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Confronting rising medical practice expenses amid inflation, staffing shortages

Podcast - September 15, 2022

Recruitment & Hiring

Staffing Models

Population Health

Daniel Williams MBA, MSEM

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There are plenty of culprits to point the finger at — the COVID-19 pandemic, record-high inflation, and more — but the reality is that medical practices are facing dual threats from rising expenses and staff shortages. 

MGMA consultant Adrienne Lloyd, MHA, FACHE, CEO and founder of Optimize Healthcare, joined the MGMA Insights podcast recently to share her insights into these challenges, as well as preview her upcoming sessions at the 2022 Medical Practice Excellence: Leaders Conference, Oct. 9-12 in Boston. 

Editor’s note: The following Q&A has been edited for length and clarity. 

Q. Let’s talk about inflation — is that actual word coming up in conversations you have with clients? 

A. I am not hearing the word “inflation” quite as much as I'm hearing rising salaries and rising expenses, which, of course, are all symptoms of [inflation]. It's more expensive to hire staff, to retain staff, and then there are supply and equipment expenses — the supply chain issues are continuing, and that's impacting people's ability to provide the care that they need. When they do provide it, it's now at a much higher cost. Our expenses are going up, so we're squeezing those margins — if we even had positive margins; it’s presenting even more challenges for the practice leaders. 

Q. The sticker shock of those increased expenses and the lack of staff to operate, what are those impacts for practices today? 

A. I heard from a radiology practice that they’re having to close an MRI scanner for a day [due to staffing shortages]. … This staffing gap leads to further revenue gaps, and then they either can't get the supplies or resources that they need or, when they do get them, their contracts are now going up 15% to 20% over what they were before. 

I don't know that we're at panic levels — I hope not — but I do think that there's extreme caution and a lot of trepidation around what is it going to cost for us to retain the staff that we have, to hire in the staff that we feel like we need, and then still be able to adjust to the reimbursement declines that we're seeing.  

That's causing people to think about growth that they were planning— whether they were planning to partner or acquire another practice into larger organization or expand — and that's really starting to have impacts, as well as on other strategic initiatives they might have had, such as replacing outdated software. At some point, it becomes mission critical to make those changes. 

Q. One word that comes up amid all these issues is “quality” — not just the quality of patient care, but also the quality of life of staff who experience higher stress and burnout amid this labor market.  

A. Everyone in healthcare is very committed to providing high quality and high-value customer service; most people got into healthcare for that reason and want to move that forward.  

I have a colleague who is a nurse practitioner in a hospital NICU, being asked to pick up additional second and third shifts; I trust that they're doing everything they can to provide that same care to those infants that they did the first shift of the week, but there's only so much bandwidth any human can have, and it creates risk. There's an increased risk that something is going to fall through the cracks: Someone is going to miss a step in a process, and it could result in an error. None of us want that to happen. 

Q. The other topic tied to quality is value-based care. In this climate, are there opportunities to create more revenue and lower costs by embracing value-based arrangements? 

A. It’s about how you approach it; I'm not sure that it is true for every disease, condition, or specialty. It typically is truer for primary care specialties where you're looking at providing incentives for patients to get better care or more frequent care: They're getting checkups, they are getting nurse phone calls to check in and see how they are doing. That prevents them having to go to the ER or having additional tests because something got missed for too long.  

Value-based care helps highlight some opportunities that we've known existed for a long time; we have a lot of lack of standardization in healthcare. When you have these bundled payments for a certain patient population, you start to look within that specific specialty, and say, “How much is it costing us now to provide the care for this type of patient?” and “How might we be able to reduce that cost?” Is it supply expenses? What types of staff are we using for this? Does the physician need to see the patient, or could an advanced practice provider get involved? 

You want to look at those costs, and does that provide a lot of opportunity? One of the things when I was at Duke ophthalmology, we were looking at our diabetic retinopathy patients: Retinal injection medication, as an example, is expensive. We looked at the different types of medications being used and determined there was a better kind of protocol to consider for these patients. 

Getting your providers involved is another great opportunity to be able to have conversations [about] how do we provide the best care for these patients. In interventional radiology, GI or cardiology, a lot of our devices and supplies can be very expensive. Could we use a stent that's a couple hundred dollars less for a patient and still have the same outcome? Maybe yes, maybe no, but at least have those conversations. 

It's also about whether we have patients going through steps in the process that really are not adding value to the patient, and is there a way that we can reduce the time and resources?  

On the revenue side, it’s about being able to then negotiate with your payers and say, “We're able to provide the care for these patients, this is the quality we're able to provide,” “We’re able to get them in within two weeks” —whatever that that target might be. Being able to sell that can hopefully lead to better contracting with those payers to get higher rates for those populations. 

Q. Do practice administrators need any new skills to prepare and equip them for running a practice with value-based care arrangements? 

A. I think most of them have all the skills to do that. I think it just requires a mindset shift. Before it was, “How can we see more patients? Are there additional services that we can provide?” Now it's keeping quality and customer service at the forefront, but looking at it from a margin perspective and saying, you know, how can we treat these patients in a better way with fewer resources?  

Digging into what are those costs that go into providing that care, and then having those conversations with your physicians and getting even a few a few of them to the table and say, “I'd like your input into how we can reduce the cost,” or “Can we provide an elevated service?” 

Q. You often mention the importance of Lean principles in achieving efficiencies in practice operations. How do you incorporate those in a value-based care setting? 

A. I really love utilizing process mapping —mapping out the process of what the patient is going through. Also, kick off with brainstorming with your team, [acknowledging] we're short staffed. Tell them: “I need your ideas, I need your input.” A lot of times, as leaders, we feel like we must have all the answers. But really, if we can give some of that power back to our teams and help them, they have much better solutions, and they see much more of the practice and the flow than we do.  

Use an affinity diagram and impact difficulty matrix to really prioritize those items that can really help save you time, reduce some of the stress and burnout that the team is feeling.  

I love taking that to the next level, using visual cues or short videos to help train the staff. If you've got someone new to the organization who doesn't know how the EHR works, or they don't know where all the supplies are located, and they don't want to have to ask other employees every single time. Providing some resources that they can go to … is very helpful. Creating that standard process will help with onboarding and training. It just makes it easier to get more consistent outcomes. It also helps on the performance side. 

Q. What sorts of resources and tools would you recommend for someone trying to make progress on these issues? 

A. I have a brainstorming video and a standard work tool I'd be happy to share. [Click here to access the free resources.] Creating those short, actionable videos and training tools can be helpful to just reduce the questions that you or your team gets and really help those new employees feel that they are positioned for success, because the last thing you want is to have spent all this time recruiting and training and then have them leave in three to six months. 

We want to hear from you 

We'd love to hear from you. Tell us what you think. Let us know if there's a topic you want us to cover or an expert you would like us to interview. Email us at podcasts@mgma.com

The MGMA Insights podcasts are produced by Daniel Williams, Rob Ketcham and Decklan McGee. 

About the Author

Daniel Williams
Daniel Williams MBA, MSEM
Sr. Editor MGMA Englewood, Colorado

Daniel provides strategic content planning and development to engage healthcare professionals, managers and executives through e-newsletters, webinars, online events, books, podcasts and conferences. His major emphasis is in developing and curating relevant content in healthcare leadership and innovation that informs, educates and inspires the MGMA audience. You can reach Daniel at dwilliams@mgma.com or 877.275.6462 x1298.

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