Project: Practice Formation & Administration

Practice Description: Surgical practice - 1 physician (expanded to 2 physicians)

Project Term: 6 Months for Formation; Ongoing Administration

Existing Situation:

• Physician unhappy with current group dynamics and income level.
• Billing Department was struggling with a Days in Accounts Receivable of 113.46.
• Physician desire to enter solo practice and control his own destiny.
• Physician recruited existing nurse to move with him.

Path to Improvement:

• Identified new practice location, negotiated lease, coordinated site preparation and arranged bank financing.
• Hired two new employees, evaluated and purchased practice management system and defined all standards of operation.
• Developed new operational reporting structure to evaluate performance.
• Designed and implemented performance benchmarks for all departments and employees with corresponding evaluation criteria.
• Created strategic plan to include expansion of ancillary services and addition of one surgeon over the following three years.
• Implemented practice wide standards of operation to maximize billing efficiency.
• Implemented billing department standards to improve collections and initial claim accuracy.
• Implemented employee incentive program linked to performance benchmarks.
• Provide active management/leadership role in practice and take responsibility for practice performance.

Results:

• New practice became operational in less than 180 days.
• Days in Accounts Receivable reduced to 64.43 after six months; 42.05 after twelve months; and below 25.00 after three years.
• Maintain practice overhead at or below 33%.
• Recruited new surgeon who reached break even revenues in 5 months.
• Physician income grew by 75% over first two years.
• Start up Line of Credit paid off during first 6 months of operations.
• Physician enjoys reporting and performance benchmark structure providing understanding of current practice performance and vision of the future detailed by the strategic plan.
• Owner - Physician dedicates 30 minutes or less to business operations of the practice weekly.

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