Viewpoint Volume 3 Issue 3 Autumnal Equinox 2017 by VerdenGroup

CONTENTS Volume 3, Issue 3 - AUTUMN EQUINOX EDITION 2017

Welcome

Big Impacts

Finance Matters

Enjoy the harvest, plan ahead

Killing the Affordable Care Act

Physician Compensation

Time to reflect on how the passing year has gone, and welcome back trusted experts to help you put your financial house in order and begin planning for the year ahead.

Susanne Madden has been following developments in the GOP's persistent efforts to repeal the Affordable Care Act. Read the latest developments here.

Chip Hart shares what he's learned about physician compensation - how to measure productivity, set compensation, and incentivize physicians, fairly.

Frontlines

NCQA Update

Industry News

RIP PCMH 2014

Cybersecurity

Tiffany Lauria says adieu to NCQA's PCMH 2014 Program - which will be retired on September 30, 2017 - and gives you some quick tips on what to expect from NCQA for PCMH 2017.

Lucien Roberts is back with a piece on cybersecurity, a topic we love to hate, and the steps you need to take now to implement safeguards at your practice. You can't afford not to do so.

Managing Increased Patient Financial Responsibilities with Head and Heart Robert Goff discusses the ever-increasing burden on physicians and patients, the consequences of bad debt, and what to do about it.

CONTRIBUTORS

Connect Connect with us in-person and online. Here you'll find details on the key events and conferences that we'll be attending this fall. You'll also find handy links to connect with us on all of our media streams.

Susanne Madden

Chip Hart

Paul Vanchiere

Tiffany Lauria

Robert Goff

Lucien Roberts III

27 Spotlight Four Simple Ways to Track Key Indicators Paul Vanchiere takes us through the basics of how to measure key financial aspects of your practice, and how to turn those into on-going metrics to stay on-track throughout the year. .

Scott Hodgson

David Magbee

30 Podcast Direct-to-Patient & Employer Care Susanne talks to Michael Lubin, VP of Hint Health, about the direct care market and opportunities for providing services to patients and employers, Can we finally cut out the Payer middleman?

31 HR Matters The High Cost of Employee Turnover Tiffany Lauria tackles the obvious, and hidden costs, of employee turnover at your practice and provides useful tips on how to close that revolving door for good.

ViewPoint is a digital publication that looks at perspectives on the business of healthcare and is produced by The Verden Group. ViewPoint is available by free subscription and is distributed seasonally. Print copies are available by request. Please contact us for pricing. The Verden Group is an innovative consulting firm focused on shaping the landscape of advocacy by empowering medical practices to navigate through the increasingly complex business of healthcare, and to advocate on their behalf with insurers and regulators. The Verden Group delivers expert services and advice to meet needs across your practice. We work with individuals and groups of any size, from start-ups to super groups. From contract negotiations and management, to social media set-up and administration and PCMH transition ? we are your Partner In Practice. To learn more about our services visit www.theverdengroup.com Subscribe to ViewPoint to stay on top of all our news and views on the business of health care. Read past issues of the magazine and additional content at: verdenviewpoint.com

? WELCOME ? The Autumnal Equinox, my favorite time of the year. Summer is over, thoughts turn from enjoying the harvest to laying down stores for the winter. We hunker down to the serious business of evaluating the year's ups and downs and begin planning for the new year ahead. In this issue we are focused on helping you get your financial house in order. Chip Hart is back with a two-part piece on physician compensation and shares insights into what makes a productivity model work (or not). Paul Vanchiere guides us through simple steps for developing key metrics to track financial performance, AND provides pro tips on how to value your practice and for whom. Tiffany Lauria tackles the high cost of employee turnover and what to do about it, and says adieu to our old friend,the NCQA PCMH 2014 Standards. Lucien Roberts is back with a timely piece on cybersecurity and how to protect your practice from attacks, leaks and sloppy procedures. I tackle the on-going attempts of the GOP to repeal the Affordable Care Act and how, with not enough votes to pass a Frankenbill, Trump is taking steps to kill off the program instead; and share a podcast with Michael Lubin of Hint Health on the opportunities for direct care to both patients and employers. We may be able to cut out the Payer middlemen yet! And last but not least, Robert Goff is back with a thoughtful piece on the consequences of patient debt for patient and practice, and how to tackle debt with both head and heart . . . Wishing you a bountiful harvest from the hard work you sowed over 2017. May the darkening days ahead provide time to reflect and re-assess, and prepare for your best year yet.

SUSANNE MADDEN | EDITOR-IN-CHIEF 4

? BIG IMPACTS ? SUSANNE MADDEN, MBA, CCE CEO / CoFounder / Editor

KI LLI NG THE AFFORDABLE CARE ACT The congressional failure to replace, or repeal, ACA has done little to halt White House ACA-elimination attempts. Rather, it shifted the Trump Administration?s repeal strategy to one of utilizing underhanded tactics, by undermining the federal ACA exchanges and individuals? support through de-funding specific provisions. ?Let Obamacare implode?, tweeted President Trump in July 2017? following failure of the Republican-led Senate to repeal the ACA. President Trump has since embraced a strategy of financial pressure and executive orders to lower families?enrollments throughout the nation.

participating in the ACA exchanges are dependent upon cost-sharing subsidies to cover their discounted health plan coverage. Through cost-sharing subsidies to insurers, the ACA aimed to enable exchange-based health plan enrollees to incur lower out-of-pocket expenses, with the goal of helping these individuals to buy insurance rather than forego it. In response to the federal court ruling in 2016 that the Obama Administration could not reimburse insurance companies for ACA-related costs (since Congress had not appropriated such funds), Lynch (President Obama?s attorney general) appealed Judge Collyer?s decision in the Republican-filed lawsuit, House v. Price, during which cost-sharing subsidies to insurers continued to be paid.

According to a Kaiser Family Foundation (KFF) tracking poll, 61% of Americans did not support the ACA repeal efforts as of July, 2017. Following the ?skinny repeal? failure (amendment to H.R. 1628), 52% of registered Republicans (and 95% of Democrats) surveyed in this poll felt that Congress should ?fix Obamacare rather than allow it to fail?. Yet, ACA failure is the objective of most Cabinet members in alignment with President Trump?s goal of ACA repeal. Consequently, the likelihood of viable ACA exchanges in the future (along with future ACA functional ability) is lessening.

Despite President Trump wanting to drop that appeal, attorney generals from 17 states (plus the District of Columbia) on August 1, 2017 blocked this from occurring. In turn, as of September 6, 2017, President Trump remains undecided as to whether his administration will make scheduled CSR payments in September, and this is now fostering increased insurer confusion and anxiety, further destabilizing the ACA exchange program.

De-Funding Subsidies and Legal Actions

Cost-Sharing Reduction (CSR) ? Weakening of a Fundamental ACA Component

Two types of federal subsidies were included in the ACA to support the ACA?s mandate of insurance coverage for all Americans. The first type was premium assistance for low and moderate-income individuals (in concert with Medicaid/CHIP coverage for impoverished individuals). The second type was assistance to insurers participating in the ACA?s federal exchanges. Ending federal subsidies for purchasing health insurance is an expressed objective of the Trump Administration. Insurance companies

