Major Business Challenges of Medical Practices

The Major Business Challenges of Medical Practices

Medical practices across the US face a myriad of issues, not the least of which is falling average revenues and rising average costs in the last ten years in particular. However, there are ten specific challenges that most physicians tend to struggle with most are as follows:

1. New patient relationships. As morepatients gain access to insurance, practices that accept new patients will need to focus on building good early relationships with them, both medically (appraising any undiagnosed chronic conditions or conditions that have gone untreated for a long time) and financially (by quickly appreciating how far their insurance reaches (and what co-pay gaps they will need to bear).

2. Reimbursement declines. According to Physicians Practice Fee Schedule Survey, the average commercial payer reimbursement for all new and established medical office visits fell nearly 5% last year over the one before. And because this downward reimbursement trend is likely to continue for medical practices (amongst other healthcare providers) new strategies have to be evolved.

3. Collecting patient payments. Unless they pay immediately, getting patients to pay is not an easy task and may be getting even more difficult according to several recent research surveys in US medical practices. This is often because many of the health insurance plans offered through the health insurance exchanges require patients to carry more of their healthcare costs, making the co-pay amount harder to find for many patients. As a result, every medical practice may need to increase its patient payment collection approach and efforts.

4. Operational efficiency and effectiveness
A medical practice is a much more complex environment than it once was and processes for assessment, diagnosis, treatment and drug and other service delivery can be convoluted. As a result, medical practices need to ensure that their processes are as efficient and effective as possible so that they do not contain waste and cost that could be readily saved with a little process redesign.

5. Recruiting challenges.It is well documented that the US is facing an upcoming shortage of both doctors and nurses in particular in the next decade (at around 10% less supply than demand in both cases). Many medical practices, and especially those in more rural areas, are already having to “make do”, with either less staff than they need or, in some cases, staff with lower level skills. This is both a hiring and training challenge that all medical practices will be affected by.

6. The ICD-10 transition. The implementation of ICD-10 has probably been the biggest and most widespread change in systems in healthcare since Medicare began and medical practices have had perhaps the hardest time of all the providers. Although many have now made the leap, (and others are close to doing so) it still causes plenty of headaches for medical practice staff and can frustrate patients.

7. HIPAA compliance. As penalties associated with HIPAA breaches increase, medical practices are under considerable pressure to do all that they can to mitigate the risks of a HIPAA violation. Many of these risks are still very much human ones (at receptionist, nurse and doctor level)but there are many new risks arising from much new technology that is now coming in to physician’s practices and needs great care.

8. Pressure to Grow or Die. Because overall reimbursement levels have been steadily declining medical practices are under greater pressure to partner with other practices (either formally or informally) or larger healthcare systems. In other words, smaller medical practices need to have a growth strategy just to survive.

9. Low Practice staff satisfaction.Managing many of the above challenges has meant that practice staff have been asked to take on more responsibility and work longer or harder (sometimes for little or no extra pay). While individuals may have been willing to do this in the past, there is a limit to this and practices will undoubtedly have to find new ways to keep staff morale high.

10. Low physician satisfaction. Many surveys of US physicians in medical practices (especially when these are independent) report that doctors are working much longer hours than in the past, are under more stress and feel that they don’t have as much time for their personal life as they should. Because physicians are the leaders and role models of practices, they must find new ways to keep their own morale high despite these challenges.

Change is everywhere in healthcare and medical practices of all kinds are at the heart of it. Ideally, a forward thinking practices needs to be actively looking for possible solutions to the above challenges by reviewing best practices and comparing themselves to their peers. Some of this can be done internally, but where not, external assistance is often close at hand and should be drawn upon as much as necessary. RX4 has experienced all of these challenges in many different general and specialist medical practice environments and can provide considerable insight and options where the knowledge is limited or does not exist internally.

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Dr Jon Warner

Dr. Jon Warner
CEO-RX4 Group-Taking Care of the Business of Healthcare

Jon is the CEO of RX4 Group based in Los Angeles, California. He can be reached at

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