GE Healthcare Camden Group Insights Blog

Five Ways Medical Groups Can Prepare for Value

Posted by Matthew Smith on Sep 8, 2015 1:52:07 PM

By Marc Mertz, MHA, FACMPE, Vice President, GE Healthcare Camden Group

Healthcare payment is transitioning from fee-for-service to value-based. Although individual markets and organizations are at different stages of this transition, recent actions of the Centers for Medicare & Medicaid Services and commercial payers clearly indicate that the industry is moving in a single direction.

Here are five things that medical groups should be doing right now to prepare for value.

1. Reduce Costs

To prepare for success under value-based payment models, including risk-based contracts, medical groups need to take a critical look at their costs. The majority of medical group operating costs are in just a few areas: physicians and other providers, staff, facilities, equipment, and supplies. Physician compensation warrants its own discussion (see below), but groups should develop cost-accounting capabilities to evaluate and monitor the other cost categories. Each category of expense should be regularly compared against industry benchmarks. As outliers are identified, groups should quickly develop action plans to bring the expenses in line.

As groups advance into value-based models (including shared savings and risk-based models) they will be held accountable for the cost of care provided. Groups should prepare for this scenario now by collecting total claims data from payers and implementing systems for monitoring and reporting costs by clinical category and by physician.

2. Evaluate Contracting Opportunities

Medical groups are responding to the industry’s shift to value by beginning to develop population health management and care coordination capabilities. While these new approaches are largely about eliminating waste and providing the appropriate care at the right time, they may reduce a group’s payment under a fee-for-service contract. Any reductions in utilization or costs may help the patient, and certainly the payer’s bottom line, but do little to compensate the medical group that has invested in the care model redesign, IT, and staffing necessary to implement population health management.

Medical groups should take a more aggressive and proactive approach to payer contracting. Rather than waiting for health plans to offer new payment models while they invest in care redesign, groups should identify opportunities to negotiate care management payments or shared savings arrangements that allow the group to share in the cost reductions it generates. As the group gains experience, it can consider more advanced models, including risk-based models.

3. Update Physician Compensation and Incentives

As payment models change, medical groups should consider redesigning physician compensation models. Most physician compensation plans are predominantly based on volume—work relative value units, revenue, or charges. As groups progress down the path to value, they will need to implement performance measures such as patient satisfaction, access to care, quality scores, and other indicators that support population health management. Rewarding the behavior changes and the clinical cultural transformation necessary for success in the new value-based models is critical.

Consider the use of a physician compensation committee to ensure compensation plan design and performance measures reflect the objectives and values of the group, and to gain buy-in and support. The committee should include administrators and a representative number of primary care, specialty, and hospital-based physicians.

A new compensation plan should be implemented in a way that allows physicians to modify behaviors based on the new incentives. Consider a phased-in approach or “shadowing” process, in which physicians are paid under the old model but receive reports regarding projected performance under the new model.

4. Create Dashboard Reports to Monitor Performance

Ready access to data allows an organization to quickly respond to opportunities and to correct underperformance before it becomes a major issue. During the transition to value, medical groups should continue to monitor traditional key performance indicators such as physician productivity, revenue cycle performance, and operating costs while beginning to track value-based indicators such as cost of care, quality, patient satisfaction, patient access, and gaps in care. To facilitate this level of monitoring, the organization must develop dashboard reports that quickly indicate group performance relative to targets, and that highlight deficiencies. These reports should be shared often, and action plans developed to address any instances of underperformance.

5. Evaluate Your Fee Schedule

Groups should be aware that price transparency is increasing at a rapid pace. Reporting organizations are collecting charge data from medical groups and sharing it with the public via websites and other forums. Meanwhile, the prevalence of high-deductible health plans is increasing and patients are taking a more active role in deciding what care they receive and where they receive it. Groups with high published rates may very well see patients avoiding their services.

Hospital-based clinics that charge a facility fee in addition to professional fees should evaluate whether the high payment is being offset by decreased volume and higher patient dissatisfaction. All medical groups should evaluate their fees in the wider context of their market and consider how patients would view those fees. Groups then should consider promoting transparency by posting the prices for common services on their websites.