Approximately $7 billion in payments were made by the federal government to insurers in 2017. A cost-sharing reduction provision was included in the ACA to obtain insurer ?buy-in?, and curtail the need for insurers to raise annual premiums to off-set anticipated federal exchange participation costs. This was due to the recognition that an unstable market produces anxiety and uncertainty for business (e.g., insurance companies) in predicting the 5

following year?s expenses, and then determining a plan to assure adequate revenue to meet expected expenses. The rationale behind inclusion of the ACA?s CSR provisions was to mitigate financial risk, and thereby reduce the following: a) the likelihood that insurers would leave the federal exchanges, and b) the likelihood that annual premiums would be increased beyond most exchange enrollees?ability to pay. By sowing insurer confusion and fear, President Trump?s goal is to accelerate insurer departure from the exchanges and American displeasure with the ACA? even if the result is a loss of coverage and healthcare access by millions of people? in order to ensure it collapses. The failed Republican-proposed American Health Care Act (AHCA) was already determined by the Congressional Budget Office to cause a loss of health insurance coverage for millions of people, and this Trump Administration strategy is widely predicted to also lead to millions of Americans losing coverage. Elimination of ACA Outreach and Enrollment Navigators As the Human Health and Services (HSS) head, Tom Price withdrew $5 million in funds targeted for advertising aimed at encouraging ACA exchange insurance enrollment after Trump became president. The Trump Administration intends to spend 90% less on ACA enrollment advertising than under President Obama in 2016 (only $10 million as compared to $90 million). Tom Price? Trump?s choice for Secretary of HSS and an ACA opponent? also has cut funding by 41% for enrollment navigators (people who assist individuals in choosing a health plan to meet their needs). Additionally, HSS cancelled ACA contracts in 18 cities that brought enrollment assistance into libraries and workplaces, and has removed detailed directions from the ACA?s HealthCare.gov web-pages assisting individuals to enroll and/or renew enrollment. Such drastic cuts before open enrollment commences this November is likely to cause potential ACA health exchange enrollees to become frustrated and forego purchasing insurance coverage. The open enrollment window has also been reduced to 45 days from nearly twice that time period under President Obama. Enabling Greater State Latitude in ACA Regulation Compliance President Trump?s executive order in January 2017 pertaining to the ACA directed the HSS and other federal agencies to enable states to have greater flexibility in adhering to or enacting healthcare system regulations. The ACA mandate for Essential Health Benefits (EHBs) in insurance plans is another area that the Trump Administration can weaken, in that HSS is enabling greater state latitude in requiring the previously-mandated EHBs (through changing of their ?benchmark?plan). In addition to granting more state authority in ACA decision-making, the Trump Administration, in tandem with HSS, has advised the IRS not to enforce ACA-mandated fines for foregoing insurance. Additionally advised was heightened IRS scrutiny of individuals signing up for ACA exchange coverage outside of the annual enrollment period (i.e., due to marriage, loss of job-based insurance, or a birth). This is yet another strategy to weaken the ACA?s ?individual mandate?, and generate obstacles for health plan enrollment. Not surprisingly, those that benefit most from the exchanges are often minorities in low-paying jobs without employer benefits. The threat of facing scrutiny for enrolling is enough to ensure that many minorities give the exchanges a wide berth. Reducing ACA Tax Revenue Streams President Trump?s tax reform plan? which will be crafted by the Republican-led House Ways and Means Committee into a Bill for debate? includes elimination of the ACA?s tax-based funding mechanisms (e.g., the 3.8% net income investment tax). Besides its other detrimental effects on future federal revenue, tax code changes corresponding to Trump?s tax reform plan would tremendously reduce the federal dollars available for ACA administration. Consequently, the Centers for Medicare and Medicaid Services (CMS) budget? under the HSS? would probably experience funding and service cuts as a result (and particularly the CMS demonstration projects funded by the ACA).

Destabilization as a Strategy to Destroy ACA Achievements

This Robert Wood Johnson Foundation-funded research report also concluded that repeal of the individual mandate would result in higher premiums in 2018 to compensate for insurer expectations of a sicker risk pool. Inevitably, the Trump Administration?s weakening of the ACA could also lead to a higher dependence on hospital emergency rooms for care by individuals who can no longer obtain insurance coverage and/or afford the cost.

Democrats and many Republicans in Congress do not want the ACA to fail, because the result is most likely to be higher national healthcare costs. ACA destabilization is also likely to result in increased withdrawal by insurers from the ACA exchange marketplace. However, President Trump, conservative Republicans in Congress, and most of Trump?s cabinet members want repeal of the ACA to prove that Obama?s healthcare legislation? passed with no Republican congressional support? was a failure. Toward that end, these elected leaders are willing to cause financial pain and hardships for insurers and the U.S. population as a whole, despite the wishes of the People.

As of August 2017, 78% of Americans felt that the Trump Administration should fix the ACA rather than repeal it. Empathy by the president and members of Congress for the healthcare needs of the U.S. population are needed, rather than health system destabilization and needless misery in order to show flaws in the opposing party.

According to a report issued in January 2017 by the Urban Institute, eliminating CSR payments in 2017 would ?cause insurers significant harm?with resultant widespread insurer exit from the ACA exchanges. Even if President Trump chooses to halt CSR payments to insurers, these insurers would remain responsible for paying their enrollees?healthcare bills? which could lead to large insurer financial losses, a consequence Wall Street will not tolerate well.

Especially concerning is that the Trump Administration has embarked on a multi-pronged strategy to weaken the ACA (and our healthcare system) through deregulatory efforts across agencies and massive funding cuts, in tandem with limiting federal revenue. It could not be clearer that our health care system is being held hostage by an Administration that would rather shred livelihoods than govern with conscience.

Breaking: In a last minute attempt to push something - anything! - through Congress, the GOP introduced the Graham-Cassidy Bill, the latest iteration of the Republican legislative effort to repeal and replace the Affordable Care Act. It was worse than the original ?Trumpcare?bill. It failed to get sufficient support and the bill was pulled on September, 2017. Will it be the end of the Trumpcare Zombie for good? We shall see. Source: New York Times

? FINANCE MATTERS ? CHI P HART Director, Pediatric Solutions | PCC

PHYSI CI AN COMPENSATI ON Paying Owners and Empl oyees Fairl y When researching the biggest challenges faced by our clients (independent pediatric practices across the US) we invariably discover that at the top of the list sits Human Resources (HR). Initially, practices focus on staff problems hiring and firing, how to manage a front desk, and other problems of this sort. When we push a little harder however, we almost always learn that a major source of discontent is how the physicians pay themselves. Let?s take a look at some lessons-learned and best practices for managing clinician compensation for both partners and employed clinicians. As a result, we have to presume that you will make a profit from your employed clinicians. Profit is not a dirty word - profit is what allows your business to survive, allows you to continue to treat your patients, and allows you to employ your staff and clinicians. Without profit, your practice fails the moment your overhead increases. Profit is healthy and vital for both you and your patients.

PART 1 - Paying Em ployed Clinicians Fair ly At least once a month, we get a call or email from a practice that revolves around one of these themes: -

"I can't afford to hire a nurse practitioner." "My practice is losing money even with my four employed docs." "My employed pediatrician wants a raise."

Each of these challenges is hinged to a simple math problem that too many practices fail to solve. Using insight gathered from a series of surveys that PCC conducted with employed clinicians and the data from your practice can help you address each of the issues noted quickly and cleanly.

At PCC, where we measure both clinical and financial benchmarks for our clients, we have identified a strong positive correlation between the two sides of the business. The practices with the strongest financial health are the ones delivering the greatest clinical response to their patients. This shouldn't be a surprise the discipline required to be successful is similar on both sides. Don't be afraid to succeed.

Lesson One: No Margin, No Mission First, let's make an important assumption: you expect to generate margin from your employees. That is, you don't intend to subsidize physicians or nurse practitioners working for you. There are sometimes good reasons to do so, but they are nearly always temporary, and right now you need to focus on the long-term health of your practice and growing in a sustainable way.

So Lesson One = plan for financial, as well as clinical, success. Lesson Two: It's Not About the Money In a 2013 Pediatric Compensation Model survey conducted by PCC, we asked employed clinicians what the most important objectives were for their 8

compensation. As you can see from the data in the provided graph, income is at the top of the list, ranking 4.4 out of a scale of 6. Note however, that tied with income is "Schedule Flexibility", followed closely by "Time Off." In fact, 4 of the top 6 objectives for employed clinicians target non-financial goals, namely, lifestyle/schedule goals. This is vital for understanding the relationship you have with your employed clinicians, especially younger ones. When you offer a full-time package to a newer clinician, especially one who has or is contemplating having a family soon, he or she is likely to demand significantly more to lose flexibility. Consider working with clinicians who might cover times you don't presently serve well (after 5pm or weekends), and consider having multiple part-time clinicians instead of a single full-time doctor.

