Week 4

During my fourth week at the Banner Medical Group Corporate office, I was given an unprecedented amount of freedom. I was given access to confidential information regarding the financial integrity of Banner’s clinics throughout the Valley. I was told by mentor Chad Cornell to determine the five most successful and five least successful clinics in the East Valley of 2016.

In order to determine the success of these clinics, I had to analyze how much revenue they produced and compare it to their expenses. Although this process may seem trivial there are far more nuances to it than you might think. In terms of expenses, the most important metrics to analyze are supply expenses in total, per relative value unit, per patient visit, other expenses, and provider salaries. Moreover, clinics often incur random expenses, in terms of both the number of providers, provider salaries, and random operating expenses. When these expenses occur, the amount of revenue often flexes in the same direction of these random expenses. When analyzing revenue, I had to look at the collection rate, which is how much money the clinic collects divided by how much they charge. Clinics often collect a small portion of what they charge because insurance companies are very unreliable. I also had to look at the number of relative value units made per provider. This show how productive each doctor is. If this number is too low, then the hospital has a provider that is not seeing enough patients.

Maintaining profitability these days is far more difficult than it used to be. With an ever-growing list of costly mandates, increasing overhead, and declining reimbursements, the pressure to remain profitable has undoubtedly intensified for many office-based primary care physicians (PCPs), according to practice management experts.

The business challenges in 2017 likely will become even more magnified as patient demand increases, the supply of available PCPs decreases, and the focus on the healthcare sector shifts to cost reduction overall.

The key to building an economically healthy and viable practice, experts say, is to start with a sound business plan that focuses on patient engagement, serves a valuable need, and addresses key issues important to the economic viability of the practice. A business plan is essential to giving you and your practice firm footing on the path to financial health, and such a plan is not just beneficial to those approaching the completion of residency.