Survival Mode
During these times of decreasing reimbursement and increasing costs, many emergency physician groups have gone into “survival mode”. To maintain current income or limit the decreases, many emergency physician groups have been forced to reevaluate staffing patterns, business partners, and all contractual arrangements. Price competition for malpractice insurance, coding & billing, and physician staffing is at an all time high in emergency medicine. Who can provide a high quality product for your physician group at the best price? Unfortunately, the answer lies within your group. As you might guess, the highest quality service at lowest price is usually not contained within the same proposal; therefore, each physician is left to establish criteria for their decision-making process. Those who survive and prosper are forced to become innovative and creative. This innovation and creativity has resulted in many new approaches to the business aspect of emergency medicine.
Changes in physician staffing, utilization of mid-level practitioners, productivity expectations, and other physician component changes have been discussed until we are all blue in the face. For the purposes of this article, I would like to present some interesting developments that have occurred within the billing community. As you know, many emergency physician groups outsource their coding and billing functions to professional billing companies that often operate on a percentage of collection. As the average collection per patient has decreased for many emergency physician groups, so to has the billing fee per patient collected by the billing vendor. At many emergency departments, even the best of billing companies is unable to maintain historical average patient collection rates. Economic factors beyond the control of the billing company and emergency physician group have led to decreased reimbursement. Economic factors include but are not limited to decreasing reimbursement from managed care plans, increasing percentages of uninsured and underinsured, and state and federal budget crunches. At the same time billing revenue per patient has decreased, other costs such as overhead and personnel costs have increased.
The need to control costs to maintain or slow the reduction in profit margin has led to many mergers, joint ventures, partnerships, and outsourcing opportunities within the billing and coding industry. The hottest topic today is outsourcing. Traditionally, outsourcing resulted in utilizing the resources of another person or company within your city, state, or geographical region. Outsourcing today is far different. With the explosion of the internet and other communication technologies, we are in the age of a global market. Many Fortune 500 companies have outsourced multiple job functions all over the world for a number of years. Often, the consumer has no idea that their payment was posted or a sales call made by someone in another country. For many of these companies, outsourcing has worked far beyond their wildest imagination. Employee costs have been controlled, efficiencies gained, and new access to a ready-to-work highly educated labor force has been tapped.
In the last twelve-eighteen months, the movement towards outsourcing some of the job functions within the billing and coding industry has built some momentum. Just as physician groups have been forced to make changes for economic survival, so to have billing companies. After speaking with many billing company executives over the last year, it is clear that many companies have already started to outsource or considering the concept. Since outsourcing beyond the United States is so new to our industry, healthy debate is in the infancy stage. Major issues such as confidentiality, risk, patriotism, etc. are all points of interest in the outsourcing equation. As with all new concepts, the debate regarding the risks and benefits will be fierce. These debates will be filled with truths, untruths, stereotypes, and rumors; therefore, it will be a difficult process to determine who and what to believe.
Several billing companies that are currently outsourcing data entry functions have experienced tremendous success that has reduced personnel costs and increased efficiencies through greater accuracy and shorter accounts receivable cycles. Many of the companies currently providing outsourcing options are located in India, which has a large population of highly educated people without sufficient job opportunities. These college educated people provide what we would call entry-level data entry jobs that are frequently unpopular and hard to fill at reasonable costs. Thus a win/win situation has been created for billing companies and their outsourcing partner. With the success in the data-entry arena, many of these outsourcing companies are working closely with their billing company partners to develop and provide coding services in the very near future.
Regardless of whether you like or believe in the concept of outsourcing, I think it has reached the billing industry and is likely here to stay. Emergency Medicine has truly become part of the global economy. Outsourcing will be a hot topic over the next few years. It will be interesting to follow this movement and see the long-term effects on the industry. The debates should be very lively.