Lesson 3: Do the Math Unfortunately, this is where most practices stumble, but the lesson is simple: Your employed clinicians need to generate enough revenue to cover their expenses, their share of the overhead, and your margin. That's it. There's no magic or science involved, but you will need to do a little homework about your practice revenue to speak to the issue of employed clinicians clearly. The three pieces of information you need to gather are: -

The expected revenue-per-visit of your clinician The expected visit volume for your clinician Your practice overhead (defined as your total expenses divided by your total revenue, without direct clinician expenses like salary)

Use your existing practice data as a baseline estimate and then adjust for the expected potential differences (a new clinician may not have a full schedule initially or a new clinician may have a different visit profile). There are different methods to approach the math, but the most common involve starting with a salary and calculating the required revenue OR estimating the expected revenue and then calculating the maximum salary. Let's look at an example of each.

Many practices report to us that younger physicians, after working part-time through their children's school-years, suddenly wake up to wanting to work full-time or become partners. Having the opportunity to work with someone for a few years before deciding if you want to take on a new partner, or pass the practice along, is an invaluable opportunity! You may well have a vision for what you need for additional clinical service in your practice. For many readers here, it's about sharing the burden of the practice or perhaps even being able to take some time off. Consider the talent pool from which you are hiring and realize that FT work may not be a good match adjust to your market and you may be rewarded.

Example A: You want to hire a new pediatrician and she expects to make $150,000

Example B: Your employed clinician asks for a raise When we start from the other end of the equation with known productivity numbers - the offers can become more concrete. Let's say you've employed a part-time NP for the last few years and now that her kids are in high school, she wants to work more and increase her salary. Use actual practice data to quickly figure out what you can do to accommodate this request.

First, you need to convert her $150,000 into a reasonable estimate for what the practice needs to generate to cover her expense. If she expects to earn $150,000, we know that the additional employer tax and other benefits will push the full figure to as much as $175,000 (adjust as appropriate) - too many practices fail to account for the real cost of their employed physicians!

Next, you need to account for the general practice overhead (let's say 60%) and a realistic margin (let's say 10%). If overhead plus margin is 70%, the remaining 30% of revenue will be needed to cover the $175,000 estimate above. You can quickly see that in order to earn $175,000 in salary and benefits without the practice subsidizing the employee, she will have to generate $583,000.

Present Salary and benefits: $75,000 Revenue-per-visit: $135 Total Revenue: $375,000 Practice Overhead: 65%

Quick math here shows that, after accounting for practice overhead, there is $131,000 left from her revenue to cover your margin and her cost. Subtracting $75,000 from $131,000 leaves you with $56,000 or approximately 15% margin, which is very reasonable for both parties.

Note: you are, indeed, presuming that the practice overhead will remain fixed even with the addition of significant revenue from the new employee. It's certainly true, on paper, that your overhead should decrease with additional sources of revenue, given the fixed costs of running your practice (particularly rent and most staff time). If you are sophisticated enough to properly account for the correct overhead, excellent! As a practical matter, expect your overhead to drop, but not substantially ? 20 physician practices hover around 65% overhead, as do 2-physician practices.

Now that she is willing to increase her visit volume, you know that at least 35% of the additional revenue will be left over (perhaps more as your revenue increases - see above). You can determine how much of this revenue you wish to share - you could continue to keep 15% and mutually project that she can keep 20% of all the additional revenue . . . and feel confident that you are making a financially sound decision based on evaluation of the data.

Once you know that she needs to generate $583,000, apply your revenue-per-visit to the result. If you generate $125/visit, and don't expect her visit profile to differ, then you know she'll need to see just under 4,700 visits over the course of the year. If she wants to work only 3 days a week, that's 31 visits/day - a number that few new clinicians can generate. You can quickly see how many practices end up losing money on their employed clinicians! In order for this example to make sense to the practice, we need to either lower the salary expectations of the physicians, increase the volume or revenue-per-visit contribution of the clinician, or be prepared to subsidize the employee. 10

One pattern is worth mentioning, however- practices who use some measure of productivity are more likely to be satisfied. The data shows that the introduction of any recognition to the bottom line, no matter how small or significant, creates some understanding of "fair" in most practices. Again, this isn't a universal truth - there are plenty of satisfied "equal pie slice" practices, yet practices with some measure of productivity are a little more likely to be satisfied.

PART 2 - Paying Physician-Owner s Fair ly "The best time to plant a tree is 20 years ago. The second-best time is today." Although apocryphally a Chinese proverb, it sure sounds like it came from a managing partner in a medical practice. One of the biggest holes in the practice management landscape is partner compensation. The challenges come from many directions ? senior partners declaring "No more call!" without a change in compensation, disgruntled physicians who feel that the distribution isn't fair, or perhaps the receipt of a big P4P check and disagreements on how to split it up. Through the execution of three national surveys of independent pediatric practices, and years of work with practices on their compensation models, PCC has learned what the practices with the most compensation satisfaction can share, and what we can learn from them. The most common problem practices seek to solve is how to be "fair." There are three predominant models used by practices to distribute money fairly: Âˇ -

2013 PCC Survey of Compensation Models

Pure productivity (or "Eat What You Kill") Equal distribution A combination of the previous two

The Productivity Measure Doesn't Matter In my work with practices, when determining what measures to use for a productivity model I often get asked, "Should I use Work RVUs or RVUs or charges or payments?" Repeated review and analysis of the various productivity measures makes it clear: it doesn't matter what measure you use, as long as the physicians understand the measure, it's easily and transparently calculated, and doesn't penalize a physician with a unique panel (high Medicaid, all newborns). This shouldn't come as a surprise - in an evenly distributed practice, the correlation among charges, payments, RVUs, wRVUs, and even visits, should be remarkably tight. If those measures are not highly correlated, then something interesting is happening in your practice that you'll need to evaluate moving forward.

There are pros and cons to each method and digging deeply into offices using each has turned up some valuable insight: there is no magic compensation model. Detailed interviews and consecutive surveys failed to tease out any evidence that there is a particular partner compensation model loved by all. There are very satisfied practices that split every penny evenly, just as there are practices that detail every expense in order to assign them to a physician. For example, the three models are fairly evenly split in the wild, which suggests that conventional wisdom hasn't identified a best practice. In the 2013 study of compensation models, 32.7% were based on salary, 21.4% were based on productivity, 27.6% had a mixed compensation model, and 18.4% based their models on another method of disbursement. Older practices with more experience do not exhibit any patterns nor do new practices, started by physicians dissatisfied with their previous employers or partners. In other words, the market hasn't identified the best method for distributing income to partners.

One important piece of advice: share the data clearly and cleanly. Too often, a repeated narrative ("I am the busiest doctor here!") becomes "truth" even if it's not demonstrably true. Nothing will settle an argument faster than pointing out that each of the physicians is, in fact, within a 5% productivity range. 11

A common task we recommend for practices confronting this challenge is to ask every partner to simply track the time they spend doing non-clinical work for a few weeks. Inevitably, one of two things happens: the group discovers that one person truly is doing all the practice management work or that the work is actually spread out more than is initially understood. Either result will lead to a better understanding of how to compensate that clinician. Consider Partner Symbiosis One of the flaws of the productivity measures above is that they are each ultimately volume based. If you see more patients, you have more revenue / charges / RVUs.

2013 PCC Survey of Compensation Models, Productivity Measures

Recognize Non-Clinical Work One of the biggest sources of contempt in the practices we work with is the lack of recognition for non-clinical work. When one clinician feels like she "does all the work", resentment will invariably build. In some practices, the distribution of non-clinical work is managed in a reasonable, unspoken way and the parties are relatively satisfied. More often however, the important work of running the practice is not evenly distributed, and there are many who are blissfully unaware of the work being done for them. Our 2013 survey uncovered that: -

A common misconception held by many of the "most productive" partners in many groups is that their individual productivity is somehow independent from the other work done in the practice. Tell-tale anecdotal comments include, "Well, she takes so long with all those teen visits," or, "I bring in all the new families and see 30 kids a day while he only sees 15." Very often, the ability to be the most productive clinician depends wholly on other clinicians peeling off the visits that would otherwise hinder that productivity.

