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Utilizing Benchmarking to Manage Health Center Operations

Utilizing Benchmarking to Utilizing Benchmarking to Manage Health Center OperationsManage Health Center Operations

Curt DegenfelderManaging Directorcurtis.degenfelder@rsmi.com

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Provider! Physician Productivity! Physician Salary & Fringe! Midlevel Productivity! Midlevel Salary & Fringe! Midlevel/Physician Mix

Direct Provider Support! Staffing Ratios! Direct Provider Support Mix! Direct Provider Support Salaries & Fringe

Enabling! Staffing Ratios! Other Staff who Engage in Enabling

Services

KEY COMPONENTS OF COST PER VISIT

Overhead! Staffing ratios! Overhead % of Total Cost! Facility Overhead! Administrative Overhead

Ancillary & Other! Dental! Pharmacy! Radiology! Lab! WIC! Other Programs

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30%

16%

4%8%

29%

13%

Provider Direct Support Direct EnablingFacility Overhead Administrative Overhead Ancillary and Other

ALLOCATION OF HEALTH CENTER COSTS BY AREA*

* Data extracted from RSM proprietary National Ambulatory Care Database.

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PHYSICIAN PRODUCTIVITY - VISITS

Data Source: Internal Reports, Worksheet B of the Medicare Cost Report

Cost Component Calculation ComparisonPhysician Productivity Total Physician Visits Productivity(by provider type) Physician FTEs Standards

COMPARATIVE DATA BY SPECIALTY: Health Center (1) MGMA (2)

General and Internal Medicine 3,566 3,651Family Practice 3,858 4,367Pediatrics 3,623 4,771Obstetrics & Gynecology 3,679 2,962Median of all Physicians 3,682 4,009

(1) Data is from proprietary Health Center Database maintained by RSM McGladrey Inc.(2) Data is from Physician Compensation and Production Survey: 2004 Report Based on 2003 Data (MGMA 2004) Represents

Ambulatory Encounters only.

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PROVIDER PRODUCTIVITY

DRIVERS OF PROVIDER PRODUCTIVITY:

• Provider Mix (Number of Physicians, Nurse Practitioners, etc.)

• Percent of Time spent in Patient Care

• Adequate Infrastructure to Support Providers

• Number of Scheduled Patients plus Walk-Ins

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DRIVERS OF PROVIDER COSTS-PERCENT OF TIME SPENT IN PATIENT CARE

ISSUES FOR CONSIDERATION:

• What is the standard workweek? 35 Hours? 40 Hours?

• How many sessions is a full-time provider responsible for? Weekly average is 7-8, average hours in clinic are 28 - 32.

• How is inpatient/on-call time handled?

• When are meetings scheduled? During lunch? On weekends? At night?

• How is Quality Assurance Peer Review coordinated?

• How is travel time taken into account?

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DIAGNOSING HEALTH CENTER BENCHMARKS –PHYSICIAN PRODUCTIVITY – VISITS

What is it about the way Health Centers provide care to children that is different from private practice?

(1) Data is from proprietary Health Center Database maintained by RSM McGladrey Inc.

Family Practice Pediatric Ratio

Health Centers (1) 3,858 3,623 1.06

Private Practice 4,367 4,771 0.92

Productivity

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Cost Component Example Comparison

Physician Salary Total Physician Salaries/ Regional SalariesTotal Physician FTEs

COMPARATIVE DATA BY SPECIALTY: Health Center (1) MGMA

General and Internal Medicine $ 131,455 $ 159,252Family Practice $ 135,148 $ 157,481Pediatrics $ 129,779 $ 158,867Obstetrics & Gynecology $ 201,068 $ 237,191Median of all Physicians $ 136,136 $159,252

(1) Data extracted from RSM proprietary National Ambulatory Care Database.

