Preserving Physician Income in a Low-Margin Environment: EMR Strategy

A frequent concern I hear in my conversations with physicians is that they are challenged by increasingly harsh economic pressures. Healthcare reform, lower—or at best stagnant—reimbursement rates from government and private payers, and the higher proportion of lower-paying Medicare patients are reducing or capping practice revenue. At the same time, overhead costs are escalating unrelentingly, since employees still expect raises and other operating costs continue to rise. While the common perception is that physicians are not businessmen/women, they are in fact running small businesses; and now, more than ever, they need to focus on ways to maintain business viability in light of lower margins.

Physician Income Calculator

The above graph illustrates the economic challenges. Click on it to enter your own practice data and assumptions concerning anticipated growth or decline in reimbursement and expenses, and observe the effect on physician income—the green line. Given that physicians have no control over reimbursement rates, the only way to positively impact that green line is by effecting fundamental changes to practice operations—and the right EMR is critical to this end.

First, it is imperative to significantly reduce overhead—the orange line. Government programs that may, or may not, deliver short-term financial incentives do not address cost structure. What is needed is an EMR that delivers sustainable and significant reductions in the staff-to-physician ratio and more efficient management of all resources—depressing the orange line. Increasing revenue—the blue line—requires increases in physician productivity and patient volume. The challenge here is to wade through EMR marketing hype to identify the EMR that will actually shift the orange line down and the blue and green lines up.

3 thoughts on “Preserving Physician Income in a Low-Margin Environment: EMR Strategy

  1. EMR’s are expensive. We do not feel that the records will save us time or Staff. We multitask in order to be more efficient. We manage with a minimum amount of employees who are well trained and efficient. We are concerned with overhead expenses, of course. Insurance premiums for our Staff will go up 20% because of the new Healthcare reform laws that just went into effect. Rent is up, supplies are up, Malpractice insurance is up; reimbursements from CareFirst Blue Cross Blue Shield are dismal, somewhat better from other carriers.

  2. SRS has paid for itself every few months for all of the 120+ months we have used it. With over 100,000 distinct patient charts in our practice, we have gained at least enough space to accommodate 3 extra exam rooms (income generators) by having our records digitized (and stored in a small-footprint server rack). We no longer have a file room, nor a file room staff. In addition, our workflow is much more efficient than when we were on paper. Telephone messages, chart retrieval, and prescription writing are much more efficiently addressed by using the software. Also, remote access to all of our records (and the ability to remotely annotate charts) has substantially improved the quality of life of our physicians. Do not overlook the potential value in having all of our records backed up and stored off-site, thereby rendering our practice essentially fire-proof.

    This piece of software is one of the few cost-saving investments that continues to generate returns for us.

  3. It is patently obvious that the government’s intention is to incentivize primary care, not specialty care. They estimate that there is such an imbalance between primary care income and that of specialists they really do not want specialists to receive any incentive payments. Just as you do I do not believe the penalty phase will ever come to pass.

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