58% of practices pay physicians for non-clinical duties (administration) For those who pay for non-clinical duties: 70% pay for being Managing Director o 17% pay for negotiating work 30% pay for clinical projects 15% pay for HR work 26% pay for IT work 20% pay for being Medical Director 11% pay for external professional work 25% pay for other things as well Almost none use other measurements for incentives (patient satisfaction, peer review, community outreach, etc.)

That "slow" doctor who spends all the time with the teenagers? Without her, those appointments would be pushed into the schedule of the "busy" doctors, zapping their high volume. Worse, when a family can't find a good fit in your practice any more perhaps because your "producers" don't want to deal with asthma or obesity or eating disorders - they will take their business out of your office. When considering productivity, think about how each clinician might fare in solo practice. It's very likely that a few different styles and speeds in an office benefits everybody. Should You Be Partners? Often, as we excavate an outdated 30-year-old compensation model and review comments from each of the partners about what they like and don't like about it, we have to ask them: "Why are you partners?"

There is no best-practice for how to value non-clinical work. Again, simply assigning *some* value to the work provides the greatest tension relief. Most physicians just want to have their work valued and recognized - it's not simply about the money.

We can't stress this enough: there is no perfect compensation model that recognizes the entire contribution of each partner. And if money is the focus of your partnership, there will always be a struggle. Ultimately, you need a core philosophical agreement about how the partnership should pay the owners. If three of you want full productivity and two of you just want to "split it," be prepared to argue forever. If your partners don't want to pay for all of your practice management efforts, but you're sick of not being recognized for doing it, why are you partnered with them? In fact, if a partner is only interested in the give/take relationship between revenue/expenses and not contributing to the management of the practice in some way, why are you partnered at all? Partners are the ones taking risk, losing sleep, and doing the work beyond the exam room - and they should be paid for it when the practice succeeds. If someone just wants to see patients and go home, the relationship should probably be redefined. In other words, a "compensation model" problem is often, in fact, a partnership problem. Now is the Best Time to Plant the Tree Returning to our proverb, when is the best time to work on your compensation model? The answer is always TODAY. Even, and perhaps especially, if people are currently satisfied all around. When everyone is happy, it's the easiest and least contentious time to consider making changes. Waiting for someone to express discontent or anger at your existing model will color the process and take longer to resolve. At the next opportunity, sit down with your partners and compare your productivity measures to your compensation, review your non-clinical compensation and ask each partner: is this working for us? If it's not, get out the shovel and plant the tree.

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? FRONTLINES?

ROBERT E. GOFF Author & Consultant

MANAGI NG I NCREASED PATI ENT FI NANCI AL RESPONSI BI LI TI ES WI TH HEAD AND HEART Talk with any physician that is actively practicing and he (or she) will tell you that their greatest professional satisfaction is from the patient-physician relationship, the opportunity that they have to use their skills and knowledge to help restore a person to good health, or help people maintain their health. That patient-physician relationship is unique, giving physicians?deep insights into a person, and some of their most private experiences, fears and concerns. A valuable, candid relationship. Talk with any actively practicing physician and she (or he) will tell you that their greatest professional frustration is when economics interferes with that relationship. When money is not an issue, when the patient has good insurance coverage, low, affordable copayments and deductibles, and is able to readily make payment, the relationship is without conflict for the physician. The patient-physician relationship is not stressed by economics. Unfortunately, economics has increasingly stressed that relationship. As the cost of medical services increased, both the physician and patient came to rely on health insurance to allow their relationship to be one about the patients?health, and not their wealth. After a generation of generous health benefits, including the replacement of indemnity insurance with managed care that made routine and preventive medical care ?covered?by health benefit plans, the patient is being dragged kicking and screaming into ?consumerism?- which translated means the patient pays for an increasing portion of the care they receive. Consumer-directed health plans, consumer engagement, and patient responsibility are all terms that simply mean the patient is paying more. Health insurance, in particular managed care, which sought to promote ready access to routine care to address health needs early and prevent higher costs later, is being returned to the now forgotten ?good old days?when the patient was financially responsible for nearly all care outside of services that required hospitalization. In the 50+ years that have passed, the cost of that routine care and ready access has become greatly increased. In 1967, for example, the 75th percentile of fees for a follow-up office visit and a routine hospital visit corresponded to between $7 and $8 for a new office visit and between $9 and $10 for a hospital visit. Fees at the 95th percentile were between $14 and $15, according to a study about physician fee inflation in the 1960?s. And while the average incomes of households in 1967 was lower, these costs were ?affordable?. Over the intervening years inflation worked its way through the economy, with healthcare?s inflation rate consistently double or more than that of the general economy. Yet patients have been largely protected by generous health benefits, with insurance paying the difference between their copays (even as these continued to increase) and the actual cost of medical services. Experts believe that with insurance protecting the patient from 14

the actual cost of medical care, and employers accepting the cost of higher insurance premiums, the healthcare industry became irresponsible in its costs and pricing of services. For the patient and the physician, when it came to the necessity of being more efficient in delivering care, why bother? The insurance is there to pick up the tab.

It is a conflict between head and heart The physician, using their head, knows that to stay in practice and to support a family, he or she must collect payment for the services provided. Yet at the same time, the patient-physician relationship has created an intimate knowledge of the patient and their circumstances, and their heart does not want to add financial injury to the patient, in addition to the health injury of their illness. As a result, physicians are faced with the unhappy prospect of increased bad debts and write-offs. Making matters worse for physicians, the cost of medical care has necessitated that they participate with insurances, which like Medicare and Medicaid, regulate their incomes, precluding the ability to increase charges to patients that can afford to pay more, to cover the losses from patient that can?t pay their full costs. This problem is expected to continue to grow, putting pressure on the physician?s ability to remain in practice, particularly in independent practice.

Now the patient is being forced out of the protective cocoon of generous health benefits and coverage. The reality of the cost of health care is hitting home, and that reality is not pleasant. With employers no longer willing to accept double digit increases in the cost of health benefits, they have shifted to restraining premiums by implementing higher copayments and deductibles. Patients are now experiencing what inflation has done to the actual cost of a physician visit. According to Fair Health, in 2017 the cost of a new patient visit to a physician in Manhattan had risen to $570, and $250 for an established patient visit.

Since 2010 the number of Americans with high deductible health plans has grown by 75%, and that number is expected to explode by 2018 as employers who have continued to offer generous health benefits face the reality of a ?Cadillac tax?, part of the Affordable Care Act (ACA), of 40% of the cost of the insurance premiums they pay. Some 40 million Americans are expected to be living with the consequences of high deductibles, as will be their physicians.

Impacting the Provider and Patient Increasing patient financial responsibility for the cost of their care is dramatically changing the patient-physician relationship. For patients with continued generous health benefits coverage or having the economic means to assume the costs, the nature of the office visit experience has taken on a more mercantile approach. However, for an increasing number of patients, this cost-shifting of increased patient financial responsibility is creating a significant conflict for the physician when the economics of receiving medical care becomes an economic hardship for the patient.

For 37% of American households with deductibles of between $1,200 and $2,400, those deductibles exceed their families?liquid assets. And as deductibles increase, it worsens: 49% of households have deductibles greater than their liquid assets when those deductibles are between $2,500 and $5,000. According to a Kaiser Family Foundation/New York Times survey, 45% of insured said medical bills had a major impact on their families, and the US Federal Reserve reported that 46% of Americans do not have the money to cover a $400 emergency expense. The patient is not the only one who will bear the cost of these deductibles, the consequences extend to the physician: 40% of physicians fail to collect over $31,000 a year from patient financial responsibilities, while another 20% fail to collect over $66,000, according to Athena Insight. 15

While a portion of the dollars lost to failure of the collection of patient responsibilities resides in the inefficiencies of physician practices, there remains the reality of the necessary write-off when patients are unable to make payment on that debt, even after significant efforts on the part of the office. The head says to collect, the heart says no, not wishing to add a financial burden to patients already burdened by illness and poorer economic status.