Mr. Mertz is a vice president with GE Healthcare Camden Group and has 18 years of healthcare management experience. He has 15 years of experience in medical group development and management, physician-hospital alignment strategies, physician practice operational improvement, practice mergers and acquisitions, medical group governance and organizational design, clinical integration, and physician compensation plan design. Mr. Mertz has managed private practices, hospital-affiliated practices, and academic physician practices. The Medical Group Management Association (“MGMA”) has identified practices under his management as “Best Performing.” He may be reached at marc.mertz@ge.com.  

Topics: Value-Based Reimbursement, Physician Compensation, Payment-for-Value, Marc Mertz

Senate Passes SGR Fix, Embraces Value-Based Reimbursement

Posted by Matthew Smith on Apr 15, 2015 2:45:32 PM

senateThe fix for Medicare’s Sustainable Growth Rate (“SGR”) is finally in as the Senate approved the previously House-passed healthcare reform package (“H.R. 2”). The fix repeals Medicare’s SGR physician payment formula after previous passage of 17 short-term bills since 2003 to block cuts to physician payments. President Obama had previously pledged to sign the bill as soon as it passed the Senate.

Impact on Physicians

  • Stabilizes payment increases from 2015 to 2019 with 0.5 percent increase per year with 0.0 percent payment adjustment between 2020 to 2025
  • Moves to pay-for-value in 2019
    • Incentive bonuses (5 percent annually) to providers who “receive a significant portion (25 percent+) of their Medicare revenue” from an alternative payment model, including patient-centered medical homes and accountable care organizations (“ACOs”) between 2019 to 2024
  • Combines the various current incentive payments and streamlines the current Merit-Based Incentive System (“MIPS”) beginning in 2019 to reward physicians for quality, resource utilization, clinical practice improvement activities, and meaningful use of the electronic health record (“EHR”)

Medical Group Must Dos

The SGR fix doesn’t eliminate challenges for medical groups, whether they are independently or hospital/health system owned. To be successful, medical groups need to be taking action on a number of fronts, including the following:

  • Re-examine your physician compensation plan and add incentives for quality, patient satisfaction, and efficiency
  • Maximize operational efficiency
    • Assess work flows
    • Maximize patient throughput
    • Effectively use care team members to maximize physician effectiveness
    • Improve patient access so you can meet quality and efficiency standards
  • Participate in Medicare’s current value-based payment initiatives
    • Participate in Medicare’s Physician Quality Reporting System (“PQRS”)
    • Attest for EHR meaningful use
    • Analyze your performance on quality and cost and develop a performance improvement action plan now

Other Key Provisions

H.R.2 also extends the Children’s Health Insurance program through September 30, 2017 and includes provisions on hospitals and post-acute providers. Other provisions include:

  • Delays disproportionate share payment cuts to safety net hospitals until 2018 and extends the DSH policy through 2025
  • Delays until September 30 changes in the two midnight rule on inpatient billing that were set to take effect at the end of this month
  • Increases Medicare payments to post-acute facilities by no more than 1 percent in 2018
  • $7.2 billion in additional funding for community health centers
  • Permanently extends Medicare’s Qualifying Individual program for low income seniors and the Transitional Medical Assistance program that helps families with Medicaid keep their coverage as they transition from welfare to work

Only about one-third of the $200 billion-plus package was offset by spending cuts. To help offset new spending, H.R. 2 provides for means testing for Medicare recipients. Higher-income beneficiaries will pay higher premiums for physician services and prescription drugs; some Medi-Gap plans will see limits on first-dollar coverage.

Although the bill’s passage was welcomed, some expressed caution and suggested that the legislation should not be considered a permanent solution. Additional payment updates and bonuses are currently set to expire in 2025 so there will be a need to re-examine the physician payment methodology again in the future.