DRIVERS OF PROVIDER COSTS -SALARY - PHYSICIAN

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PHYSICIAN COST PER VISIT

Data Source: Medicare Cost Report, Worksheet A, Line 1, Column 5 Divided by Worksheet B, Line 1, Column 2

Cost Component Calculation Comparison

Physician Cost per Medical Visit Total Physician Cost / Evaluate Against Total Medical Visits Cost per Visit Standards

Example: $585,862 Salary & Fringe Cost/11,546 visits = $50.74/visit

National Median for Health Centers - $44.00 (1)

(1) Data is from proprietary Health Center Database maintained by RSM McGladrey Inc.

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PHYSICIAN COST PER VISIT BY PHYSICIAN TYPE*

General & Internal

MedicineFamily

Practice PediatricsMD Cost per

Visit

Health Center A 43.12$ 38.21$ 43.01$ 63.21$

Health Center B 32.88$ 31.33$ 33.38$ 32.74$

Health Center C 41.06$ 40.08$ 38.15$ 58.05$

National Median 42.09$ 39.79$ 39.82$ 44.00$

* Includes fringe benefits

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PHYSICIAN COST PER VISIT

While Health Center A has higher Physician Salary Costs, thus higher absolute costs than the national average, it also has higher productivity. This ultimately leads to a lower cost per visit.

Productivity is the #1 Driver of Cost

Physician Salary

Physician Productivity

Physician Salary per

Visit

Facility Overhead Cost per Physician

Facility Overhead per Visit

Facility and Physician

Salary Cost per Visit

Health Center A 128,359$ 4,700 27.31$ 32,000 6.81$ 34.12$

National Median 125,534$ 3,694 33.98$ 32,000 8.72$ 42.70$

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COMPONENTS OF COST PER VISIT –MIDLEVEL PRODUCTIVITY – VISITS

Data Source: Internal Reports, Worksheet B of the Medicare Cost Report

Cost Component Calculation Comparison

Midlevel Productivity Total Midlevel Visits / ProductivityMidlevel FTEs Standards

COMPARATIVE DATA BY MIDLEVEL TYPE: Health Center (1) MGMA (2)

Nurse Practitioners 2,535 2,351Physician Assistants 3,077 3,106Nurse Midwives 2,361 1,876Median of all Midlevels 2,596 2,351

(1) Data is from proprietary Health Center Database maintained by RSM McGladrey Inc.(2) Data is from Physician Compensation and Production Survey: 2004 Report Based on 2003 Data (MGMA: 2004).

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DRIVERS OF PROVIDER COSTS -SALARY - MIDLEVEL PROVIDERS

Component Example Comparison

Midlevel Salary Total Midlevel Salaries/ Regional SalariesTotal Midlevel FTEs

COMPARATIVE DATA BY MIDLEVEL TYPE: Health Center(1) MGMA

Nurse Practitioners $69,692 $67,835Physician Assistants $70,706 $70,262Nurse Midwives $86,224 $71,748Median of all Midlevels $71,842 $70,262

(1) Data extracted from RSM proprietary National Ambulatory Care Database.

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MIDLEVEL COST PER VISIT

Component

Total Midlevel Salaries & Fringe/Total Midlevel Visits

COMPARATIVE DATA BY MIDLEVEL TYPE: Health Center(1) MGMA(2)

Nurse Practitioners $32.31 $33.18Physician Assistants $26.09 $26.01Nurse Midwives $35.29 $43.98

(1) Data extracted from RSM proprietary National Ambulatory Care Database.(2) Assumes a 15% Fringe Benefit Rate

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DRIVERS OF PROVIDER COSTS-s -PROVIDER MIX

Component Example Comparison Example

Ratio of Midlevels/Physicians Total Midlevel FTEs / 3 Midlevel FTEs / Total Physician FTEs 6 Physician FTEs = .5 Ratio

ISSUES FOR CONSIDERATION:• If the ratio is high, physician productivity may decrease due to increased responsibility of overseeing midlevels.• Average RVUs per provider must be taken into consideration. Median work RVU productivity: primary care

physician – 3,512, primary care midlevel – 1,888• Are midlevels getting tougher cases?• Are midlevels getting acute cases?

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PROVIDER MIX

! The national health center median of midlevels to physicians is .55.