First, while much is said about deductibles, patients worry about their cost of medical care to the extent that many have become confused about what coverage they still have that are deductible-free. Preventative services, often including an annual examination, are usually provided as covered benefits without application of the deductible under most health plans, and are expected to remain so. Therefore, physicians should become educators and promoters of their ability to provide that care to their patients and of how to understand a patient?s health benefit coverage. Reminders, calls, letters, and newsletters are all tools that a practice can use to educate their patients to check what services they should obtain for themselves and their families, reassured that they will not be on the receiving end of a bill. Immunizations, mammograms and other screenings are required to be covered under health plans that qualify under the ACA without being subject to the deductibles.

It is hard to find reliable information on the level of medical debt that physicians experience, since medical practices generally operate on cash based accounting principles (recognizing income only when cash is received, and expenses only when paid; with no recognition of bad debt as an expense). There are no central reporting requirements, as there are with hospitals, and some studies indicate that bad debt can run between 5.9% and 14% of a physician?s billings. A report in 2010 from the Medical Group Management Association indicated that on a per physician basis, bad debts averaged $12,480 for an individual primary care physician, rising to $27,077 for an individual surgical specialist. The publication Health Affairs estimated that in 2013, uncompensated care to office-based physicians totaled $10.5 billion.

Second, increased patient financial responsibilities require a total review and re-training of your office staff, especially your front desk. Their role is now far more important than greeting patients, answering the phone and scheduling appointments. They must be trained how to ask for payment, and how to address the patient that is unable to make payment. Will your office institute contingent credit cards to be charged for deductibles and non-covered services not paid for at the time of the visit? Will your office look to enhance your billings and statements, and add the ease of online payment? Perhaps a discount on payments made by receipt of the first statement? The practice can also set up payment plans, allowing patients to pay over time and ensuring payment is received. Preparation is needed to increase your collections from those patients that can pay for their care in full.

And in a 2012 survey, the Physicians Foundation found that 62 percent of physicians stated they provided $25,000 or more every year in uncompensated care. Compensating for the Loss Clearly the consequence of the cost-shift to the patient through deductibles has implications for the financial stability of a physicians practice, as well as for the patient. With more patients expected to be beset by material deductibles, physicians need to consider how they operate the business of their practice.

However, there are other considerations to arranging for that write-off to be abolished for good; legally, and pragmatically.

Third, recognize that a portion of your patients will not be able to make payment on all or a portion of their financial responsibility. For these patients, you need a policy and a plan. You need to separate those that could pay, but choose or seek not to, from those that would pay if they could. A written financial policy is appropriate, and make sure it is known to your patients. If a patient has financial concerns, they should be able to speak with the office manager about creating a payment plan. The practice might also identify patients that are so economically stressed, often because of illness, that payment is not possible. For these patients, what is your criteria for pressing for payment, or writing-off that balance?

Technically, under IRS Tax Code if a debt is forgiven (written-off ), the economic benefit of eliminating that person?s debt is taxable to that person. The IRS rules call for sending a 1099-C for cancellation of debt. Additionally, if a practice has used a collection agency, that debt may have been reported to a credit reporting agency, which has negative implications that could impact not only your patient?s credit score, but also their job prospects, as many employers check credit ratings as part of the hiring process. To help practices do this, R.I.P. Medical Debt, a 501C-3 charity, can legally abolish this debt against your patient, without consequences to the patient, and with removal of any report on the patient?s credit report. At no cost to you, R.I.P Medical Debt will advise the patient that the debt has been abolished, and remove this economic burden from them.

Many practices extend a balance write-off to patients in the 200% or less of the Federal Poverty Guidelines, however studies have shown that when medical bills exceed 5% of income they become nearly uncollectable, so be sure to adjust for patient?s broader medical situations.

It is uncommon for practice to notify a patient when a balance has been written off, leaving the patient hesitant to obtain necessary medical care, thinking that they will be denied care, or embarrassed in the office for that past due balance. R.I.P. Medical Debt can be reached at www.ripmedicaldebt.org.

At some point, the practice may have reached the point of diminishing returns. Yes, any balances can be turned over to a collection company, or you can even sue in small claims court to seek every dollar billed, but the reality is that the physician should be using their heart and their head in decision-making. Even collection companies can?t collect when the patient has no resources, and your costs to collect often make the returns trifling. While many practices do ?write-off? balances eventually, how about taking one more step and making arrangements to legally abolish that debt for good.

The cost shift to patient financial responsibility for care has implications for patients, pressuring them to avoid care when necessary at the early onset of an illness, and for preventive care and screenings. For the physician, it?s a significant change in the business of medical practice, and the relationship with patients. Those practices prepared for this change will be best positioned to adapt for continued success.

For most practices, a write-off is to remove a balance from the practice books, and not consider it again, taking no further action.

? NCQA UPDATE ? TIFFANY LAURIA Practice Consultant | THE VERDEN GROUP

R.I .P. NCQA PCMH 2014 If your practice is racing toward the finish line to become recognized as a Patient-Centered Medical Home (PCMH) under the 2014 program of the National Committee for Quality Assurance (NCQA) by September 30th, we wish you a speedy and successful finish! If you are just beginning the journey but are familiar with the last version of the PCMH 2014 Standards, you will notice that PCMH 2017 is an entirely redesigned program. What?s Out: -

No more levels of recognition No more elements and factors No more three-year recognition period

What?s In: -

Single Recognition Status. Practices either meet the criteria for recognition . . . or they don?t Core Criteria and Elective Credits replace ?elements?and ?factors?.Practices must complete 40 Core Criteria and at least 25 Elective Credits Sustained Recognition Status. Practices can only retain recognition if they successfully submit and meet Quality I reporting requirements

Already Recognized Under 2014? -

Wait for renewal and then enroll in the new annual reporting process under PCMH 2017 Standards. Previously earned PCMH 2014 credit will be applied to aspects of PCMH 2017. Practices with PCMH 2014 Level 3 recognition can move directly to the re-designed program with annual check-ins. Practices with PCMH 2014 Level 1 and 2 will need to complete a more comprehensive program for recognition under PCMH 2017.

A detailed crosswalk of the 2014 program to the 2017 program can be found here. You can also read our recent article ?What You Need To Know About PCMH 2017? here. 18

? PRO TIPS? PAUL D. VANCHIERE. MBA Founder | Pediatric Management Institute

SI MPLE METHODS FOR VALUI NG YOUR PRACTI CE How to determine your practice?s value for buy-in, buy-out and sale to other practitioners Background When it comes time to value a practice, many rely solely on their accountant to tell them the value of their practice. While helpful in some ways, this can also be dangerous. Some accountants rely primarily on the tried-and-true ?book value' method (assets minus liabilities) along with the shareholder's total income and practice revenue stream, to determine an end figure. Such an approach can be wrong on many levels. And third party assumptions only add to the confusion - I recently worked with a client that had 8 providers generating well over $4,000,000 in revenue each year and their lawyer said "with all that money coming in, the practice is worth millions". Guess what? He was wrong. Gone are the days where hospitals would hand over a blank check to acquire a practice. Today, there may be more integration of physicians with hospitals through models like Accountable Care Organizations, but Stark (and other) regulations limit what can be paid to physicians for their practices. The methods I use here are for evaluating buy-ins, buy-outs or sale to another practitioner, rather than contemplating hospital or venture capitalist purchases. The trick to a fair shareholder valuation ÂŠ Marvel Studios/ / Paramount Pictures formula is to keep it simple. Think of conveying the calculation to, say, a new physician that is thinking about joining your practice and buying in. If the process takes more than a minute to explain, it is likely that it is more complicated than it needs to be. Valuation Philosophy The approach I take to determine practice value is to establish what is the added benefit of owning the practice versus being employed. If a shareholder makes $250,000 for a given year and an employed physician at the same practice makes $180,000, the added benefit for owning the practice is $70,000. Makes sense? Much like the stock market, my approach then projects that value by a multiple of years. While Apple, Chevron and Microsoft stock prices may be based on the expected 10-15 years of earnings, I remain conservative with a multiple of 2 to 3 1/2 years projected earnings when valuing a medical practice. Multiplying that $70,000 by 3 years results in a calculated value of $210,000. Seems pretty straight forward so far, right? 19

Formula Not so fast. If the practice has more than one shareholder, and one or more employed physicians, the process to determine the value is still pretty simple: -

Determine the average of the shareholder earnings Compare shareholder earnings with the average compensation for the employed physician(s) in your practice. If all physicians are shareholders, find regional or national averages for employed physicians for comparison. Then multiply the variance times the number of shareholders to determine the Valuation Basis. Multiply the Valuation Basis times the number of years of projected earnings.

