in her article on behalf of the Transplant and Immunology Network published in CHEST.3
Major survey categories included the following: two to four questions pertaining to number and types of physicians, NPPs, clinical and clerical staff; numbers of office and hospital locations; average labor and benefits cost; malpractice cost; average square foot of space per provider; clinical services offered; averages charges and collections; an A/R profile; days in receivables; outsourced services; types of electronic platforms that practices use; and patient satisfaction measurement. Survey responses were tabulated with on-line software (www.surveymonkey.com) and the use of Excel spreadsheets (Microsoft; Redmond, WA) by staff liaisons at ACCP and members of the PAN.
The data have been presented annually in simple graphs most often denoted by percentage of respondents. In a few categories, smaller practices (one to five physicians) are compared and contrasted to larger practices (six or more physicians). In those categories, the size of the practice did not impact the results.
Although cost-based surveys exist, none seem to be specialty specific for pulmonary and critical care medicine. It is important to acknowledge that this type of survey has inherent design and data collection limitations. They do, however, add practical value to those interested in improving practice performance. It offers the participant a mechanism to review specialty-based trends in practice structure, staffing levels, clinical services, malpractice cost and coverage levels, facilities utilization, and guidelines for financial management.
Results
The survey initially asked questions regarding personnel managing the practice. The questions were divided into three categories: nurse manager, bachelor’s degree personnel, and master’s degree personnel or equivalent. The percentages of practices employing bachelor’s- and master’s-degreed managers in 2005 were 43% and 31%, respectively. The results for 2005, compared to previous years, demonstrate an increased percentage of practices employing both bachelor’s- and master’s-degreed individuals. The percentage of nurse managers has declined over the past few years to the present level: 19% of groups reported using a nurse as a practice manager.
When reviewing the actual costs for employees, the 2005 survey of salaries and wages increased from 2004. Average staffing per full-time equivalent (FTE) pulmonologist was 4.55 employees per physician in 2005, up from 3.96 employees per physician in 2004. The increase of approximately 0.6 FTE is reflected in the clinical and nonbilling clerical staffs. The billing staff per physician remains relatively consistent with 2004 levels (Table 2 ). The MGMA Cost Survey for Single-Specialty Practices does not report on the pulmonary specialty; but for comparison, other internal medicine subspecialties such as cardiology and gastroenterology have reported mean staffing per FTE physician of 5.67 and 4.75, respectively.4
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The survey obtained average patient charges and total collections for an FTE pulmonologist using a single fee schedule (Table 4 ). These reported averages are consistent with contemporary thinking that pulmonary physicians are "working harder and making less." The 2005 survey also states that a pulmonologist’s average pay and pension was 46% of total revenue, or $267,190. In the 2004 survey, a pulmonologist’s pay and pension together was 58% of revenue, or $270,765. This average pay included all reportable income and the physician’s pension plan contribution.
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The most complex process within a practice is the revenue cycle. The survey measured three major indicators of the objective performance of the revenue cycle. The survey has provided vital data relative to the aging of A/R, not inclusive of collection accounts, and the timeliness and thoroughness of the revenue cycle. When reviewing the survey data, practices were segregated into groups with a total percentage of the receivables > 90 days of < 12%. In our opinion, this population represents a group of 13 "better performing" practices. The average aging of A/R for these practices is in Table 5 .
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The second major indicator of the performance of revenue cycles is the "adjusted collection ratio" or the "adjusted fee for service collection percentage." The adjusted collection ratio is defined as "the ratio that indicates how effective and efficient the group is collecting its adjusted fee for service gross charges."5 We like to think of the adjusted collection ratio or the adjusted fee for service collection percentage as an objective measurement of the "staff’s thoroughness" in the collection process. The equation for the adjusted collection ratio is as follows: net fee for service revenue (collection)/adjusted fee for service charge.
Empirically, we have noted that for the revenue cycle of a practice to operate efficiently, the adjusted collection percentage should be in the 98 to 102% range. The average adjusted collection ratio in the survey was 83%, which is well below the acceptable range. Only 36% of the groups that participated had an adjusted collection ratio in the acceptable range of 98 to 102%. It should be noted that poor collection of co-pays and deductibles, which can approximate a practices profit for an office service, can have a large effect on the adjusted collection ratio. Due to the volatility in physician charges and collections, the adjusted collection ratio should be calculated using a minimum of 3 consecutive months of revenue cycle transaction data.
The third major indicator of the performance of the revenue cycle is "days revenue in A/R" or simply "days in receivable." Days in receivable are a measure of the "timeliness" of the revenue cycle, or a measure of the average number of days that a group’s charges are outstanding and pending collection. The equation for days in receivable is as follows: A/R ending balance/annual payments plus annual adjustments/360.
The survey results showed an average days in receivable of 55 days. The survey’s 10 "better performing practices" averaged 27 days, but 26% of participants exceeded 75 days. The MGMA cost survey for single-specialty practices reported that the mean days in receivable were 41 days for cardiology and 42 days for gastroenterology.4 Based on survey results for the adjusted collection ratio averaging 83% and days in receivable being at 55 days, we conclude that many of the practices surveyed are not performing the adjudication of the fee-for-service charges in a timely and thorough fashion. Knowing the amount collected, and the percentage of charges collected, does not constitute a measurement of the performance of the revenue cycle. Practices need to monitor the three aforementioned major indicators on a trending basis to objectively assess whether they are performing within acceptable standards.
The survey also asked whether practices measure patient satisfaction. In 2004 and 2005, 38% of practices responded that they measured patient satisfaction. Practices performing patient satisfaction surveys (2004, 81%; 2005, 78%) responded that they reviewed results and altered procedures accordingly. It is our belief that the use of formal patient satisfaction information is an important tool to change behavior and increase patient satisfaction with services rendered.
Conclusion
The 2005 Practice Performance Survey, "the vital signs of a pulmonary practice," has provided many practices with comparative data and information to assess practice performance. There have been numerous calls from physicians and practice managers requesting further information. Many stated that the survey is their basis for analyzing individual practice data compared to national trends described in the survey results. To review the survey results in their entirety, contact networks@chestnet.org.
Footnotes
Abbreviations: ACCP = American College of Chest Physicians; A/R = accounts receivable; FTE = full-time equivalent; MGMA = Medical Group Management Association; NPP = nonphysician provider
The authors have no financial or other potential conflicts of interest.
Received for publication February 7, 2006. Accepted for publication June 12, 2006.
References
This article has been cited by other articles:
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  S. Goldfarb and C. Higgins Pulmonary practice profiles: results of a practice performance survey. Chest, September 1, 2006; 130(3): 636 - 637. [Full Text] [PDF]
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