! Midlevel productivity generally exceeds minimum utilization threshold standards of 2,100 visits, whereas physician productivity generally falls short of 4,200 visits.

! Midlevel cost per visit is lower than physician cost per visit.

! This does not necessarily mean that health centers should strive to be above the national median. Service intensity and patient need should be considered, as well as overhead coverage considerations.

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COMPONENTS OF COST PER VISIT –DIRECT MEDICAL SUPPORT COSTS

Drivers of Direct Medical Support Staff (DMS) Costs

! Productivity

! Ratio of Direct Medical Support Staff to Providers

! DMS Compensation

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COMPONENTS OF COST PER VISIT -DIRECT MEDICAL SUPPORT COSTS

! Direct Medical Support Staff includes Medical Support Supervisors, Nurses, Medical Attendants, Phlebotomists, Medical Receptionists, Nurses Aides, and QA Coordinators/Medical Transcribers.

! Direct Medical Support Staff should be evaluated based on salary including fringe benefits and in relation to the number of physicians and midlevel providers.

! Health centers can develop a model of delivery where Direct Medical Support Staff can increase provider productivity and cost effectiveness (e.g., staff can perform basic tasks, such as checking weight and blood pressure, leaving physicians more time for complicated patient care).

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COMPONENTS OF COST PER VISIT –DIRECT MEDICAL SUPPORT COSTS

Cost Component National Median

! Avg. # of DMS per Provider 2.38

! RNs, LPNs, Medical Assistants, Nurse Aides per Provider 1.4

! Avg. DMS Salary (1) $34,281

! Avg. DMS Cost per Provider (1) $81,558

! Avg. DMS Cost per Visit (1) $16.76

(1) Assumes a 23% fringe benefit rate.

COMPONENTS OF COST PER VISIT –DIRECT MEDICAL SUPPORT COSTS

Service Category

National CHC Ratio to Medical

Providers

National CHC Cost per Medical

Visit

National CHC Average Salary

Per FTE Medical Support Supervisors 0.14 1.96$ 40,882$ Nurses - RN 0.48 6.33$ 38,247$ Nurses - LPN 0.53 4.04$ 25,783$ Medical Attendants 0.66 5.55$ 23,509$ Phlebotomists 0.14 1.46$ 24,640$ Managed Care Support (Clinical) 0.06 0.58$ 38,678$ Referral Coordinators 0.12 1.40$ 23,383$ Patient Triage Support 0.11 1.28$ 27,277$ Medical Receptionists 0.63 3.65$ 21,289$ Nurse Aide 0.31 2.54$ 19,030$ QA Coordinator / Medical Transcriber 0.09 0.90$ 27,884$ Direct Medical Support Overall 2.38 16.76$ 27,871$

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DIRECT MEDICAL SUPPORT STAFF ANALYSIS

Ratio of DMS to Medical Providers

DMS Cost per Medical Visit

MD Cost per Visit

Health Center A 2.80 14.97$ 50.39$

Health Center B 2.45 23.45$ 39.87$

Health Center C 1.90 15.22$ 41.78$

Health Center D 2.43 7.99$ 45.94$

National Median 2.38 16.76$ 37.56$

Median of Total Direct Provider Support to All Providers – 1.84

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Exam Rooms per Provider

Total Visits per Square Foot

Medical Visits per Medical Square Foot

% of Total Space Devoted to

Medical

Health Center A 2.25 3.25 5.45 50%

Health Center B 1.98 1.12 2.32 26%

Health Center C 2.37 1.66 2.12 69%

Health Center D 1.79 1.66 1.55 69%

National Median 2.32 1.76 2.99 50%

OTHER WAYS TO LOOK AT PROVIDER SUPPORT –PROVIDER INFRASTRUCTURE REPORT

* Data is from proprietary Health Center Database maintained by RSM McGladrey Inc.