However, there may be a variety of adjustments to the formula that may need to be made including: 1. Taking average shareholder salary for previous 2 or 3 years. 2. Adjusting Average Shareholder Compensation for end of parity payments that expired December 31, 2014 (if averaging over several years). 3. Adjusting Average Shareholder Compensation based on whether meaningful use monies have already been received. 4. Adjusting Average Shareholder Compensation based on whether the shareholders may have previously taken lower salaries to fund practice projects that are expected to generate additional earnings in the future. 5. Adjusting the Years of Projected Earnings or Average Shareholder Compensation to account for upcoming large capital expenditures. 6. Adjusting for a variety of nuances in the shareholder compensation formula. As with any process that involves money, there needs to be open dialogue on how to handle the six possible adjustments to the formula listed above.

Join Us At t h e An n u al PM I Con f er en ce

But by keeping it simple, and then adjusting for nuance from there, it should allow you to determine a reasonable value for your practice for purposes of buy-in, buy-out, or sale to other practitioners.

h t t ps:/ / w w w.pediat r icm an agem en t in st it u t e.com / ch ar lest on 20

Am anda Ciadella Senior Consult ant

Julie Wood Co-Founder

- ROLL CALLAt The Verden Group's Patient Centered Solutions, we assist many practices in achieving National Committee for Quality Assurance's Patient Centered Medical Home and Specialty Practice Recognition programs. Good luck to our clients submitting under the PCMH 2014 Standards by Sept 30, 2017!

Congratulations to our clients that have achieved NCQA PCMH Recognition this season!

PRACTICE

STANDARD

PRACTICE, CITY, STATE

LEVEL

1. The Pediatric Group, Chantilly, VA Atlantic Coast

2014

2. Shults Pediatrics, Knoxville, TN

Pediatrics, FL Hershey Pediatrics, PA

3. Ballard Pediatrics, Seattle, WA 2014

4. Dawson Pediatrics, Dawsonville, GA

5. Dover Pediatrics, Dover, NH BCD Health Partners: Middletown and Old Tappan, NJ, locations

2014

6. Eastern Pediatrics, Greenville, NC

7. Heights Pediatrics, Brooklyn, NY 8. Pediatric Assoc of Fall River, Fall River, MA 9. Riverside Pediatrics, Georgetown, SC 10. Clearwater Pediatrics, Clearwater, FL 11. Katz Pediatrics, Stuart, FL

?The Verden Group / PCSTeam wasunbelievably helpful to me and my organization when we were going through our first PCMH recognition process. They were so organized and detailed and made what would have been an overwhelming process, seem like a breeze. I cannot thank them enough. We wouldn?t have received Level 3 recognition with them?-

12. Kidz Pediatrics, Angier, NC 13. Children's Physicians, Jupiter, FL 14. Palm Beach Pediatrics, West Palm Beach, FL 15. Pediatric Parters, West Palm Beach, FL 16. Pediatric Assoc of Savannah, Savannah, GA 17. Harmony Mills Pediatrics, Cohoes, NY

Jennifer Horne Manager, Clinical Informatics www.tribe513.org

Check out our new sit e: ncqasolut ions.com 21

? INDUSTRY NEWS ? LUCI EN W. ROBERTS, I I I , MHA, FACMPE Administrator | Gastrointestinal Specialists, Inc

CYBERSECURI TY I m plem ent ing Basic Saf eguar ds At Your Pract ice

I worked with a physician for many years who was infamous for taking medical charts home for dictation. I can?t help but think that he was prophetic way back in 2001 when he insisted that the safest place for patient charts was . . . locked in the trunk of his car.

Here is what I have learned. There are some simple, yet necessary steps that we all can take in order to enhance cybersecurity. And if your practice has already instituted these steps? Review them again, and again, continually updating and adjusting your security protocols to minimize as much risk as possible, and to account for changes and updates that may have occurred in the interim.

Due to the enormous amounts of information being housed and transmitted electronically, and the continual sharing of patient health information in the name of providing better care, patient data has become more vulnerable than ever. Balancing patient privacy against the need to provide quality care (which is theoretically optimized by sharing patient data amongst all of a patient?s healthcare providers) has become the ultimate juggling act. Your practice is responsible for keeping patient information safe under these conditions? both health and financial information? and for protecting the practice?s liability.

Passwords If there is one point I want to stress, it is to establish and enforce a rigid password policy. The most basic protection is the one I see abused most often, yet it is understandable why this is the case. We need passwords for everything. Heck, even a mere bureaucrat like me has 64 different programs and log-ins that require passwords? and that is just for the work side of my life. But remember, passwords are there for our protection, not just to annoy us and challenge our memory.

My daughter may accuse me of being a geek, however I am anything but a cybersecurity guru. Rather, I am the administrator of a private GI practice in Richmond, Virginia, working 50-55 hours a week and still not finding enough time to get everything done. When it comes to data security, I have neither unlimited time nor budget to batten down the hatches and keep data secure. I have no doubt that others share this reality? struggling with the limits of time to learn comprehensively about cybersecurity, and the limits of budget to pay for an expert, yet somehow needing to meet the challenge of cybersecurity head-on in a practical, affordable and functional way.

Ensure that everyone in your organization follows these six guidelines in order to use passwords appropriately: 1) Do not use the same password for all programs. It?s like having a single key that fits all of your cars, all of your offices, your home, and your safety deposit box. If one person gets a copy of the key, they have access to everything you cherish. Use a distinct password for every program.

2) Do not use simple passwords based upon personal information. Far too many folks use the names of their kids or pets followed by ?1234?,or something similar.

The more complex the password, the more difficult it becomes to crack. Establish a rigid password policy now and enforce it. That?s your first line of defense, and it doesn?t cost a thing.

3) Size matters: longer passwords are better. The experts recommend passwords of at least eight characters that include a combination of upper and lower case letters, numbers, and special characters like ?^?or ?& ?.

Redundancy

4) Passwords should be changed approximately every 90 days. Our practice management system and EHR require passwords be changed every 90 days. If yours do not, ask your vendor to flip the switch that activates this security measure.

Regardless of where your data is housed? stored in the cloud or on hardware in-house? make data back-up a priority. We keep our data on in-house servers and back up our data nightly to separate servers. This automated process adds a level of security in the event of a ransomware attack, resulting in the only loss being 24 hours worth of data in the event of an attack. Backing up frequently ensures your data loss is minimized in the event of a breach or catastrophic event.

5) Do not leave your passwords written on a piece of paper on your desk or anywhere else that may be easy to find. Instead, consider using a password-protected spreadsheet on a secure device to retain your passwords.

Restricted Access

6) Do not share your passwords with anyone. If you do need to ? for whatever reason ? make sure to change them immediately after use, or if used in an on-going fashion, absolutely change them if that person leaves the practice or becomes disgruntled (be sure to deactivate or delete the former employee?s password and user accounts).

Determine which computers and data each employee needs access to, and restrict their access to only those applications and data levels that are determined to be necessary to that employee carrying out their work. Deactivate any employee or provider who leaves your practice, immediately upon their leaving. Badges, user ids, keys, and the like: you want to eliminate all physical and electronic options for an ex-employee to access protected health information.

