Published 11/1/2008
Steven E. Fisher, MBA

The ins and outs of a practice operational assessment

What you should know—and why you should do one

Spend a few moments and take the simple quiz below. If you respond “I don’t know” to any of these questions, your practice is a prime candidate for an operational assessment, and you should keep reading.

Operational Assessment Quiz (PDF)

What is an operational assessment?
An operational assessment is a review of selected aspects—frequently all aspects—of a medical practice. A complete assessment would cover the 20 areas listed in
Table 1.

What are its benefits?
Conducting an operational assessment can result in several benefits to the practice, including the following:

  • A strategic plan to guide the practice’s future growth and development
  • Coordinated solutions to problems associated with the office’s day-to-day operations
  • Improved patient relations and decreased risk of professional liability lawsuits
  • Strict compliance with regulations such as Stark and Anti-kickback
  • A governance structure that improves professional relations among practice principals

These benefits will not materialize automatically. Every operational assessment must have specific objectives, a structured approach, and the support of all physicians in the group. In addition, any recommendations resulting from the analysis must be implemented for the practice to realize these benefits.

When should you do an assessment?
Some consultants and consulting firms recommend completing an operational assessment every year or every 2 years. Because most practices never conduct an assessment, one that does so every 4 or 5 years is significantly ahead of its competition.

Some circumstances may trigger the need for an operational assessment. For example, if your office is implementing new technology, such as an electronic medical record system, or if you are thinking about expanding office facilities or services, an operational assessment may be helpful in the decision-making process. Other triggers include the following situations: when replacing the practice manager, during the “information exchange” stage of a merger between two or more offices (or in preparation for a practice divorce), and when suspicions arise that “something is just not right.”

Who should participate?
A complete assessment should involve everyone—from practice principals to part-time file clerks. A focused review should involve all staff members responsible for the area, the practice executive, and the managing partner. In larger groups, all the physicians responsible for practice oversight, such as the management committee of a 30-physician group, should actively participate as well.

It is important, however, to take a broad view of who should take part in a focused assessment. For example, if the assessment relates to billing and collections, involving staff who work in related areas—such as those who manage payor agreements, verify insurance coverage, and file insurance claims—would be wise.

Regardless of how many doctors participate in the operational assessment, all practice principals should actively demonstrate their support of it.

Internal assessment or using a third party
Arguments can be made both for and against conducting the assessment internally or using a third party. An internal assessment, for example, could have lower out-of-pocket costs and more flexibility regarding the process and timing of the assessment. Additionally, operations would not be disrupted by the presence of strangers, and staff may be more comfortable talking with people whom they know.

An internal assessment, however, does have drawbacks. Physicians may not know what is involved in conducting a comprehensive assessment or have the time to dedicate to this task. They may also have preconceived notions of what the problems are. Finally, staff members may not be comfortable speaking to physicians if trust issues exist.

Using a third party may reduce the amount of time physicians have to dedicate to the project and make it easier for the staff to raise issues. Additionally, practice management consultants tend to be experts in conducting reviews and do not come into a practice looking to place blame on anything or anyone—they come to solve problems.

On the other hand, using a third party can be costly, particularly if the practice conducts such assessments regularly. Finding an outside consultant with experience specific to orthopaedic practices may be difficult, and consultants sometimes use an operational assessment as a means of securing other work (such as conducting strategic planning retreats or recruiting practice executives). Finally, confidential information could be inadvertently shared with others.

Whether you conduct the assessment internally or use a third party, follow a formal protocol and undertake the assessment in a rigorous manner, guided by structured questions. Action recommendations should be based on an analysis of the answers to the questions. It makes no sense, for example, to terminate the practice executive if the operational assessment finds that the executive committee is dysfunctional. Nor does it make sense to replace billing and collection personnel if the fundamental problem relates to an outdated practice management system.

How long will it take?
The length of an operational assessment will vary significantly depending on the size of the practice, the project scope, whether or not a third party is conducting the assessment, and how many problems are uncovered.

In general, an operational assessment has four phases: data collection, on-site analysis and observation, compilation and communication of findings/conclusions, and implementation. If the assessment has a very focused scope, the data collection phase may take the longest. In a comprehensive assessment, however, most of the time is in the on-site analysis and observation phase. The assessor will need to spend a substantial amount of time observing what actually happens in the office, as compared to reviewing what is supposed to happen according to paper protocols. The time involved in the implementation phase depends on the problems identified and the steps required to solve them.

Finding help and determining cost
Many individual practice management consultants and consulting firms will say they conduct operational assessments. However, identifying a good consultant with experience in orthopaedic practices is challenging. The best way of finding someone with a proven track record is by word of mouth.

AAOS members will soon be able to search an online practice management resource directory that contains the names of firms that provide products and services (including consulting services) to orthopaedic practices. All firms listed will have endorsement letters from orthopaedic practices with which they have worked. Whatever method you use to identify a con­sultant, be sure to check references.

The cost of an operational assessment will depend on the size of the office and the scope of the project. Costs typically include the consultants’ expenses (travel and lodging, if needed) and time (collecting and analyzing data, on-site interviewing and observation, and compiling and communicating findings). Consultants may also assist in the implementation stage for an additional fee. If another service is recommended, the consultant will draft another proposal and quote a separate fee. Be sure to ask for and check references in connection with every new project that has a different scope from the previous one.

This article is an introduction to operational assessments. A follow-up article will provide more details—specifically, the steps associated with conducting an assessment, the information that must be collected, and the analyses that must be undertaken. For more information, visit the AAOS online practice management center (http://www.aaos.org/pracman).

Steven E. Fisher, MBA, is manager of the AAOS practice management group and staff liaison to the Practice Management Committee. He can be reached at sfisher@aaos.org