Topics: Value-Based Reimbursement, Medicare, Physician Compensation, Operational Efficiency, Physician Group Practices, Sustainable Growth Rate, SGR

Top 10 Trends and Implications for Medical Groups in 2015

Posted by Matthew Smith on Jan 27, 2015 2:23:00 PM
By Mary Witt, MSW
Senior Vice President, The Camden Group

016_healthcare_consultant.juSuccess in 2015 requires clear thinking and decisive action. Whether independent or hospital/system-owned, medical groups cannot continue to do business as usual and expect to succeed in 2015. Increasing financial pressures, the move to fee-for-value, and increased expectations for quality require new ways of doing business. Here are the top 10 trends for 2015 that can provide direction and focus as medical groups plan for the year ahead.

1. A focus on performance optimization is necessary for success. Medical groups can no longer be satisfied with median performance. Medical groups that are not pushing themselves to excel will find themselves left behind as top performers emerge and gain market dominance. Also, as financial pressures increase for hospitals and health systems, they will no longer be able to sustain the high losses experienced by many hospital-owned medical groups. It is critical that medical groups assess their performance as compared to industry best practices and implement a performance improvement plan to address any deficits. To sustain forward momentum, medical groups should establish clear accountabilities for performance throughout the medical group by creating measurable performance standards, continually measuring performance against targets through the use of dashboard reports, developing action plans to address variances, and incorporating performance expectations into job descriptions.

2. Patient collections cannot be ignored. With the increase in high deductible plans and patient copays, medical groups are seeing a significant increase in the dollars owed by patients. Therefore, an effective patient collection process that starts when the appointment is scheduled is critical to ensuring that all revenue owed is collected. When the appointment is scheduled, patients should be informed of copay and deductible amounts as well as outstanding balances, and the expectation that payment is due at the time of the visit should be established. Time of service collections should include collection of all monies owed for the services provided that day as well as any outstanding balances.

3. 2015 brings increasing competition from nontraditional organizations. New, non-traditional competitors are entering the outpatient medical care market. Retail firms such as WalMart, Walgreen’s, CVS, and RiteAid have created primary care clinics; while some have partnered with local providers, more often they have created their own clinics or partnered with national firms. Target and Kaiser Permanente have developed a partnership to provide primary and specialty care in clinics in Target stores that will be open to nonKaiser enrollees. Payers such as Anthem California are marketing e-visits directly to their enrollees bypassing the traditional in person physicianpatient relationship. Partnering with non-traditional organizations is an option that should be assessed as well as considering non-traditional practice locations. It is important to understand what patients want and expect of the practice to retain them. Regularly survey patients about their experience with the practice; consider the use of focus groups to gather more in-depth data on what is important to them.

4. Physician compensation models require redesign. As medical groups prepare for fee-for-value payment, increasing competition, and a focus on quality, there is likely a need to redesign their compensation model to better align incentives with the new environmental realities. What worked in the past is unlikely to work in the future. It is important to understand how quickly the market is shifting from fee-for-service to value-based payment in order to determine what needs to be changed and how quickly it needs to happen. Medical groups will want to develop a road map to broaden compensation incentives to prepare for fee-for-value payments. Consider adding incentives for care coordination, quality, and efficiency in addition to productivity. Initially, it may make sense to devote a small percentage of compensation to these new metrics to prepare for the future if the market is not demanding immediate change.

5. Transparency is becoming increasingly important. The era of transparency in cost and quality is here. Payers are publishing provider charges by Current Procedural Terminology (“CPT”) code; CMS has published Medicare payments made to physicians. Employers are demanding price transparency, especially as they move to high deductible plans and pass more cost on to their employees. States are creating multipayer pricing databases based on payer claims data and providing access to consumers. Many new websites enable consumers to shop price and quality. Quality is being tracked more vigilantly, and quality scores are readily available to the consumer through a variety of websites. With all of this data available, it is important that medical groups understand how their pricing and quality compare to their competitors and take action to ensure that high prices and poor quality do not cost them patients.