7) Do not use similar passwords for personal and business activities, and keep personal and work passwords stored in different locations too. Make sure all of your employees and fellow providers follow these same password guidelines. A chain link fence is only as strong as its weakest link.

Layers Offer Protection Our patient data resides behind multiple firewalls on three servers. Multiple layers such as firewalls, password protections on servers, restricted physical access and so on, are a very good idea and offer much more security than a single firewall. Adding extra firewalls does not have to be very expensive either, from both an equipment or installation standpoint, and in our practice this has not had a noticeable impact on the speed of our network either. We use Drayteks, which range in cost from $200-$700 and contain multiple layers of protection within a single unit. This pricing includes all licensing, whereas other manufacturers like Sonic and Cisco do not include licensing in their base prices.

To highlight, notice how long it takes for one open software hacking program to crack passwords:

# of characters in

Time to crack a password

1 second

2.7 mins

25 mins

9.8 mins

171.3 hrs

3377.8 hr

110.8 hrs

6585.8 hrs

27360 hrs

The other reason we use Drayteks is their internal bandwidth--they do not impact the speed of our network, compared to other previous firewalls that had a clear detrimental impact on speed.

refurbished Dell server cost us $2,000-$3,000. Storage in the cloud, however, has its place, and it is where the health industry (and everyone else!) are going. The patient data that we share with other practices and health systems of course ends up in the cloud, stored in their EHRs. If you are cloud-based or considering going to the cloud, check with your vendor to make sure they meet industry standards (?ISO 27018?is the security standard recommended by many experts).

Security Risk Assessment All practices are required under HIPAA regulations to conduct a risk assessment. You can find an excellent tool for identifying risk vulnerabilities here: Assessment Tool. The Security Risk Assessment may sound like a pain, but it?s a good exercise to conduct. You don?t need to go through the whole program at one time; the tool saves your progress so that you can complete the process as needed over a period of time. And having a few folks on your team (doctor, office manager, etc.) go through it together is an effective way to complete the assessment and learn more about your infrastructure across the team.

Recommended Resource The web is full of guides for making your practice more secure. My favorite, for its brevity and straightforwardness, was developed by the government to help practices like ours: HealthIT.gov Insurance for the Cyber-Age Regardless of the steps taken to combat a breach of health or patient financial data, insuring your practice in the event of a breach is a wise move and is quickly being considered part of any practice?s standard menu of policies to have in place. Data breaches, asset protection, and even cyber-extortion policies can be put in place to augment your security plan and provide a financial buffer to aid in awarding compensation and in recovery? a resource that you will hopefully never. Ask your insurance provider to provide a proposal, with a full detailing of exactly what is being covered and an explanation of cybersecurity terms, as this may be new ?jargon?for you. In addition, be sure to compare proposals from at least two or three providers to ensure you are getting the right coverage and the best cost.

Penetration Testing We have a ?white hat?(a cybersecurity expert) attempt to break into our systems to expose vulnerabilities and attempt data access twice a year. This exercise is known as ?penetration testing?. The cost of the initial penetration test was several thousand dollars for our practice, but we considered it a necessary cost of doing business in order to keep patient data safe then and now. One of the most enlightening findings of our penetration testing has been ensuring that back doors that vendors use to update our system are relocked. If these ports remain open, your vulnerability increases exponentially. Whenever a vendor uses an electronic back door, make sure they close it. Cloudy with a Chance of Pain Many experts say the cloud is the safest place to be, but we have chosen to keep our patient data on physical servers in-house. Luddites we may seem to be, but it works well for us. Physical safeguards? locked doors, restricted access, excellent surge protection, and a $24/month agreement with a local alarm company? are in place. Servers have become surprisingly affordable, too. We use refurbished Dell servers, which cost about 1/10th the price of new Dell servers. A fully decked-out 24

Following Through It is easy to get discouraged, or intimidated, and just do nothing. After all, the FBI, the CIA, and the NSA have all been hacked at some point or another. And if cybercrooks can hack into Equifax (resulting in 143 million Americans impacted, about 44% of the U.S. population) or Anthem (resulting in 79 million people?s information being impacted, nearly 1 in 4 Americans), it seems that there?s only so much we can do to protect our practices. Yet, we need to do what we can, for both our patients and our practices. They place their trust in us, and we have an obligation to be prudent in protecting their data. We also need to protect our bottom lines. Thinking about the practice?s financial security is not callous or indifferent? it?s necessary and pragmatic in order to continue delivering patient care. The Equifax hack resulted in a 50% drop in their stock prices? can your practice withstand a large financial hit? Investing in data security is insurance on your bottom line. The recommendations discussed here can be implemented by most practices without a large investment of time or money, and should be executed immediately if your practice has not already done so. Schedule routine analysis, maintenance and updates to your security plan, and dedicate the needed resources to keep pace with the ever-growing needs of cybersecurity in your medical practice.

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? SPOTLIGHT ? PAUL D. VANCHIERE. MBA Founder | Pediatric Management Institute

FOUR SI MPLE WAYS TO TRACK KEY FI NANCI AL PERFORMANCE I NDI CATORS 2. Track Your Revenue Each month, you should receive a detailed report by payor showing the total revenue collected for the prior period. Tracking revenue allows you to see not only how your cash flow is trending but to identify any problem areas that you need to tackle fast. If charges are steady but payments are declining, look carefully at the following areas:

Timely and relevant information is essential to staying on top of your finances. Whether you are an employed physician or own your practice, there are four simple things you should look at every month to ensure that your practice is running effectively. If your computer system cannot not readily provide you with the listed information, you need to find ways to get it. There are economical solutions available to readily extract and review your financial data, so if your practice management system vendor can?t help, look to add on a solution that will give you visibility into your financial data and allow for improvement over time.

1. Track Your Charges Since charges are what drive practice revenue, you should keep a close eye on charges month-to-month. Any decrease in the average amount of charges from one month to the next should be investigated to look for issues such as a slow down in posting out procedures and visits at the billing office, decreased physician productivity, decreased volume of patients, and so on, adjusted for seasonal variation. By tracking this information on a monthly basis, you can at least get out in front of unexpected dips in revenue before a cash crunch is inevitable. See charges as the indicator for assessing the health of clinician productivity and patient volume.

Operational issues impacting payments such being short-handed in the billing department for posting payments and following up on collections Changes to your Payer Mix, whereby a poor paying plan is accounting for a higher percentage of your volume and may need to be slowed down Changes in payment rates from a plan or two. Payers reduce fee schedules all the time, this time it may have been your specialty that got hit. Changes in payment policies, such as bundling of services or reductions in multiple codes billed on the same day Changes to Plan Mix, whereby patients may be moving to higher deductible plans within a given Payer and more and more of the expected payment for services now needs to be billed to the patient

3. Review ALL Denials and Adjustments Ever wonder why some of your claims don't get paid? Payers (or Managed Care Organizations known as MCOs) do a really good job of telling you why they don't want to pay for a claim. For every claim submitted, your practice receives a detailed ?Explanation of Benefits?(EOB) or Electronic Remittance Advice (ERA) explaining by code why you will not get paid what you expect. You will find policy changes showing up there, such as new bundling rules being applied, but there are also frequent errors made by the plans that should not be allowed to result in unpaid claims to you. So make sure you understand why there is a change, and challenge or appeal all denials. You?ll be surprised how often the Payers make mistakes and end up paying claims upon appeal. 4. Calculate the Ratios Now that you have these three key pieces of information, you can use them to much more effectively monitor the financial health of your practice under the following KPIs: -

Gross Collections ? This shows total collections compared to the revenue you are generating. This should be tracked monthly, quarterly and annually for each Payer. Net Collections ? This shows total collections compared to expected rates from Payers. While a practice may charge $300 for a series of CPT codes, you are likely contracted to collect $210 when you add up the combined allowables for the billed CPT codes. As such, many practices use the Net Collection Ratio to examine the amount of payments compared to the negotiated rates. Charges per Encounter - This shows the average gross charges per patient encounter. The use of this ratio is twofold: to monitor provider production and to estimate future gross charges to be used for budgeting and forecasting. Revenue per Encounter - This shows the average revenue per patient encounter and is also used to monitor provider production and to estimate future revenue.

