Doctors, patients and the bottom line

Once, a Yale doctor could comfortably juggle clinical care, teaching and research without worrying too much about the business of medicine. Those days are gone.

By John Curtis

On a Monday evening in February, two dozen Yale physicians are clustered around tables, puzzling over a series of management problems. They range from the ordinary to life-threatening: How can parking spaces at a new building be allocated most fairly among the staff? How can a search-and-rescue operation be completed without squandering scarce resources? Management professor Victor Vroom, Ph.D., has led the group through the processes those in charge might use to resolve these and other issues, then broken the class into small groups for discussion.

All of the participants in the course—junior faculty, service chiefs and department chairs included—have given up one evening a week from January to early April with the goal of honing their leadership skills and helping colleagues, as well as themselves, adjust to the changing requirements of academic medicine in the late 1990s. None of the problems raised at this evening’s session is specific to medicine, but that is precisely the point, says Stephen Rimar, M.D., HS ’83-87, the course director and medical director of the Yale Faculty Practice. Answers to many administrative issues facing doctors, he adds, can be found in the experience of other organizations. “What medicine is going through,” Rimar says, “is not unique.”

The idea of training physicians in management is just one indication of a culture shift under way within the Faculty Practice, which represents more than 650 faculty physicians and provides care to thousands of patients throughout the region. When it was established in 1981, it was essentially a billing office that provided service to the school’s clinical departments. But as the health care environment has grown more complex, the Faculty Practice has evolved into something quite different from its original incarnation. Now it coordinates the clinical activities of 17 medical school departments, negotiates contracts with insurers and managed care organizations, ensures compliance with a host of government requirements and has become the focal point for ensuring that patients are well served. And while it clearly is a business and must be run like one, it is a business that exists for a larger purpose. “The clinical activity of our faculty is an essential part of both teaching and research,” says Dean David A. Kessler, M.D. “How that clinical enterprise is managed has a very large impact on the school as a whole.”

Supporting the core missions
While managed care, with its eye firmly on the bottom line and a thirst for measurable results, is perhaps the most visible influence affecting faculty practices at the nation’s 125 medical schools, it is by no means the only one. It’s true that insurers have cut reimbursement rates and thrust themselves into the medical decision-making process to the dismay of physicians. But the federal government has added complexity as well, imposing regulatory requirements highlighted by several well-publicized audits of medical school billing operations around the country. Perhaps more importantly, patients have better access than ever before to the latest information and treatments, and increasingly regard medicine from the viewpoint of consumers. As a result, physicians are being urged to pay closer attention to the details of their practices and to regard patients not only as people in need of care, but as people who deserve a level of service taken for granted in the for-profit sector.

How do these trends affect the academic environment in which medicine is practiced at Yale? “Since medieval times, the purpose of a university has always been clear—to teach and to expand knowledge,” says David Leffell, M.D., HS ’86, a dermatologic surgeon who became director of the Faculty Practice and associate dean for clinical affairs on Jan. 1. “Our challenge is to develop a plan that allows us to support those missions effectively when there are enormous pressures. The overhead costs and the realities of medical billing compliance no longer make it possible to see a few patients in morning clinic and talk at length with medical students about those interesting cases. We have to be more creative about how clinical teaching is done.”

Several initiatives reflect the changing nature of the practice. Last year, it drew up a book of practice standards that address administrative issues ranging from relationships with referring physicians to telephone and waiting-room etiquette. It introduced a newsletter for physicians and staff that reinforces the customer-service ethos with such articles as Chopping Down the Phone Tree and Practice Checkup. And it has engaged in a number of bridge-building activities, such as a retreat in March for managers from the clinical departments and their counterparts in the Faculty Practice.

Leffell, who set the stage for these efforts as the practice’s medical director over the past three years, has spent the winter and early spring holding strategy sessions, setting goals with fellow administrators and faculty, and monitoring the implementation of a new computer billing system. He and his colleagues argued for and won the right for the Faculty Practice’s board of governors to approve its own budget, which previously had been determined by the central administration. “It’s an important step forward,” he says, “because it allows us to set priorities and focus resources on improving clinical services.”

Putting patients first
Those improvements, Leffell contends, are essential not only to the success of the practice but to the school as a whole. “In the absence of a system that treats patients efficiently, courteously and with compassion, there will be fewer and fewer patients coming our way,” he says. “And without patients, there is no medical school. They’re critical to both teaching and research.”

The school also has had to recognize long-standing traditions that at times may run counter to the new culture. University professors the world over are typically valued more for their individualism and academic talent than for their ability to function as institutional players. In academic medicine, success in research is often a quicker path to promotion than a good bedside manner and skill with patients. And at Yale, as elsewhere, individual departments that generate much of their own income have become accustomed to their own ways of doing things. “We are moving from a primarily entrepreneurial, department-based practice to something that will end up being more cohesive,” says Joseph B. Warshaw, M.D., deputy dean for clinical affairs and chair of the Department of Pediatrics.

