Why Hire a Practice Administrator?
Author: Cynthia M. Roehr, CPA, CMPE
Medicine is a business. Every independent anesthesia group recognizes the incredible complexity of the current environment. But many smaller groups continue to manage their practices primarily through the efforts of their physicians. They supplement these efforts with services of consultants, CPAs, lawyers and billing company personnel. But is this sustainable? And more importantly, wise?
In 2014, Ronald Booker, JD, CPA published an article titled “The Value of a Quality Practice Administrator” in the Anesthesia Business Consultant’s Fall Communique. It is still available online at https://www.anesthesiallc.com/publications/communiques/83-communique/past-issues/fall-2014/695-the-value-of-a-quality-practice-administrator Despite being written over 5 years ago, its perspective and information is still accurate. His article outlines the advantage an administrator provides through assistance with decision-making, problem-solving, communication and relationships. Mr. Booker concludes his article by saying “A quality administrator is worth his or her weight in gold.”
While it is true that physicians can perform these responsibilities, doing them part-time does not yield the same result as devoting your full consciousness exclusively to them. Administrators that I know spend their days (and nights!) scheming on how to build a stronger relationship with hospital CEOs, outsmart insurance carriers or facilities in upcoming negotiations and develop new ideas to eradicate employee/provider misbehavior currently underway. Physicians are some of the smartest people around, but part-time or fragmented effort is not the equivalent of full-immersion.
Similarly, there are aspects of practices that need constant or perpetual attention. Billing collections and compliance, HIPAA security, MIPS and CRNA compensation and benefits are a few examples of such items. Likewise, positive, enduring relationships are invaluable when working through negotiations. These need continuous nurturing along with historical and in-depth knowledge. Lapses can occur when practices rotate these roles among physicians. The loss of institutional knowledge is detrimental and can be costly. As well, there’s the adage of “we don’t know what we don’t know” – the nuances of these intricate topics and relationships are infinite and important.
Ours is an industry wrapped in government bureaucracy. Is your practice compliant? Medicare requires annual (i) Privacy Awareness Training (ii) Fraud, Waste and Abuse Training (including compliance training) and (iii) HIPAA Security Training EVERYONE in the organization. And every practice, even if lacking an “office” is required to complete (and regularly review and update) Medicare’s Security Risk Assessment Tool. Every provider and practice vendor is required to be regularly checked to assure they are not on the OIG and SAM excluded provider lists. For the areas of (a) Security, (b) Privacy and (c) Code of Conduct or Compliance, Medicare also requires (i) an assigned/identified officer and (ii) documented plans. Fines apply if requirements (and documentation retention requirements) are not met. Do you have individuals assigned to assure these are completed and documented?
Are there other things that are just not getting done? While you might see some of these as optional, they are vital for anesthesiology and the future viability of independent practices. Is someone completing the MGMA cost and compensation surveys so the industry has the information needed for stipend negotiations? Did someone send ASA their insurance contracting data for that annual survey? And within your practice, is someone documenting the attendance and performance of CRNAs and physicians? Is everyone doing their CPE and renewing their privileges and licensure timely? Are there FMLA attendance issues and is EPLI insurance in place to protect from litigation? Is everyone really “rowing your boat” in the same direction? Or is your practice standing still?
Each practice has an endless number of opportunities to improve. Examples include chasing underpaid claims, exploring cost-savings opportunities (e.g. self-insurance of deductibles, new banking relationships), developing new benefits (e.g. early-retirees’ health insurance coverage), evaluating providers, restructuring compensation plans, etc. There are not enough hours in a day/week/year to tackle all the opportunities that exist. When physicians opt to self-manage their practice, these improvements have difficulty getting the attention and traction they need. Physician-managed practices tend to be reactive instead of proactive. Thus these practices are not optimized and over time will find themselves lagging in the recruiting and negotiating arenas.
