A health care provider’s office that is not part of a much larger organization or a franchise is becoming a rare entity in today’s economy. There are several factors playing into this, but understanding how to best navigate and take care of the basic challenges is essential. Financial errors can quickly compound and cause major stress, or worse. We’ll look at the macro items first.
The largest external pressure by far is the transformation of the health insurance industry over the past 20 years. Prior to the advent of the PPO (Preferred Provider Organization), doctors of all description had pricing power. Fees were determined through a relative value scale, and the purpose of the health insurance was to decrease the cost of the care, not assume all of it. Patient responsibilities were tiny compared to what they are now, but they still existed. The major difference was that the provider could balance bill the patient, meaning that patient was responsible for the entire amount, whether the insurance company paid their portion or not.
By limiting the amount of providers in a certain specialty and by setting an “allowed amount” for a particular service, the provider no longer has pricing power. This subtle shift has caused healthcare services to become more like a regulated utility, rather than a professional calling. In fact, empanelment on the insurance listing now has a specific value when a practice is bought or sold, strictly an artifact of limiting the number of providers by the insurers. Al companies have pricing limits imposed by the competitive marketplace, but this system has come to resemble a top-down set of wage and price controls, something not seen in any other private sector.
Counteracting the pressure
What can be done to counteract the continuing squeezing of fees and increasing regulatory compliance burdens? There are several routes open, and the measures you take will depend on your standing in your community and your specific financial needs.
- Stay within the insurance system as is, but commit to becoming more efficient and accurate. There are several features here, including becoming enabled with electronic billing, direct deposit, use of internet portals for eligibility and claims tracking, bringing billing in-house and assigning specific responsibility to management of the A/R. With declining reimbursement structures, collecting 100% of available fees becomes progressively more important.
- Stay within the insurance system as is, but expand your line of services and products to things that are not currently covered under the insurance system. Most insurance plans are written to cover “medically necessary services”, which usually translates out to care or support for a named condition. They will not cover optional, cosmetic, wellness or preventative services, with a few exceptions. In a chiropractic office, Nutritional programs, weight loss programs, wellness programs by any description, or fitness and conditioning programs can be packaged or delivered within the general scope of practice, and would never be considered medically necessary and thus insurable.
- Stay within the insurance system as is, but expand your menu of services to include insured services delivered by employees of yours. This can be massage services acupuncture services (some states), physical therapy (some states), nutritionists, and athletic trainers. There is a wage cost to this pathway, but does allow your organization to generate revenue other than by your labor.
- Partially withdraw from the insurance system as is. There is still a range of compensation levels and of access to services that patient have with different carriers and with different employers. Understanding what the various plans and payers pay for and what the insurance limits are is a fairly simple task. This can be most easily accomplished by listing your 10 largest carriers and create a table for allowed amounts for typical procedural codes, dollar or visit limit, and special provisions. Some carriers require extensive pre-authorization of care and have intentionally burdensome filing procedures that are designed to give them an opportunity to deny claims. Some are more simple and straightforward. Low paying, high-nuisance plans can be jettisoned, creating more space and time for other patients.
- Completely withdraw from the indemnity insurance system. This step should only be considered as a strategy if the office has significant financial reserves and low financial demands. Taking this step will reduce your volume by a significant amount; 50-75%. Yes, you can return to the market pressure pricing model, but you will have a much tougher value proposition for the patient and a much lower volume to practice it in.
Think about it first
These are all strategic decisions, not operational or based around governance (rules). When considering any of these, you should always consider the desired end result and what you are most trying to accomplish. Dealing with the system as it presently stands is exasperating, but these types of decisions should never be made out of frustration or escapist mentality.