The wisdom of forming groups

Simon Brignall reflects on the challenges that consultants’ groups face with their billing – and points out some of the differences from running your own sole practice.

Consultants forming groups are nothing new and they have always formed a key component of our client base at Medical Billing & Collection (MBC). But their popularity has grown over the past decade. 

There are many reasons for this including:

 Groups’ ability to provide clinical services to the NHS and private sector;

 Economies of scale that can help reduce costs;

 Private medical insurers favouring the group model; 

 Super-specialisation and cross referral opportunities within the group;

 Brand identity and marketing opportunities;

 Patient Recorded Outcome Measures (PROMs) data; 

 Confidence and capacity as a proven referral pathway.

Some specialties such as anaesthetics and radiology naturally favour the group model, especially when they supply clinical services to a private hospital or NHS trust. 

Working together

Group structures improve the quality of care provided to the patient by having several consultants working together within the same specialty, yet with each doctor having specific expertise within their own field. 

Specialties such as urology often form groups where one consultant urological surgeon may focus on stone removal and another whose subspeciality is uro-oncology. 

Groups can also benefit from increased volume, as insurance companies and GPs are more likely to refer patients to them because they know they have capacity and expertise as centres of excellence in their field. 

Orthopaedic groups allow a group of surgeons to have a brand identity for treating a wide range of patients, who may require a hand and wrist, shoulder and elbow, hip and knee, spinal or foot and ankle surgery.  

Groups can provide many benefits, but, in our experience, many find the medical billing side of the business challenging and unless professionally managed, this vital area can very quickly run into difficulties. 

We partner with more than 50 groups across a wide range of specialties and well know the problems that arise. So I will use this and next month’s article to discuss some of the key points you should consider when setting up or joining a group.

Group structures

The term groups can include consultants working under a variety of models depending on their group dynamic and specific needs. 

The simplest is a virtual model where consultants continue to operate as individual practices under common branding that often includes a website. Virtual models can still allow for shared administration costs and still appear unified from a patient perspective.

More formal structures can be utilised such as consultants forming chambers, limited liability partnerships or limited companies. 

These group structures often have centralised pooled funds. Some have founding partners and can have various rules around the distribution of funds and the allocation of costs. 

Some well-established groups require a consultant to hit a revenue target or work for a specified time before their income and cost allocations is equitable to other participants in the group.  

Managing volume

But groups often become a victim of their own success. 

Managing the volume of activity generated by the group is the single biggest issue that they deal with and the more successful the group, the bigger this issue becomes.

The administration required for consultants working together is often underestimated. This covers all aspects, from the raising of the invoices to the volume of phone calls and emails that require answering on top of dealing with private medical insurers, clinics and hospitals. 

In our experience, often the first job to be set aside is the reconciliation and chasing of invoices. Delays in reconciliation mean that debt and cash flow suffer, because if you do not know what is outstanding, then it is impossible to raise shortfall invoices in a timely fashion and chase any money owed. 

This situation can easily escalate, as the busier the group practice becomes, the less time is spent on this function and money owed to the group accumulates . 

In some cases, this can result in consultants earning less money than they did before they formed or joined the group, which obviously defeats the point. Even when the group takes steps to remedy the situation, it is often only a short-term fix and the problem recurs worse than before.

Bad debt rate

We have had several group practices join us that have hundreds of thousands of pounds outstanding and who have written off tens of thousands of pounds in bad debt. But we average a bad debt rate of less than 0.5% across the firm.

It is not uncommon for busy groups to get behind on the raising of invoices and, as the first stage in the revenue cycle, this leads to delays all down the line. 

Failure to raise invoices promptly means that problems with invoices are not identified early, which can impact their chances of resolution. 

Delays at this key stage mean that all the further stages of the revenue cycle are impacted, which not only makes the practice look unprofessional but can lead to patient dissatisfaction and negatively impact cash flow.

Excess capacity

Groups who employ practice managers and medical secretaries are required to make binary decisions about staffing to facilitate their activity. The organic nature of many groups means that managing their workload can be challenging as new consultants join the group or members leave. 

This is a major reason why groups choose to outsource their medical billing and collection, as this provides it with excess capacity on tap when required. Out­sourcing also offers the added benefit of a cost structure linked to received income. 

An often-overlooked benefit of outsourcing is the improvement to the patient journey because  staff are freed up to focus on their customers. And that can lead to an increase in revenue as a result of more referrals and quicker responses to new inquiries. 

Of course, groups have many benefits derived from their economies of scale. But it is important to ensure these are not lost by ineffective management.

Next month in Independent Practitioner Today, I will cover groups’ billing and pricing, bank accounts and reporting.

This will also feature a check list for the group you are considering joining, examining each of these key areas. 

If you are seeking to establish a new group, this article will also act as useful guide to some of the challenges you may face. Often the best solution is to seek the advice of a professional medical billing company.

Simon Brignall (right) is director of business development at Medical Billing & Collection