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Edward Gulko, MBA, FACMPE, FACHE, LNHA

AAOS Now

Published 8/1/2013

Benchmarking Your Orthopaedic Practice

AAOE Benchmarking Survey provides valuable information

Benchmarking is a valuable tool that enables medical practices to measure their internal processes against those of their peers. Each year, the American Association of Orthopaedic Executives (AAOE) surveys its members to establish orthopaedic practice benchmarks. Recently, AAOE members participated in a roundtable discussion on the survey’s benefits to their practices.

Allan A. Fentner, MBA, CMPE, of Orthopaedic Associates (Ohio) moderated the discussion. He was joined by the following practice managers:

  • George D. Trantow, FACHE, of Aspen Orthopaedic Associates (Colo.)
  • Edward Gulko, MBA, FACMPE, FACHE, LNHA, of Englewood Orthopedic Associates (New Jersey)
  • Sam Santschi, JD, of Diana L. Kruse, MD (Wisc.)
  • George Nyktas, CPA, MBA, of Reconstructive Orthopaedics and Sports Medicine, Inc. (Ohio)


Allan A. Fentner, MBA,
CMPE


George Nyktas, CPA,
MBA


George D. Trantow, FACHE

 

Mr. Fentner: This year, more than 1,600 physicians were represented in the AAOE Benchmarking Survey. What should AAOS members know about the survey?

Mr. Trantow: This is the most valid survey for comparisons; it’s the largest survey of orthopaedic practices in the United States. When you have the largest sample size and many data points, you can crunch the numbers in different fashions. AAOS members need to know that when they want to do a comparison, they can get the most valid data from the AAOE Benchmarking survey.

Mr. Fentner: How does your practice use the AAOE Benchmarking Survey?

Mr. Nyktas: I usually use it by provider. I build an income statement of collections and expense categories and I use that as my benchmark in the financial reports. It gives me a real-world reference point.

Mr. Trantow: I use the survey to benchmark our practice, by group size and geographic area, against AAOE membership at least twice a year. We look at staffing, practice variables, and cost and revenue per doctor. We also look at charges and payer mix: How does our payer mix compare to other orthopaedic practices’? We can also determine what’s driving our overhead and how our overhead compares to other practices of similar size. That enables me to drill down to areas where we are different and explain those differences to our physicians in terms of controllable and uncontrollable expenses and areas where we derive our revenue, whether it be payer mix or ancillary services.

Mr. Gulko: I use it for roughly the same thing. I look at the staffing patterns, comparing our practice against others of similar size. The data give me a reason to move staff into other areas to become more efficient. Having a feel for what others are doing gives us a reality check.

Mr. Santschi: I primarily use it to check on staffing issues, such as head count, that drive our ratio of clinical to nonclinical staff. Also, by looking at the payer mix and the various expense breakdowns, I am able to tell my physician where she stands compared to her peers and help her understand reasons for profitability fluctuations like payer mix and expense changes.

Mr. Fentner: A new benchmark this year—one that physicians frequently ask about—is what doctors get paid to be on call. What other specific benchmarks are especially useful to your practices?

Mr. Trantow: The two big ones for my groups are overhead and compensation. My physicians want to know what their overhead is and how it compares to their peers. They are also interested in compensation by subspecialty and knowing where their revenue comes from—surgery, ancillary services, or office visits.

Mr. Santschi: In our practice, the head count benchmarks are very important because they help us determine staffing requirements. My physician is also very interested in how the survey has tracked the precipitous drop in physician-owned practices.

Mr. Gulko: My physicians are very interested in the low accounts receivables to get a feel on whether we are working them properly and receiving the monies that we should. They’re also interested in the staffing pattern numbers—numbers and type of staff per physician—to make sure that we are hiring the right people. Because the AAOE survey is blinded and, in most cases, completed by the administrators, we know we are getting accurate data.

Mr. Nyktas: One of the things that makes the AAOE survey premier is that the questions come from practice managers with many years of experience. Every year, it gets better and better. For example, it includes the number of full-time equivalents (FTEs) a practice has by category—clinical staff, radiography, billing—and by provider. This year, at the suggestion of a member, it also includes the number of FTEs per thousand office encounters because that will highlight how busy one physician is versus another.

Mr. Trantow: The ability to triangulate and get data based upon the number of doctors and the number of per-thousand visits and compare with other data points is incredibly important. To my knowledge, the AAOE survey is the only one that does that.

Mr. Fentner: For those who may be unfamiliar with the AAOE Benchmarking Survey, what additional information—aside from staffing levels, physician compensation, ancillary revenue, and expenses—does the survey provide?

Mr. Nyktas: It includes provider compensation within subspecialty. For example, we can see the compensation variances among sports medicine, hand, and joint replacement.

Mr. Trantow: With respect to ancillary revenue, the survey helps physicians identify new opportunities. We used the AAOE survey to look at how we could expand our ancillary services: What’s the average profitability on different ancillaries? Which ones are going up and which ones are coming down? What am I not taking advantage of and how might I do that?

