Accounting Firms Provide Assistance and Expertise
Doctors Struggle to Meet Client, Business Demands
BY THOMAS J. SAIZ
Special to the Business Journal
The last 10 years have been economically challenging for health care organizations such as hospitals, community clinics and private physician offices.
But these past few years have been especially tough because of the shift from fee-for-service to managed care.
The majority of workers are enrolled in HMOs or PPOs, so if health care providers are to survive, they must contract with these insurance providers. If not properly advised, however, many health care providers can undermine their ability to serve patients, thereby minimizing their profitability.
Most people don’t want to think of a hospital or doctor’s office as a business. Topping the list of people who don’t want to characterize health providers this way is doctors. After all, they spent years in medical school because they care deeply about people.
Physicians choose their profession to save lives and improve health. But the reality is a health care provider must incorporate proven business practices or it will be unable to sustain its own life.
Take for example, the recent shutdown of the trauma center at Palomar Medical Center in Escondido. All six county trauma centers are losing money, but Palomar’s contract disputes with insurance companies forced doctors to suspend services, leaving a gaping hole in trauma care for the county.
A group of teens injured in the Lake Henshaw van accident earlier this month would have normally been taken to Palomar. Instead, the two more seriously injured teens were flown to Scripps La Jolla and Sharp Memorial in Kearny Mesa.
This delayed one arrival by five minutes; the other by 25. Thankfully, county officials and doctors at both hospitals agree the delay did not affect either teen’s medical conditions. This should sound the alarm, though.
– Health Care Providers
Face a Plethora of Plans
Negotiating contracts with insurance companies is a very real challenge for health care providers in San Diego. Our region is one of the most competitive health care environments in terms of providers having to take the smallest portion of fees.
There are a myriad of plans out there, and without an advocate, health care providers can find themselves slipping further and further into a Palomar-like state of economic trauma.
A few years ago, a small medical group had been doing well in the fee-for-service environment, but then began contracting with several insurance companies without properly evaluating the contracts. Because these contracts were negotiated at rates that weren’t profitable to the medical group, it found itself in a precarious financial position.
The group survived the tough time and learned a valuable lesson , when it came time to re-negotiate their contracts, the medical group enlisted the services of financial experts who understood the health care environment. This allowed the group to focus its attention back to the important work of caring for its patients.
– Business Management vs.
Hands-On Patient Care
When the business side of a health care provider is running smoothly, it allows doctors to do what they do best , treat patients. An accounting firm that specializes in health care can help an organization negotiate better rates, run their practice more efficiently, audit their books and increase their profitability.
The chief complaint heard from providers is that they didn’t get into medicine to think about business issues. Doctors, like all professionals, must focus on their core competencies , and let others do the same. A doctor who is unencumbered by economic woes is able to provide better health care for patients.
Doctors are also facing increasing costs of doing business, which puts a strain on their bottom line. Higher rent, utilities and salaries put pressure on health care providers, but perhaps one of the greatest concerns heard from health care organizations these days is the costs involved with compliance with the new Health Insurance Portability and Accountability Act (HIPAA).
In an effort to protect patient privacy, the federal government is encouraging providers to conduct certain financial transactions, such as billing and medical charts, electronically.
Most health care providers welcome the reengineering of how the medical industry does business because it provides real benefits for the patient.
Privacy is safeguarded. And powerful databases can be created that cross-reference a patient’s conditions and medications , facts that can sometimes get lost in a paper environment.
Cuts Both Ways
While many doctors see the benefits that technology can lend to their practices, the reality is that it also adds to the cost of doing business. The hardware, software, training and staff are all investments that the provider must incur.
Health care organizations should ask their accounting firms to identify what the costs are, where their break-even point is, and set up productivity benchmarks. After this assessment, the accountant can lead them toward the appropriate vendors to design and implement systems.
It is a tough time to be a health care provider in San Diego County. Those who got into the field find themselves increasingly frustrated by the demands on their time and resources that take away from patient care.
And yet, some of those demands, like HIPAA requirements and HMO and PPO contracts, do provide benefits to patients. If health care organizations allow their accountants to draw out the road map to economic success, some of this burden will be lifted from them. And they will be able to get back to what patients need them to do most , practice medicine.
Saiz is the managing partner at Calderon, Jaham and Osborn Certified Public Accountants and Consultants.