Taking a Swing at Better PM

May 1, 2006

A North Carolina-based orthopedic practice improves operations and strategic growth with an on-demand practice management service.

The hardest thing to do in golf is to make major swing changes or switch to different equipment—a fact, with which few avid golfers would disagree. In 1973, I was graduating from Duke University as a two-time All American golfer and I was looking to make my mark on the PGA Tour. Having had a good collegiate career, many of my teammates and friends thought I had all the physical and mental attributes I needed. However, I knew I needed to get even better in order to compete professionally, so I decided to take the necessary steps to improve on my swing. After a year and a half of intense training, frustration and reflection, I had refined my swing and went on to have a successful four and a half year career on the PGA Tour. I left the golfing world to enter the world of medicine, specifically orthopedic surgery. Years later, I found myself in the same transitional situation I had been in as a budding professional golfer.

A North Carolina-based orthopedic practice improves operations and strategic growth with an on-demand practice management service.

The hardest thing to do in golf is to make major swing changes or switch to different equipment—a fact, with which few avid golfers would disagree. In 1973, I was graduating from Duke University as a two-time All American golfer and I was looking to make my mark on the PGA Tour. Having had a good collegiate career, many of my teammates and friends thought I had all the physical and mental attributes I needed. However, I knew I needed to get even better in order to compete professionally, so I decided to take the necessary steps to improve on my swing. After a year and a half of intense training, frustration and reflection, I had refined my swing and went on to have a successful four and a half year career on the PGA Tour. I left the golfing world to enter the world of medicine, specifically orthopedic surgery. Years later, I found myself in the same transitional situation I had been in as a budding professional golfer.

   Addressing New Market Pressures

Today, many medical practices are experiencing financial and operational stagnation that is eroding their productivity and profitability. This can include declining cash flow, losses from ineffective billing, and claims rejections that raise administrative costs and further extend days in accounts receivable.

In 2001, my medical group, Triangle Orthopaedic Associates, P.A., of Durham, North Carolina, a surgical group with over 60 providers and nine locations, was for the most part a well-run group that had just selected a software-based practice management (PM) package from an established vendor. Over the course of the next few years, we used the software-based PM system with fair success, looking to mitigate the same operational challenges facing so many groups.

It wasn’t until 2003, when we brought on a new chief financial officer that we decided it was time to explore a different approach to PM and billing. The group’s senior staff decided that the software-based PM system we selected in 2001 was no longer allowing for the operational transparency and accountability needed for our group to make the kinds of necessary strategic decisions moving forward. There was obvious room for improvement.

We were seeing new trends within the market place, such as pay-for-performance (P4P) and consumer-directed health care (CDHC), as factors that were going to make our traditional software-based PM system obsolete. We felt our current system would be unable to apply new P4P protocols from specific payers to our billing process. Nor would it be able to calculate certain payment responsibilities in advance for patients with high-deductible plans under CDHC. Without these capabilities, our group would potentially be losing revenue by failing to meet new and ever emerging reimbursement requirements.

In addition, we felt the costs associated with maintaining our software-based PM, training and ongoing software maintenance fees would only exacerbate our operational and financial constraints as we looked to grow. Our goal was finding a solution that could provide tangible and measurable financial outcomes for the business.

Looking for Results, Not Just Software

As it turned out, our new solution was not too far off. I had recently visited a fellow orthopaedic surgical clinic in San Antonio that had just deployed a new kind of on-demand revenue cycle management service that combined Web-based PM software, a real-time payer rules engine and a “virtual back office” that included a billing and collection service. The new results-based offering was provided by athenahealth Inc., of Watertown, Massachusetts. From what I saw in San Antonio I thought this new approach to PM could grant our business even greater operational efficiency and streamline our revenue cycle process, while delivering a tangible and measurable return on investment, something that was becoming critical given our size.

We also explored other new, application service provider (ASP)-based PM systems, but in the end this new on-demand approach offered a much different ROI model than software-based PM or new ASP offerings. On one level, on-demand business services are a close cousin to ASPs, since the PM solution is hosted on a remote server and the application is accessed via the Internet using a Web browser. As with ASPs, this model reduces the cost of ownership by eliminating the need for customers to purchase, implement and maintain complex software and hardware systems. This point, however, is where the similarities between ASPs and on-demand business services end.ssed. SOA provides an environment in which functions can be standardized and used across systems and processes. Figure 2 presents a conceptual view of the “register patient” set of services.