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OTHER WAYS TO LOOK AT PROVIDER SUPPORT –MEDICAL PROVIDER STAFF SUPPORT

SUPPORT PER MEDICAL PROVIDER FTE (1)

Admin Staff per Provider FTE (2)

Billing/MIS Staff per Provider

FTE

Medical Records Staff per Provider

FTE

Facility Staff per Provider

FTE

Enabling Staff per Provider

FTE

Other Staff per Provider FTE (3)

Direct Medical Support

per Provider

FTE

Total Support Staff per Provider

FTEHealth Center A 0.84 1.12 0.38 0.32 0.25 1.76 1.60 6.27 Health Center B 1.07 0.80 0.29 N/A 0.09 0.14 3.09 5.48 Health Center C 1.22 0.21 0.85 N/A 0.58 N/A 1.38 4.24 Health Center D 0.95 1.23 0.68 N/A 0.98 0.29 2.20 6.33

Median - National 0.96 0.74 0.36 0.24 0.61 0.69 2.41 5.87 MGMA 0.34 0.65 0.53 0.09 N/A 0.60 1.95 3.99

(1) Medical Providers - Physicians & Midlevels(2) Executive, finance & administrative(3) Other includes Non-Medical/Dental and Ancillary

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SUPPORT PER TOTAL PROVIDER FTE (1)

Admin Staff per Provider FTE (2)

Billing/MIS Staff per Provider

FTE

Medical Records Staff per Provider

FTE

Facility Staff per Provider

FTE

Enabling Staff per Provider

FTE

Other Staff per Provider FTE (3)

Direct Support

per Provider

FTE

Total Support Staff per Provider

FTEHealth Center A 0.84 1.12 0.38 0.32 0.25 1.76 1.60 6.27 Health Center B 0.81 0.60 0.80 N/A 0.07 0.11 2.34 4.15 Health Center C 0.87 0.15 0.21 N/A 0.42 N/A 1.08 3.13 Health Center D 0.64 0.83 1.23 N/A 0.66 0.19 2.10 4.87

Median - National 0.79 0.53 0.39 0.24 0.57 0.43 2.02 5.01

(1) Includes all providers(2) Executive, finance & administrative(3) Other includes Non-Medical/Dental and Ancillary

OTHER WAYS TO LOOK AT PROVIDER SUPPORT –TOTAL PROVIDER STAFF SUPPORT

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TYING IT TOGETHER –VISITS PER SUPPORT STAFF

(1) Executive, finance & administrative(2) Other includes Non-Medical/Dental and Ancillary

Admin (1) Billing /MISMedical Records Facility Staff Enabling Other Staff (2)

Direct Support

Total Support

Staff

Medical Visits 3,567 4,792 10,586 14,906 5,592 6,059 1,585 588 Total Visits 4,249 6,110 11,611 16,945 6,112 6,453 1,626 668

VISITS PER SUPPORT STAFF FTE

• Visits per support ties together both provider productivity as well as staffing ratios.

• Health centers must consider provider productivity in looking at staffing ratios. If the health center is below national medians in productivity, do they need as many support staff per provider? Or is provider productivity held down by inadequate support?

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INTERNAL BENCHMARKING

Visits

Non- Provider Staff

Provider Staff

Visits per Non- Provider Staff

Provider Support

Support per Provider

Provider Productivity

Site A 11,000 18.0 2.5 611 5.0 2.0 4,400 Site B 12,000 15.0 4.2 800 7.0 1.7 2,857 Site C 15,000 19.0 5.0 789 11.0 2.2 3,000 Site D 18,000 25.0 4.8 720 11.0 2.3 3,750 Site E 9,000 14.0 2.0 643 6.0 3.0 4,500 Average 65,000 91.0 18.5 714 40.0 2.2 3,514

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COMPONENTS OF COST PER VISIT –ENABLING SERVICES COSTS

Enabling Services are the supplementary services that enable theprovision of direct medical / clinical services, including transportation, interpretation, outreach, translation, case management, and health education.