Yale’s clinical operation is important to the educational and research missions of the school in a number of ways. Clinical income provides close to 25 percent of the medical school’s annual operating revenue of approximately $500 million, and, with its constant flow of patients, the practice serves as a primary learning environment for medical students. Because medical school departments were flush for so many years with fee-for-service clinical revenue, physicians could leave administrative and financial details to others while they concentrated on medicine and teaching.

A changed world
Those days are gone. In the new world of health care, physicians are seeing more patients and collecting smaller fees. The arithmetic is simple. “Under managed care the reimbursements have gone down, but our overhead at Yale has not,” says Jean L. Bolognia, M.D. ’80, HS ’80-85, professor of dermatology and a leading expert in the management of melanoma and pigmented lesions. Six months ago, she began seeing patients an hour earlier each morning to add time to her clinical schedule. But, she adds, “there are only so many ways you can expand. Spending less time per patient was a less acceptable option.”

While there has been a steady increase in new patient volume at Yale over the years, managed care does have the potential to limit patient access to Yale providers in the future. “In the old days,” says Leffell, “patients could go to the doctor they chose and physicians could refer patients to physicians at Yale for tertiary care without limitation. That has changed, and we have to be prepared for the possibility that contracting limitations will affect our patient flow.”

Five years ago, the practice appointed Ellen Skinner as its first director of managed care and marketing. “My role was to come in and organize a system for managed care contracting on behalf of the physicians that are full-time faculty,” she says, adding that the practice participates in 50 insurance plans. “When I first started in this position, less than 5 percent of our business was managed care and almost 35 percent was commercial indemnity, where you send in a bill and get paid that amount,” Skinner says. “Today we are down to about 25 percent commercial and 46 percent of our business is managed care.”

But more than simple participation in plans was needed. Of the 650 physicians in the faculty plan, all but three full-time and 10 part-time doctors are specialists providing tertiary care. About 90 percent of their patients come as referrals from other physicians, and Yale’s ability to contract with the greatest number of insurers is important for patient flow. The school has benefited in these negotiations from an expanding network of relationships developed by the Faculty Practice and from its participation in the 1,100-member Yale Independent Physicians Association, which represents all the physicians with attending privileges at Yale-New Haven Hospital.

Along with the economic landscape, the regulatory environment has also changed. Physicians not only are seeing more patients, but are spending more time documenting those patient visits, says Judy Harris, the practice’s compliance officer. “When I audit one of those services,” she says, “I am looking for 98 different components to one office visit or consultation. The basis for this documentation is very valid. It has just been taken overboard.”

Harris created a billing-compliance newsletter and an online tutorial to keep physicians informed, and faculty who wish to bill for clinical services must pass a quiz. “When they see what the documentation requirements are for them,” she says, “they complain that it adds a tremendous amount of time to their work every day.” This extra effort could cut into teaching time if other solutions aren’t found.

As part of the move towards centralization, the Faculty Practice hopes to shift billing-compliance review from the individual departments to an expanded unit within the Faculty Practice. If all goes as planned, its staff of auditors will increase from one to six as of July 1. Compliance is paramount, given the fines levied against medical schools for inadequate physician documentation as part of the Physicians at Teaching Hospitals audits. The federal Department of Health and Human Services scrutinized millions of documents at Penn, Dartmouth, Yale and other schools, and imposed fines and restitution as high as $30 million. Yale came through its audit without penalty.

Standardizing billing and services
Not every aspect of its billing operation has fared so well in recent years. Over the past two decades, as the details of reimbursement and regulation have become vastly more complex, the practice’s billing and collection systems found it difficult to keep up. Last year, the federal government contended that the school had failed to return overpayments from insurers promptly. The school acknowledged problems with its administrative systems and resolved the matter in a settlement. It also installed a new computer system last October to handle the complex requirements of the practice’s administrative, billing and collection functions. “The implementation was on time and under budget, and all the early indications are that we’re ahead of where we expected to be,” says Leffell. “But this is an area of administration we have to watch closely.”

Fixing these problems was a major step forward, says Irwin Birnbaum, who became chief operating officer in July 1997. “To pursue our mission, we have to have a professional business operation supporting our clinical activities,” he says. “Accurate billing and timely collection are critical to the health of the school.”

The operation’s success hinges on a number of factors. Each payment to the school depends on correct documentation of the service performed by the physician, a daunting task given the more than 10,000 possible billing codes. “It’s imperative that the coding is correct and that services are properly documented,” says Marianne Dess-Santoro, the executive director of patient financial services and the person in charge of implementing the new system. “There is a lot of activity that goes into collecting those dollars.”

In the midst of constantly changing claim submission rules, the new system keeps tabs on which insurance plan or plans are providing coverage for each patient, whether the patient has a referral from a physician, and whether the insurer has paid the right amount. “For the first time,” says Dess-Santoro, “we can see right away if a reimbursement from an insurance carrier is below what our contract with the carrier allows.” The system can also provide information on the clinical productivity of faculty. And, it has helped make the basis for physician charges more rational by standardizing fees for similar services that are provided by different departments throughout the practice. “It is much better from a patient perspective because there is uniformity,” Dess-Santoro says, “and it is much easier to negotiate managed care contracts now because we have a common fee schedule.”