We learned that on-demand business services use the Internet to create a hub, where physician practices can participate in a network and share intelligence. As the network grows, so does the intelligence of the service because payer rules are added to the database on a daily basis. The result is, the service can accurately review claims to see if charges reflect all the care that was delivered, and test claims before submission to reduce rejections. In cases where claims are rejected, the service’s staff members work with the payer on behalf of the physician practice to determine why the claim was rejected, then automatically adds new rules to the database to prevent similar rejections from happening in the future. This human element, where outside staffers work on a practice’s behalf, differentiates the on-demand service from the traditional ASP.

We were impressed to learn that the vendor actually gave its Web-based PM software, athenaNet, to clients for no up-front charge. We felt this would dramatically reduce implementation time, training, and the ongoing software maintenance fees we had experienced with our current and past PM systems. Its proprietary payer rules engine also came with the largest collection of payer coding rules, consisting of more than 40 million permutations.

Triangle Orthopaedics contacted athenahealth, and I, along with several colleagues, toured their headquarters to see first hand the hundreds of staff that work to support medical groups across the country as a “virtual back office.” Our group signed in December of 2005 and went live on athenaNet in early 2006 with impressive results.

Leveraging the Power of a Network

Triangle saw an immediate cost savings and return once going live on athenahealth’s network, as it quickly reviewed any averted or delayed claims in our billing system. This resulted in the group applying more than $330,000 in claims to our bottom line right off the bat. As our staff became more comfortable using the system, we experienced even greater cost savings and process workflow improvements. Along with the on-demand PM service, athenahealth’s staff assisted with the handling of claims processing and billing activity for the group, enabling us to dramatically decrease the size of our billing staff.

Today, Triangle employs 40 staff members, down from 60. These staffers use athenaNet at the nine individual clinics for all necessary PM activities—scheduling, registration, eligibility checking, check-in and check-out. This makes our practices far more efficient as all nine locations are able to share billing history information for patients and monitor performance on best practice metrics, which are automatically tracked and reported nationally in athenaNet. Through the system, our medical providers now are alerted to relevant payer rules that need to be considered to ensure proper documentation and efficient billing processes at the point of care.

 The system provided us with instant software upgrades approximately every six weeks and, with the rules engine being updated daily as payer requirements changed, enabled us to quickly reduce denied claims, which then reduced our days in accounts receivable across the group. The updates appeared on Triangle staff work screens, which are built into the practice workflow automatically. Our staff also no longer had to test, load or maintain the new upgrades. Our administrators are now more accountable for their claims, because the system can pinpoint missing slips and incorrect information in a claim. If an insurance number or billing code is entered incorrectly, the system flags the error and immediately identifies why the claim will not drop clean.

Before moving to the on-demand system, a typical claim for Triangle could spend upwards of 60 days in accounts receivable. Now, thanks to athenahealth monitoring of every claim’s progress, that number has been lowered to roughly 48 days in accounts receivable and is dropping by the day. This has also resulted in the group seeing an increase of more than $1.7 million in total collections since going live. Our medical group also is experiencing an 85 percent first-pass pay rate with all claims.

It was made clear early on to all of the physicians and staff that the on-demand PM solution we selected was designed explicitly to provide a return on investment. By switching to this proactive PM service, Triangle is actually leveraging the network power of thousands of medical providers around the country. This has permitted our group to experience the necessary financial improvement we desired in a short amount of time, which allowed us to concentrate on better patient care and the strategic direction of our group.

 Most healthcare organizations have a large portfolio of systems with much redundant processing and data. SOA allows system capabilities to be selected and packaged as services that are better focused and available across the entire organization. Organizations can shift their efforts from maintaining a complex data interface strategy to creating service-oriented applications that support interoperability while more closely aligning with healthcare processes.

For more information on athenahealth’s on-demand athenaCollector PM service,
www.rsleads.com/705ht-204

William J. Mallon, M.D. is Medical Director at Triangle Orthopaedic Associates, P.A. in Durham, North Carolina. He is also a Fellow of the American Academy of Orthopaedic Surgeons. Contact him at WMallon@ triangleortho.com.

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