6. Mastery of technology cannot be ignored. Medicare demands that medical groups report on quality or face penalties, and payers increasingly link payments to quality reporting or results. Therefore, medical practices need to be able to collect, analyze, and exchange data. Also, as expenses increase, and operational demands become increasingly complex, the ability to automate work is critical to improving efficiency. New care models increasingly rely on real-time access to patient clinical data as well as access to tools such as telemedicine or health monitoring devices. Effective use of technology to improve results is a necessary element for future success. Evaluating current work flows and looking for inefficiencies (e.g., duplicate data entry, multiple handoffs) can lead to identifying opportunities for automation. Explore the use of telephone technology to automate tasks such as appointment and payment balance reminders. Participate in a health information exchange that provides two-way communication and clinical results with hospitals, referring physicians, and other health providers. Use an electronic health record to assist clinicians in the care of their patients; the use of real-time prompts assists physicians in performing preventive services and informs them when test results are outside of normal.

7. Managing a population of patients requires new care delivery models. Managing a population of patients requires a change in how care is delivered. The focus is no longer on episodic care, but instead focuses on managing the total healthcare needs of a population of patients. The emphasis shifts to “providing the right care at the right time in the right place.” Redesigning care involves transforming both how care is delivered and who delivers the care. Re-examine roles within the practice to ensure that everyone is working to the top of their license/expertise. Successful management of a population of patients requires an expanded team approach to care. New care team members can include advanced practice clinicians, care managers, social workers, pharmacists, nutritionists, and health coaches with leadership and direction provided by the physician. Reexamine the workflow in the office to assure that as the care model evolves, the work flow is adapted to facilitate efficient use of space and staff. Explore the feasibility of using e-visits, tele-health, and group visits to improve access, responsiveness, and maximize patient engagement. Consider the operational and financial feasibility of implementing Medicare’s newly reimbursed chronic care management.

8. Patient engagement leads to better outcomes. Patients actively engaged in their care have better outcomes and utilize fewer health resources. In order to maximize patient engagement, medical practices must move from telling patients what to do to assisting them to develop the knowledge, skills, and confidence necessary to be an active partner in their care. Train physicians and staff on communication skills and motivational interviewing and integrate expectations into physician and staff performance expectations. Ensure that patients are actively engaged in discussing their health and developing their care plan. The use of patient portals can be an effective means of maintaining communication with patients and monitoring their adherence to care plans.

9. Patient demand for access is not going away. Thus, ensuring timely patient access has to be a medical group priority if the practice is to have satisfied patients. To understand patient access, routinely monitor third next appointment availability. Calculate the practice’s patient demand versus practice capacity, and implement strategies to increase capacity as needed. Consider allowing patients to schedule their own visits through a patient portal, providing evening and weekend hours, offering e-visits, and communicating by email and text. Practices should also employ strategies to facilitate regular communication with their patients through e-mail blasts, texting, and social media.

10. Physicians will continue to move toward the employment model. As the complexity of medical practice and economic pressures increases, and the demand for capital for practice infrastructure (e.g., electronic health record, care team staffing) grows, more physicians are choosing to become employed, and that trend is likely to accelerate over the next few years. This provides opportunities for existing medical groups and hospitals/health systems to add physicians to their practices as they seek to capture a greater population. To ensure a successful employment relationship, medical groups and physicians both need to clearly define their goals and expected outcomes and then develop a set of criteria to guide decisions as opportunities are considered.

As medical groups grapple with the many challenges of 2015, it is important to focus on optimizing performance and preparing for value-based reimbursement by meeting the needs of patients efficiently and effectively. Concentrate on how to create a strategic advantage by establishing capabilities or attributes that will distinguish your group from competitors. In difficult times like these, superior, nimble, focused performance will lead to success.

Mary Witt, The Camden Group, Physician ServicesMs. Witt is a senior vice president with The Camden Group and has over 25 years of healthcare experience. She has held management positions in hospitals, health systems, and management services organizations (MSOs). She has extensive experience in medical group and integrated delivery system development and management. This includes developing patient-centered medical homes, practice management, performance improvement, physician compensation, managed care, strategic planning, healthcare marketing, and physician recruitment. She may be reached at mwitt@thecamdengroup.com or 424-201-3971.


