Achieving Financial Sustainability for Hospital-Owned Physician Clinics

Powerful, results-oriented physician clinic strategy helps hospitals return to profitability

King’s Daughters Medical Center - Brookhaven, MS

For some time, hospitals have acquired physician practices with the goal of coordinating care and reducing costs—both required to successfully shift to alternative payment models. However, the losses from these physician practices have been overwhelming for some hospitals. In this case, Kings Daughter’s Medical Center (KDMC), a 122-bed non-profit community hospital located in Brookhaven, MS, lost over two million in just one year of employing 18 physician providers and mid-levels in its hospital-owned clinics.

The Challenge

KDMC began employing physicians in 2012 and by mid-2013; two hospital-owned physician clinics’ losses had accelerated to nearly $3,600,000 annually. This rapid financial loss was a result of many issues, including:
 
  • Inconsistent practice financial reports
  • Scattered practices (both geographically and operationally)
  • Disparate electronic record and practice management systems in the two clinics
  • Inexperienced management/leadership team
  • Lack of long-term practice strategy
  • Isolated providers not engaged in the clinics’ success

QHR Solutions

KDMC engaged Quorum Health Resources (QHR) Physician Practice Services to implement financial, operational, managerial, quality and patient experience improvement for a two-year engagement. QHR worked closely and mentored the clinics and KDMC to help achieve financial sustainability.
 
As a result of the engagement, KDMC implemented several initiatives including:
 
  • Consolidated two pediatric clinics into one site to enhance operating efficiencies
  • Utilized QHR’s Physician Enterprise Advisor reporting dashboards, communication format and operating standards to enhance consistency of practice financial reports
  • Focused clinics’ hours to capture optimal patient flow
  • Effectively deployed support staff in order to ensure the right staff was in right place to effectively operate the clinics
  • Addressed patient demand versus provider availability to be certain that physicians were available at patients’ preferred times
  • Consolidated all clinics on to a single practice management system and electronic health record to improve reporting and reimbursement
  • Instituted a marketing plan to increase patient access to clinics with new services such as spine surgery
  • Renewed focus on patient satisfaction improvement by quickly addressing identified issues
 
With QHR’s guidance, KDMC implemented a sustainable model to help improve the clinical, quality, operational and financial outcomes of its physician practice clinic.

Results

Consolidating the clinics to two sites helped standardize processes and contribute to operating efficiencies. While patient complaints have decreased overall, in some cases the busier merged clinics required new walk-in policies to accommodate scheduling challenges. Communication has been instrumental in helping medical staff and patients adjust to changes. After the fine-tuning that comes with any merger or change, KDMC’s hospital-owned physician clinics began to yield numerous benefits in less than two years:
  • The clinics began to have break-even months 18 months after implementation, with an increase of 9% in patient visits over the previous year
  • The overall annualized subsidy dropped to $1.2 million in fiscal year after the program was implemented, with an anticipated savings of $2.4 million
  • Losses dropped from $179K to $86K per provider
  • Estimated ROI is 12:1 over two years
  • Collections and net revenues improved by 30% in the last 12 months ending December of 2014 (with a 20% increase in gross charges)
  • wRVU’s increased 23%, while collections per wRVU increased 22%
  • Time of Service payments increased 91%
  • Total Expenses as a percentage of net revenue decreased by 22%
  • Increased patient volume in the physician clinic may require additional exam rooms in the near future to accommodate growth
  • KDMC has reduced their losses on the physician clinic from $3.6 million annualized rate at one point in 2013 to $1.2 million annually at the end of fiscal 2014, an actual improvement of $1.0 million

Want to learn more from Quorum Health Resources?

Testimonials

"QHR’s physician practice solutions helped lead to improvements across our entire organization and set us on a path to continual improvement. After quickly moving forward with the purchase of two clinics, we suddenly were in over our heads. Our physicians practice is now operating more efficiently and effectively as a result of the QHR engagement. ”
 
Alvin Hoover, CEO of Kings Daughter’s
Medical Center (Brookhaven, MS)

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