Mr. Fentner: The AAOE made some changes this year to the survey, including third-party verification and interactive reporting capabilities. Has this been beneficial or added legitimacy to the final results?

Mr. Nyktas: I was involved in the vendor selection process. This is a far better tool because practice administrators designed it. The vendor is able to correct data errors and structure the questions on the data-gathering site to obtain valid answers. The vendor will contact participants to sort out and fix things that don’t appear correct. The survey is blinded so that the data aren’t compromised and confidentiality is maintained. We are looking forward to seeing the interactive capabilities.

Edward Gulko, MBA, FACMPE, FACHE, LNHA
Sam Santschi, JD

Mr. Trantow: I think it’s a great improvement. The additional data points of staffing and other measures based upon a thousand office encounters is something that I really look forward to using because it will enable us to look more closely at how we are performing and where we might be able to improve.

Mr. Nyktas: The per-thousand unit is something I’m going to be using. It makes a lot of sense because it takes volume into consideration.

Mr. Gulko: These changes made the reports and information more usable, accessible, and, therefore, more valuable to all of us.

Mr. Santschi: The fact that a third party is doing the calculations and the verifications adds credibility to the survey, and that’s really important.

Mr. Fentner: Can any sized practice benefit from using the AAOE Benchmarking Survey?

Mr. Santschi: Absolutely. The benchmarking survey and my AAOE membership are invaluable for our practice. The survey enables us to continuously track how we’re aligned with best practices, and membership dramatically shortens the learning curve. The survey allows us to compare hard numbers on an annual basis, and it really helps that it’s segregated by practice size.

Mr. Gulko: I agree. In some cases the data are broken down by providers and can be applied to a single practice or to multiple practices. I’m currently with a 10-physician group, but I’ve been with larger practices. Whatever the practice size, it lets you know where you stand on the individual provider basis compared to your peers.

Mr. Trantow: I echo those comments and add that benchmarking gives you a place to start measuring how you are performing, no matter the size of the practice.

Mr. Fentner: How does the AAOE Benchmarking Survey compare to other external benchmarking surveys?

Mr. Gulko: I use two other surveys in addition to the AAOE Benchmarking Survey. The benefit of the AAOE survey is that I know for certain that the questions asked and the data being obtained are being identified by the administrators who will be using it. We know what we need—it’s not some third party making that decision. It’s just orthopaedics in a specific report for use by orthopaedic practices.

Mr. Trantow: I also use two other surveys, but I feel more confident using AAOE numbers because of the large sample size, which reduces the chances of error and bias.

Mr. Fentner: I look at the AAOE Benchmarking Survey as a way for me to improve my performance. How has it helped you as a practice administrator/CEO in your medical practice?

Mr. Trantow: Just as you can’t manage what you can’t measure, you can’t improve what you don’t measure. We can look at benchmarks and say, “We’re outliers and we have the opportunity to improve.” We can set goals and then measure ourselves again over time.

Mr. Santschi: I came out of a consulting background in a different industry. The AAOE and this survey really helped me get up to speed in orthopaedics practice management. It’s also helped me to staff our practice efficiently; we’re able to manage the mixture of both highly paid and hourly staff more appropriately.

Mr. Gulko: It’s a great way to know where you stand. As the administrator comparing to the benchmarks, I can see where we aren’t meeting the marks. My billing manager and I compare our accounts receivables to benchmarks from around the country. If we’re up in one area, we’re going to figure out why. If we’re much better, I’m going to thank everybody and do whatever I can to keep them happy.

Mr. Fentner: What is the biggest hurdle in getting more participation in the AAOE Benchmarking Survey?

Mr. Nyktas: One misconception is that completing the survey takes longer than it actually does. This year, we really streamlined the data input so it doesn’t take long to do the survey.

Mr. Gulko: We all have a lot of demands on our time. However, if AAOS stresses the importance of the survey, doctors will allow their administrators the time needed to complete it.

Mr. Trantow: I would challenge AAOS members to ask their administrators to participate in the survey at least once. I know they will find the data very revealing in a positive way. If you benchmark your group against the AAOE data, you will find opportunities to improve your practice.

Mr. Fentner: How can AAOS members encourage their practice managers to participate in the AAOE Benchmarking Survey?

Mr. Trantow: If orthopaedic surgeons are concerned about healthcare reform and what’s going to happen to their practice in the next few years, they need to be benchmarking. It is the best way for us to confirm what we suspect individually. Practices need to know where they’re starting from and where they stand in comparison to other practices. If they don’t, they will be behind the eight ball as healthcare reform squeezes both revenues and expenses.

Plus, this is something the practice administrator can do. Practices don’t need a consultant to run these numbers. Doing it internally is a great place to start and will save a lot of potential consulting fees.

Mr. Nyktas: I would add that participating in the survey makes each practice stronger and better able to withstand market forces—be it the Affordable Care Act, changes in the healthcare environment, or pressures from hospital systems. It enables practices to better know where they stand and what to realistically expect.

Mr. Gulko: Basically, using the survey forces practices to reexamine themselves, and that’s never bad in this environment.

For more information on the AAOE, visit www.aaoe.net