Topics: Clinical Integration, Population Health, HIT, HealthIT, Mary Witt, Medical Group, Medical Groups, Clinically Integrated Networks, Physician Compensation, Patient Engagement, The Camden Group, Trends

Infographic: Physician Compensation Stats Visualized

Posted by Matthew Smith on May 2, 2014 10:34:00 AM

Infographic, Physician CompensationLast week we published a blog post detailing the results from Medscape's latest physician compensation report. We reported that Orthopedists, including orthopedic surgeons, averaged $413,000 in total compensation last year, the most of any specialty. Cardiologists were second with $351,000. Family physicians and infectious disease physicians held the lowest two spots, earning $176,000 and $174,000, respectively.

Other pertinent takeaways include:

  • Solo-practice physicians were making, on average, $222,000 in 2013, a 5% increase from the $211,000 they were bringing home in 2012.
  • Providers working in a single-specialty practice made $273,000 in 2013 compared to $265,000 in 2012 — a 3% increase.
  • Multispecialty practice physicians saw no change in income, earning $260,000 for both 2013 and 2012. 

Physician Compensation, Infographic

Topics: Infographic, Physician Compensation, Orthopedists

2014 Physician Compensation Report Lists Orthopedics as Top Paid Docs

Posted by Matthew Smith on Apr 23, 2014 3:15:00 PM

Physician Compensation, Orthopedics, Primary Care PhysicianThe results from Medscape's latest physician compensation report reaffirm trends from the past: procedure-based and surgical physicians continue to make much more than primary care physicians and those who manage chronic diseases.

Orthopedists, including orthopedic surgeons, averaged $413,000 in total compensation last year, the most of any specialty. Cardiologists were second with $351,000. Family physicians and infectious disease physicians held the lowest two spots, earning $176,000 and $174,000, respectively.

Here are 25 statistics on physician compensation from last year, in descending order from highest-paid to lowest-paid. 

Note: Medscape's report is based on compensation information from more than 24,000 physicians.

1. Orthopedics — $413,000
2. Cardiology — $351,000
3. Urology — $348,000
4. Gastroenterology — $348,000
5. Radiology — $340,000
6. Anesthesiology — $338,000
7. Plastic surgery — $321,000
8. Dermatology — $308,000
9. General surgery — $295,000
10. Ophthalmology — $291,000
11. Oncology — $290,000
12. Critical care — $281,000
13. Emergency medicine — $272,000
14. Pulmonary medicine — $258,000
15. Obstetrics/gynecology — $243,000
16. Nephrology — $242,000
17. Pathology — $239,000
18. Neurology — $219,000
19. Rheumatology — $214,000
20. Psychiatry/mental health — $197,000
21. Internal medicine — $188,000
22. Diabetes/endocrinology — $184,000
23. Pediatrics — $181,000
24. Family medicine — $176,000
25. HIV/infectious disease — $174,000

Topics: Physician Compensation

Infographic: Highlights of Medscape's Physician Compensation Report

Posted by Matthew Smith on Aug 2, 2013 10:00:00 AM

Medscape Physician Compensation Report, Infographic, Physician CompensationThe 2013 Physician Compensation Report, published by Medscape, reveals physicians' most current salary and earnings trends by medical specialty.

This comprehensive report, with new questions and insights this year, represents data from nearly 22,000 US physicians across 25 specialty areas. It provides rarely-shared information on personal income, patient load, time spent per patient, attitudes toward insurers, and much more.

Key takeaways include:

  • 2012 compensation statistics
  • Compensation by geographic area
  • Compensation by practice setting
  • Participation in various payment models
  • Hours spent with patients per week
  • Number of patient visits per week
  • Satisfaction by speciality

Click here to view the complete slideshow at medscape.com. 

Highlights of the report are included in the infographic, below:

Physician Compensation Report, Medscape, Employed Physicians

Employed Physicians, Employed Physician Practices

Topics: Employed Physicians, employed physician practices, Independent Physicians, Physician Compensation

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