Drivers of Enabling Services Costs:! Range of Services Provided! Intensity of Services Provided! Compensation of Staff Providing Enabling Services! Level of Reimbursement for Enabling Services

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COMPONENTS OF COST PER VISIT –ENABLING SERVICES COSTS

In studying enabling services costs, the portion of total health center costs attributable to providing enabling services, including both the direct enabling costs (e.g.. Outreach staff salaries) and associated overhead costs, is 25% - 50% .

It is important in any study of enabling services costs to quantify costs for non-dedicated enabling staff who perform partial enabling services outside of their primary function. Examples of non-dedicated enabling staff include:

• Bilingual nurses providing translation services for patients• Front desk personnel performing eligibility enrollment services

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Cost Component National Median

! Avg. # of Enabling per Provider 0.62

! Avg. Enabling Salary (1) $37,344

! Avg. Enabling Cost per Provider (1) $23,153

! Avg. Enabling Cost per Visit (1) $5.48

Note: Numbers represent only dedicated full-time enabling staff; partial enabling staff excluded(1) Assumes a 23% fringe benefit rate.

COMPONENTS OF COST PER VISIT –ENABLING SERVICES COSTS

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COMPONENTS OF COST PER VISIT – OVERHEAD COSTS

Drivers of Overhead Costs:! Productivity! Staffing! Compensation of Administrative Staff! Facility Overhead Costs (e.g., Rent, Equipment, Depreciation, etc.) ! Administrative Overhead Costs (e.g., Office Supplies, Marketing,

Professional Fees, etc.)

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ANALYSIS OF SIGNIFICANT COST COMPONENTS –TOTAL OVERHEAD

Cost Component Total Facility Overhead Cost / Total VisitsFacility Overhead as a Percentage of Total CostTotal Administrative Overhead Cost / Total VisitsAdministration as a Percentage of Total CostTotal Overhead as Percentage of Total Cost

Source of Information Facility - MCR Line 37, Column 5Administrative - MCR Line 49, Column 5Total - MCR Line 50, Column 5

Sample Data$398,162 Facility OH / 42,670 Visits = $9.33 / Visit$398,162 Facility OH / $5,701,506 = 7.0%$1,222,706 Admin. OH / 42,670 Visits = $28.65 / Visit$1,222,706 Admin. OH / $5,701,506 = 21.4%$1,620,868 Total OH / $5,701,506 = 28.4%

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Overhead can be calculated using line 50, column 5 of the Medicare Cost Report.

Costs Small Health Center Medium Health Center Large Health Center National

Facility Overhead $ 259,993 $1,147,915 $1,563,565Admin. Overhead $1,018,078 $1,985,969 $2,501,555Total Overhead $1,278,071 $3,133,884 $4,065,120Total Cost $2,736,769 $7,482,627 $12,568,145

Facility OH % 9.5% 15.3% 12.4% $ 8.72 Admin. OH % 37.2% 26.5% 19.9% $30.21 Total OH % 46.7% 41.8% 32.3% $38.77

Visits 21,483 60,637 110,643

Total OH Cost / Visit $59.49 $51.68 $36.74

COMPONENTS OF COST PER VISIT -OVERHEAD COSTS

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Health Center A Health Center BTotal Visits 25,000 100,000 Executive Director Salary $70,000 $100,000

Executive Director Salary Cost per Visit (overhead cost) $2.80 $1.00

Large health centers have an opportunity to have lower overhead costs due to economies of scale. However, there is very little correlation between health center size and overhead percentage.

COMPONENTS OF COST PER VISIT -OVERHEAD COSTS

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DIAGNOSING YOUR COSTS – LOOKING AT OVERHEAD

Family Health Center’s CPV is only marginally higher than average.

View 2

Overhead Cost $1,430,796

Total Visits 29,103

Overhead Cost per Visit $49.16

National Average Cost per Visit $48.82

Because Family Health Center does not have ancillary or other programs, their % of overhead is higher although their overhead expenses are within the norms.

Family Health Center’s OPR reviewer noted that their overhead % is higher than average. Is their overhead too high?

View 1

Overhead Cost $1,430,796

Total Cost $3,134,992

Overhead Cost % of Total 45.6%

National AverageOverhead % 35.8%