That uniformity is also transferring to other areas. No matter where they receive their care at Yale, patients must be treated with equal efficiency and courtesy, Leffell believes. Clinical care, more than research or teaching, is the face the public sees. “No one has questioned the quality of medical treatment,” he says. “The question is how long are patients kept waiting in the waiting room? How hard is it to get an appointment? Does the doctor call the referring doctor back?” In addition to the practice standards book and the newsletter, the practice publishes a referral guide that is distributed to physicians across Connecticut and in parts of Rhode Island, New York and Massachusetts. The practice’s extensive web site (http://info.med.yale.edu/yfp) includes these resources and other useful information for physicians, staff and patients.

The practice standards, while they may seem focused on administrative minutiae, ultimately will lead to better medicine. “The more we can improve access for patients and ensure that the visit runs smoothly, the more it will improve patient-doctor communication,” says Katherine C. McKenzie, M.D., assistant professor of medicine and one of three full-time general practitioners in the Faculty Practice. “Patients who feel well cared for, at every level of their experience, will benefit.”

Medical director Rimar, who is responsible for leading the implementation of the new standards, is convinced they will help recruit new patients to the practice as well as retain them. “Most of our patients come to us as referrals from other physicians, and communication with the patient and the referring physician is very important,” he says. Working with doctors in the school’s 17 departments and more than 200 clinical programs, the practice is identifying areas where communication may in fact break down. There has been some resistance, Rimar notes, among doctors who interpret marketing as advertising and business as a preoccupation with the bottom line. “Patients don’t want their doctors to be business people and doctors don’t want to be business people,” he says. But the issue, he adds, is not business but management—understanding what resources are available, how to obtain them and how to keep the practice moving towards its goal.

The managers themselves, chairs of the departments facing centralized governance, recognize the need to change. “The environment is changing in health care,” says Gary E. Friedlaender, M.D., chair of the Department of Orthopaedics and Rehabilitation, “and the way in which we work together requires enhanced organization in the departments. I am convinced we are going to be a better and more nurturing environment for our patients, our faculty and the students.” Explicit, however, in the move towards centralization is a loss of autonomy in certain administrative areas, says Benjamin S. Bunney, M.D., chair of the Department of Psychiatry. “If the practice is going to be able to compete in the open marketplace for a contract, we can’t have each department trying separately to get its oar in the water. We have to be able to trust people to contract for us in a way that allows us to all pull together.”

Back to basics
What happens to medical education in the midst of all these changes? Within the practice, Leffell says, teaching continues much as it always has. “The majority of the teaching that goes on in medical school in the second two years happens at the bedside, not in the classroom,” he says, noting that he is always accompanied in his practice by a resident, and often by a student. “To teach the science and art of medicine is really why we are here,” he says.

“You can make the case,” says deputy dean Warshaw, “that by teaching students and house staff to consider cost-benefit issues, we are teaching them how to practice better medicine. If we can teach them that this test for $10 is better than a CT scan, or that a pediatrician measuring someone’s head with a tape measure can provide as much information as $1,000 worth of testing, that’s better medicine.”

Back at the Yale Management Program for Physicians, the faculty members enrolled in the evening class are working toward solutions that, in addition to advancing their abilities as managers, may be of immediate benefit to Yale’s clinical operations. A department chair is developing an incentive plan for clinicians that will help balance the budget. A lab director is thinking through a process to identify and correct problems in a range of areas, from technology implementation to employee relations. A clinic chief is looking at the feasibility of opening a satellite office outside New Haven.

One of the most interesting problems—and one that demonstrates how important management is to the well-being of patients—has been raised by Pierre B. Fayad, M.D., a neurologist who treats stroke patients. Getting the right medication to stroke patients within a six-hour window makes an enormous difference in their recovery, but it also requires an expensive allocation and coordination of services, staff and other resources. How can Yale’s cerebrovascular center direct an adequate number of patients to its services to make the investment practical? “The management tools I will be acquiring here,” Fayad says, “will be helpful in developing a program to achieve those goals.” That is Rimar’s hope, and one that he sees as realistic as physicians acquire the management skills they will need to survive and provide better patient care. “You can be an outstanding clinician—the greatest doctor in the world—and still go out of business,” he says.

As Leffell observes, the reconfiguration of the practice is a work in progress. Behind the plans, however, is a vision of the practice as a teaching center that also provides the best in clinical care and research. “Our identity as one of the world’s great medical schools defines a niche for us that no one else in our region has. It helps us focus on our competencies and our strengths. It allows us to make decisions about growth in a strategic fashion. Recognizing that we can’t be all things clinical to all people, we have to identify where we have the greatest critical mass of talent, research ability, educational skill and clinical expertise. That’s where we focus.”

John Curtis is a staff writer.