Establishing ways to consistently pull and analyze this data on a routine basis will help to avoid potential cash flow challenges and ensure that you get out in front of any hazards that can impact your revenues down the line.

? PODCAST? SUSANNE MADDEN, MBA, CCE CEO | CoFounder | Editor CLICK ON THE

A CONVERSATI ON WI TH MI CHAEL LUBI N

MICROPHONE TO LISTEN

Vice Pr esident , Hint Healt h Susanne spoke with Michael Lubin, VP of Hint Health, a 'direct care' company that helps connect physicians directly to patients and employers. No more middleman insurance companies! Read the beginning transcript of their conversation below and click on the microphone above to listen to the podcast. Susanne Madden: This is Susanne Madden, CEO of The Verden Group, talking to Michael Lubin, Vice President of Hint Health, about direct care solutions. Hint Health helps physicians and other healthcare providers to develop and administer direct to patient and direct to employer offerings. As many of you know, direct to employer is near and dear to my heart. Michael, I'm very happy to have you on our podcast today for this Equinox 2017 issue of Verden ViewPoint. Michael, tell us a little bit about what is direct care? I know there's a misunderstanding about what that might mean, so perhaps you can clear that up for us and just tell us exactly what is direct care and what does it look like from your perspective at Hint Health? Michael Lubin: Susanne, first of all, thanks for having me on today's podcast. Direct care actually is taking a lot of different forms in the marketplace today. I'm sure many of the listeners have heard of concepts like concierge medicine. Maybe some have heard of this emerging concept called direct primary care. Those are manifestations of direct care. In essence, direct care, and what physicians are doing out there with direct care, is essentially a new payment model, an alternative payment model, where they're delivering healthcare services directly to patients, or increasingly directly to employers, contracting directly with patients and employers and getting paid directly by the patient and/or directly by employers as well. In essence, that's really when we refer to direct care, it's a direct relationship with the patient and/or with an employer, to provide care directly, and where that financial relationship and that clinical relationship is really between those two entities with no third party payer relationship, or any intermediary in between that relationship. Susanne Madden: I think that's what's so neat about it, right? Is that it's getting rid of the middle man. This is obviously, hence the name direct care, but it's also direct payment. I think that's very exciting for a lot of physicians. I often hear physicians say "Gee, Susanne, but I'd love to do something like that, but I really don't think that we could survive that in this market. I don't feel like we can actually have a direct care model. Too many of my patients who are on insurance plans. I need to take insurance plans." What might you say to physicians? What is driving the growth that you see among physician groups and getting beyond these barriers? Click her e t o r ead t he f ull t ranscr ipt and / or t o list en t o t he podcast 29

Michael Lubin | VP | Hint Health

??HR MATTERS?? SPOTLIGHT TIFFANY LAURIA Practice Consultant | THE VERDEN GROUP

EMPLOYEE TURNOVER The Tr ue Cost of Hir ing a Replacem ent Your nurse announces that she is leaving the practice, after less than a year on the job, and your office manager is left scrambling to find a replacement. Sound familiar? It can feel like a revolving door at your practice, with a never-ending parade of new employees each needing to learn the ropes. Staff turnover disrupts routines, impedes patient care, and wears down office morale and the team?s ?spirit?.When all is considered, including the cost of the hiring and replacing staff, your practice is losing much more than an employee. In a recent survey conducted by the Medical Group Management Association, 50% of respondents reported that clinical support staff positions - such as nurses and medical assistants - had the most job changes. This was followed by a high turnover for receptionists, medical record and transcribing staff as noted by 32% of the responding parties. And each time an employee leaves, your practice is taking a financial loss. But how big is that loss? Let?s quantify. Going Beyond Salary An employee?s salary and health benefits are the obvious costs to factor in, but a look at the life cycle of an employee helps us to identify a number of different items that directly and indirectly impact employee cost. The following infographic identifies areas and items that are often overlooked when budgeting for new and replacement employees: While some expenses are pretty obvious and can be accounted for directly ? advertising, background checks, etc., there are some expenses more typically overlooked. For example, it is not as easy to account for the tremendous amount of time involved in on-boarding new employees in the form of training, decreased production and efficiency with a smaller workforce, time for review and handling of HR compliance and other related activities, all creating a drain on your practice, and stressing your seasoned staff who are on-boarding the new employee into the practice. Morale - An Expensive Loss Even more difficult to quantify is the impact high turnover can have on the employees who stay on. Ripples are created when a staff member leaves: concerns about why the employee left are raised, such as being underpaid, and this can create a feeling of discontent within the rest of the employees. They may begin to question their role in the practice and whether ?the grass is greener?elsewhere. And there is always some resentment at having to shoulder a heavier workload, or frustration at needing to train a replacement employee, and discomfort at the disruption of established routines and processes. In short, when one employee 30

leaves, it can spark a cascading effect throughout the practice.

The goal is to cultivate a better culture and to capitalize on the fact that new employees are coming on-board with enthusiasm and a fresh, positive impression of the practice.

All of this results in an impact to patients. The relationship between a patient and their care staff is an intimate one, and these relationships extend to the administrative and support staff as well, especially in a practice where patients are seen repeatedly. A cadre of new faces every few visits can disturb the patient?s sense of comfort and familiarity. Even worse, an unhappy employee may mutter about their concerns to the patient and create an unnecessarily negative view of the office. . .

A carefully cultivated plan gives you the opportunity to secure commitment to the practice in incremental steps along the course of their employment, helping them to transition their thinking from ?my job is here?to ?my career is here?.Engaging employees fosters longevity by helping them to see that the practice values their contributions and is interested in them personally and as a member of the team. A solid engagement plan should include:

Ending the Cycle

Invariably, there will be some employee movement into and out of your practice. Staff may relocate, retire, change careers or move to positions that suit them better. However, it is possible to stem the flow of employee turnover with a targeted retention plan geared toward minimizing the number of employees exiting, reducing the need to on-board replacement staff and stopping this massive drain on your practice.

Poll people that leave. An exit interview or survey can be a very useful tool in determining if there is a pattern related to the turnover in your practice. A departing employee may openly share their thoughts on what can be improved in the practice, how they feel they were treated by staff and patients, and what changes they would recommend that would have led to them staying. True, some employees may take this opportunity to vent frustrations that are not necessarily system failures, however, the goal is identify key weaknesses that can be addressed and remedied for the future.

Evaluate each position in your practice and determine the following: -

Are you creating a desirable work setting? Are tasks appropriately assigned and performed? Are you hiring appropriate staff and training them adequately? Are you offering effective ways for staff to communicate? Are staff members supporting each other?

A communication plan that allows for two-way communication, allowing for employees to be kept up to date on company happenings, changes and accomplishments, as well as encouraging employees to voice opinions and ideas via appropriate channels in a positive, constructive way. A focus on proper training and opportunities for career development. A comprehensive training program can eliminate employee frustrations, better set company expectations, and ensure uniformity of experience for the patients. If your practice does not have much opportunity for upward movement, continually investing in enhancement of your employees skills and engaging them in quality improvement projects will provide for richer job satisfaction. A well-defined culture and mission statement. If employees do not know what the practice is all about, how can they deliver on the mission, or align themselves with those goals? Define your practice?s culture, and be sure to embed the mission throughout all activities, from lower level staff through the providers and management.

Creating targeted retention and employee engagement plans is a process, especially if you have already noticed that turnover at your practice has increased in recent years. And while this process will initially cost an investment of time, it is very much a cost-saving measure for the long-term. Understanding the true value of an employee in your practice and the real cost when an employee leaves helps to provide incentive to invest in a long-term employee engagement plan. Doing so will ensure a high return on any employee investment.

Source: Family Practice Management, AAFP

Develop a comprehensive employee engagement plan You can review a previous article, Enhancing Customer Service The Disney Way, to help create that plan. 31

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