Management and communication abilities are key

In the operating room, orthopaedic surgeons concentrate on surgery, but they must also know enough about the roles of others to ensure they are properly performing their duties. Similarly, in their practices, orthopaedists may not need to be involved in daily management, but they do need to understand what must be accomplished and be able to determine if the practice executive is doing the job efficiently and effectively.

Practice executives face significant challenges on a daily basis. Because the business aspects of running an efficient and profitable medical practice are complex, having someone with well-rounded management and communication skills in the chief executive position is key.

Except in smaller practices, the practice executive is seldom “in the trenches.” Instead, he or she helps develop strategies, direct activities, and assess the success of the various initiatives. The practice executive should be interacting with staff—observing, coaching, and making on-the-spot adjustments. If the practice executive spends most of his or her time doing the work of a line employee, the practice is either overpaying a receptionist or underutilizing a leader.

The practice executive needs to have several skill sets, ranging from financial to human resources and from facilities management to regulatory awareness. Following is a quick run-down on seven key areas in which practice executives need experience and skills today.

Financial skills
Even if the practice uses a certified public accountant consultant or has an accountant on staff, the practice executive cannot function effectively without an understanding of accounting concepts, as well as the ability to analyze the data presented. Bookkeepers and accountants tell what has happened; an experienced practice executive with strong financial analysis skills can help project the future financial impact of current decisions.

Managing accounts receivable and improving cash flow are critical to the success of the practice. The practice management system must be able to provide detailed information on aging of accounts by payor. The practice executive must be able to analyze these reports and benchmark practice data against appropriate internal and external data.

Equipment and technology acquisition
Selecting new technology is often a long, tedious process. Whenever possible, surgeons and the practice executive should identify the critical, desirable deliverables before talking to a sales representative. Even if the process begins with talking to a representative, a full needs assessment should be performed. Once the assessment is complete, a request for proposal (RFP) can be developed, outlining expectations and soliciting information that will reveal whether or not the important components are included.

After narrowing the choices, key physicians and the practice executive should check references and make site visits. If the new technology is clinical in nature, such as a picture archiving communication or electronic medical records system, physicians should assess how it will affect workflow. Although the practice executive can manage the information gathering and selection process, the physicians are much better prepared to evaluate how well the system fits.

The practice executive should identify and analyze financing options for capital items. The right financing decisions can save the practice substantially over the life of the investment. The practice executive will present the options to the physicians, who will ultimately determine the best financing method for their situation.

The practice executive must build consensus and disseminate information to physicians and staff as the new technology is implemented. Timelines need to be established, behavioral norms have to be adjusted, and resources have to be realigned to support the project. Because staff members are often resistant to change, the physicians and practice executive must remain united advocates for adopting the new technology.

Human resource management
The practice executive needs to be familiar with legislation on both the federal and state levels. State laws can vary widely and present a special challenge for those practices that have offices in multiple states.

The Fair Labor Standards Act sets standards for overtime, exempt versus hourly employment status, minimum wage, and youth employment. The Internal Revenue Service governs matters such as top-heavy benefit plans, mileage reimbursement, timely filing of payroll taxes, and designation of workers as being on contract rather then employed. These regulations can create a minefield for the unwary manager, with severe penalties for even unintentional violations.

The human aspect of human resource management, however, is the most important. The practice executive is often a combination of social worker, psychologist, secretary of state, and executioner. He or she must be able to put practice needs as the top priority, while attracting and retaining key staff.

Cooperation between the practice executive and physicians is essential in human resource management. Many staff members are supervised by the practice executive or a subordinate supervisor, but work directly with the physician on a daily basis. To avoid conflicting directions, the physicians and the practice executive must establish specific parameters; generally the practice executive should handle those issues that have practice-wide ramifications.

Contract negotiations
A practice’s ability to negotiate contracts is influenced by factors such as competition, unique services, the size of the payor, and perceived medical efficacy/efficiency. Some contracts will be simple take-it-or-leave-it decisions while others may involve lengthy, complicated negotiations.

The key to good negotiations is preparation. Physicians and the practice executive should develop and periodically review the reasons a payor should contract with the practice. Every practice should have a list of items that physicians would like to see in every contract.

A contract decision should not be based solely on the fee schedule. Onerous and costly administrative requirements may reduce the profit from an otherwise high fee schedule. Provisions that lead to denials or limit a practice’s ability to appeal decisions need to be examined.

If a payor does not base its fee schedule on the Medicare resource-based relative value scale, provide a list of the practice’s top 100 codes and request payment amounts. Use actual procedure counts to weigh and compare the proposed schedule to the practice fee schedule and/or the Medicare fee schedule.

Government regulation
One of the roles of the practice executive is to raise physician awareness of current and pending regulations—an often difficult task. Physicians tend to want definitive answers and logical reasons for regulatory requirements, which the practice executive may not be able to provide.

Some physicians decide to ignore regulations they do not like, putting both themselves and the practice at risk. One of the most common examples of this behavior is the direction to “bill insurance only.” Not only does this violate most payor contracts, it is considered fraudulent activity under the Health Insurance Portability and Accountability Act.

Facilities management
The practice executive should routinely assess your physical plant. Significant facility changes tend to be multiyear tasks that require significant planning. The physicians and practice executive should ask the following questions:

• What are our growth plans and what kind of facility will we need to meet these plans?
• Are there opportunities to better utilize our existing facilities or make them more efficient?
• Do current market trends make purchasing or leasing a new facility more attractive than staying in our current facility?

Most practice executives manage the existing facility, handling problems such as fire alarms, loss of electrical power, computer/equipment failures, and flooding. The practice executive should assess the potential risks, determine ways to minimize them, and have a system in place to receive early notice. Facility-related risk assessments should be done and appropriate insurance should be obtained to minimize risk exposure.

Physician and practice executive interaction and governance
The single most important word for this skill set is “fit.” Although both the practice executive and the physicians will evolve and gain experience, personal core values do not change significantly.

Physicians and the practice executive must honestly communicate and provide constructive feedback to each other. Mistakes are to be expected, but provide learning experiences when the thought process behind the decision is examined.

Surgeons and practice executives need to provide direction and guidance in some areas and accept direction and guidance in others. Learn from one another and nurture the practice together.

Is such a paragon possible?
Your practice executive cannot be an expert in all these areas, but should possess reasonable knowledge of each. The ability to parse advice, think critically, and see the global picture rests with the practice executive. The mark of a leader is the ability to gather relevant facts, analyze the data, and make decisions.

Most orthopaedic surgeons really enjoy what they do, are fascinated by complex cases, and gratified by a good outcome. Many practice executives get the same thrill and satisfaction from overcoming the challenges they face at work each day—that’s the person you want leading your practice.

Dale A. Reigle is chief executive officer of Rocky Mountain Orthopaedic Associates, PC, a member of the AAOS Practice Management Committee, and president of the American Association of Orthopaedic Executives.

Read a more comprehensive version of this article. (member login required)