Hospitals spend two to 10 percent of revenue in either non-employed or employed physician payments. In fact, it is no secret that hospital employed practices annually lose between $150,000 and $200,000 per physician.

According to the Medical Group Management Association, losses in excess of $200,000 per physician are not uncommon. Over the past 20 years, physician practice loss has steadily increased with a significant increase seen in the last 10 years.

In a recent nThrive educational webinar entitled, “How to Decrease Physician Practice Financial Loss,” Jon Maner, Trinity Health vice president of Operational Excellence and Brian Buell, nThrive vice president of Client Management Analytics Advisory, discussed the steps they are taking to discover and quantify the root causes of Trinity’s employed physician practice financial loss – the key being to engage a ground-level, practice-view approach.

“It's not surprising to me that the amount of loss has increased in a 10-year span; I've seen that firsthand,” noted Maner. “Up until the last few years, Trinity Health compared relatively well to the industry numbers.” Since the deployment of the health care provider’s comprehensive performance management system, they are beginning to see improvements relative to benchmark, progressing them past the average.

Buell explained that the nThrive data ingress process has been essential; it provides Trinity Health a practice-level view. Through the data ingress process, the provider’s EHR, billing, general ledger and costing data from more than 40 systems were aggregated and mapped into a single dataset.

“Now everyone across the health system understands the data element that is measured and they know that it actually compares to the benchmark because you know the performance is being measured the same way across the enterprise,” Buell explained. “Everybody understands what you mean when you say it isn't right... So now you can focus on improving business first and foremost.”

When data is consistent across each physician group, practice data can be compared in a uniform fashion to different benchmarks, which in turn unearths financial and operational opportunities within a practice. Through the nThrive A10 Practice Assessment, Trinity Health can identify gaps across the 10 economic drivers of a physician practice, which include: 1) volume drivers, 2) revenue drivers and 3) cost drivers; also referred to as “the three-legged stool.”

Economic Drivers of a Physician Practice


"The 3-legged Stool"

VOLUME DRIVERS

  • Volume

  • Visit and procedure volume relative to benchmark

  • Visit Coding

  • Coding patterns of patient E&M visits relative to benchmark

  • Procedure Utilization

  • Procedure acuity relative to benchmark

REVENUE DRIVERS

  • Revenue Cycle

  • Efficiency and effectivness of billing and collections

  • Rates

  • Commercial rates relative to benchmark

  • Payor Mix

  • Composition of payor sources relative to benchmark

  • Other Revenue

  • Revenue not related to procedures/visits relative to benchmark

COST DRIVERS

  • Overhead - Labor Cost

  • Labor costs relative to benchmark

  • Overhead - Other Cost

  • Other costs relative to benchmark

  • Compensation

  • Provider compensation relative to benchmark

Maner explained that he’s become more acclimated to the physician enterprise and how to run high performing physician groups. He’s also learned that speaking about the economic model really resonates with physician practices and medical groups.

“It's in a simple, easy to understand fashion that's much more exciting to folks than just using a lot of finance and accounting jargon that people don't necessarily connect to,” Maner added. “Those are the three things you do to make any business run better.”

With this apples-to-apples comparison, Trinity Health has had the ability to build action plans from the ground up, from the practice or provider level where opportunity is best measured. It is at the practice level where action plans are crafted, opportunity for growth is realized, and progress is tracked and measured to monitor progress.

“If you don't build this from the ground up, meaning provider and practice level up, it's very easy for the benchmarks to misguide you and not serve pockets of opportunity,” Maner reiterated.

Ultimately, the key takeaway from the webinar was that data integration and transparency hold the key to physician practice operational and financial success. To learn more about how Trinity Health and nThrive are innovating and tightening the revenue cycle to gain financial and operational efficiency, and deliver great care and patient experience at the lowest possible cost, view this informative session.

To learn more about nThrive’s A10 Physician Practice Assessment, click here.