Billing companies definitely employ some individuals with incredible talent. But practices cannot and should not expect billing companies to independently evaluate the competency or quality of their own revenue cycle management performance. Nor do these individuals have boots-on-the-ground or a sense of your medical community for factoring those distinctions into decisions and recommendations on policies and procedures. Just as one-size-does-not-fit-all, packaged solutions are not always the best option. And these arrangements typically lack the continuity, immersion and drive/traction mentioned above.
Practices with administrators are situated to design more sophisticated processes and structures. These practices allow members to work unequal workloads, develop compensation systems that reward desired behaviors, and advance their relationships with facilities. They have investments in surgery centers or other ancillary care. Their communication structures include secure-email, online scheduling, policies and information sharing. Whether creating and adopting policies, reconfiguring compensation to reward positive improvement or evaluating new systems and technology, administrators focus their attention is on making the practice better. Simple is great for some practices, but some groups desire more; administrative help allows this to happen.
Administrators also provide a more independent perspective. Because they are beholden to the group as a whole, their focus is on making decisions that are best for the entirety of the practice. Using their peer networks, many times they can provide alternative ideas to resolving issues confronting the group. A peer shared her story of joining a practice that had struggled with timely chart completion for decades. By sharing her actual “war story” of a governmental audit in a prior job, the practice adopted a no-exceptions policy within weeks of her hire date and has resolved this issue.
So how DOES a practice administrator pay for themselves? For me, I identified an ongoing, multiple-six-figure embezzlement during my first year; the group had no hint it was underway. Another group’s new leader rectified unequivocal discriminatory pay rates before litigation arose. And another peer identified and resolved HIPAA exposures that were ripe and pervasive before a breach occurred. Not every group has such sensational problems, but “you-don’t-know-what-you-don’t-know.” And there are always mundane opportunities to cut cost within practice structures. For example, good administrators draft and review legal documents to lessen actual attorney time/costs and bring bookkeeping and financial reporting inhouse. And medical liability insurance premiums and benefits are always ripe for negotiation.
Probably the surest way for an administrator to offset their salary is to increase the oversight of the billing company. Many billing companies do not provide evidence that all charges have been captured and (timely) posted. Similarly, many do not reconcile the posted payments to what was deposited to your bank (thereby mitigating embezzlement risk). Watching the key statistics for aberrations is important, but a thorough review of individual charges and detailed reports will reveal a treasure-trove of information. Squeaky wheels get oil. Doctors just do not have time or patience to dig into the details. (Nor is it the best use of their skills and talents!)
For those practices without any administrative personnel, adding an administrator is a transformation and must be viewed as such. The physicians must be willing to share information and responsibilities. They must be willing to listen and teach; it takes time for a new administrator to fully acclimate to their new environment. Best practice is for the administrator and physician leader to work cooperatively as a dyad. The administrator needs to be seen as a peer by physician-leaders, despite being accountable to the owners and executive board. This relationship can be dicey, since the best administrators are not “yes-(wo)men”; but as long as respect remains and all parties are focused on the best-interests of the whole practice, the dyad can be successful.
There is a wide range of salaries for administrators. Business Managers (mean compensation of ~$70k), Practice Administrators (~$125k), and CEO’s (~$220) differ greatly in experience, authority and responsibilities assumed. For smaller practices that are looking to hire their first administrator, a newer Business Manager with ambition (thus a practice administrator in training) may be your best option. And before you get scared away, remember that some individuals may be looking for life-work balance at a lesser salary. Relieving the burden of administrative responsibilities from the backs of physicians will enhance the sophistication of the practice and allow those physicians to have a better life-balance. And after all, isn’t that what we all want?
Cindy Roehr is a CPA with over a quarter-century of anesthesia and practice management experience. She has been a frequent speaker at ASA and MGMA conferences and consults with groups on provider performance evaluations, hospital contracting, governance, financial modeling and RCM issues. Additional information about Ms. Roehr and additional articles pertaining to practice management may be found at www.roehrconsultingllc.com