Cash Transition- Jan-June 2010

Cash Transition stats by popular request


I have been asked by many colleagues on Sermo, as well as followers of this blog to post further stats of my practice transition away from third parties.

So here goes....

First some history:

Back in 2007, I was getting fed up with the third party control of healthcare. I had a "normal" heavily HMO and managed care family practice. I was exploring options that I would enjoy more. My daughter thinks I am a good cook, but my back can not handle being on my feet for too long, so becoming a chef was out of the picture.

I had a few other options to remain in family practice.

1) Continue as is, as a solo family practice doc.

2) Join a large family practice group without walls, where the group would share a taxpayer-id and other management resources, and would handle all the contracts with the third parties. Advantages included increased fees from third parties. Disadvantages included having to toe the line of the group practice. As I do not always play well with others, I did not choose this option.

3) I also explored converting my practice to a concierge model. This also had many advantages including a guaranteed salary for three years, less patients seen per day, and no dealings with third parties. Disadvantages included the high membership fees for patients that would scare off 95% of my practice, and possibly brand me as a "country club doctor". While sticks and stones can break my bones, but names can never hurt me, I decided against Concierge as I had developed many strong relationships with my patients and I truly did not want to abandon them, or make my fees out of their reach.

So I then did what I usually always do. I made up my own business model that best fit my own personal healthcare philosophy.

I decided to transition away from all third parties other than Traditional Medicare in January 2008. I also offered prepaid yearly Wellness options, some with no copays, others with small copays, as well as also allowing regular self-pay fee for service. In 2009, I moved all my Wellness Plans to no copays. My Wellness Plan fees average about 30-35% of a Concierge practice. Please make note that I do not offer Concierge services, so I do not charge Concierge fees. There is a Concierge physician in my area who does offer these services and I have referred patients to his practice who are looking for that type of service.

OK.

Enough history..

Here are some stats.

2010- Wellness Plan-Self Pay- Traditional Medicare
2007- Normal Third party dominated practice

1st two quarters 2010 revenues are now 4% higher than 2007
1st two quarters 2010 expenses are down 23% from 2007. They would be down more, but my type of practice requires more to be budgeted for marketing. The payroll expense, not including my salary is down 40% from 2007. If you do not deal with referrals, nor deal with medical billing, and see about half as many patients per day, the staff requirements drop!!

1st two quarters 2010 patient visits are just under half of those seen in 2007, so $/patient in 2010 ($126) is just under double 2007 ($64).

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Now for what I find interesting.

I calculate percetage revenues from three different categories;
1) Wellness Plans
2) Self-pay or fee for service each visit
3) Traditional Medicare and balance billing secondary insurances

Here are the percentages for each 1st two quarters 2010 for 2007---2010.

Wellness Plans:
2007 0%, 2008 43%, 2009 53%, 2010 56%

Self-Pay
2007 20%, 2008 23%, 2009 32%, 2010 32%

Medicare-secondary insurance-(third party hmo's, ppo's in 2007 only):
2007 79%, 2008 32%, 2009 15%, 2010 12%
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More interesting tidbits:

Revenues per patient visit for 1st two quarters 2010 by type of payer:

Medicare $80.89

Self-Pay (payment-at-time-of-service) $114.10

Wellness Plans (Yearly Retainer) $162.39

My conclusion: For all the docs that think that a zero copay retainer style patient will overutilize your services, I say:

1) They won't, as my practice proves

and

2) Who cares if the revenues per visit double Medicare, while allowing you more time to spend with each patient, building up trust and the doctor-patient relationship once again!!!

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Other interesting tidbits about my practice.

I presently average about 11-12 patient visits per day.

My 1st two quarters 2010 medical billing costs are about 30% of 2007.

I share office space with my spouse, who is a psychiatrist. We share one full-time employee. We have no other staff. We do not need a referral coordinator, nor a medical receptionist. We have a voicemail system. Many patients have my cell phone number for urgent or emergent situations. They have never abused that privilege.

For me, this practice style has been a no brainer, and I do not forsee myself going back to third parties. I will probably end up dropping Medicare participation within the next few years, or sooner dependent upon how bad Obamacare actually turns out.

I hope this post has fueled some thought.

I welcome any comments.