Do you have a general practice management question you’d like our opinion on? Share it here anonymously and we’ll respond with our view.

(Please note, this feature is for public questions, asked anonymously, and answered with our general viewpoint. If you’d like a private consultation about a specific problem at your practice, our “20 minutes, one question” service might be a better resource.)

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Here's what your fellow physicians and practice managers are asking....

  • Someone asked:
    How can a solo specialty practice calculate the cost of Advanced Practice Provider turnover? How do you estimate the productivity cost of training and new provider ramp up?
    • Laurie Morgan replied:
      This is a relatively complex question without a one-size-fits-all answer. One piece of the puzzle is how your APP is compensated. Are they paid a flat salary or is production a component? Another is whether you're relying on them to generate revenue directly (through their own billings) or if the provider is mainly extending the productivity of the solo physician-owner. How long it typically takes a new APP to get up to speed in your practice framework also obviously makes a big difference in the cost. With these considerations in mind, the costs of training and turnover include:
      • - recruitment expenses (advertising, recruiter commissions, etc)
      • - lost revenue
      • - compensation that exceeds revenue contributions during ramp-up
      • - marketing costs
      • - operational costs such as credentialing (if applicable)
      • - reduced owner productivity (if applicable)
      • - patient exits (and additional marketing costs) if the APP is popular and patients follow them
      Nurse practitioners and physician assistants are in high demand almost everywhere. The costs of recruiting will also be influenced by how tough the market is in your area. Being very selective in recruiting and thoughtful in on-boarding can improve APP retention -- the best way to reduce turnover costs. Some areas to focus on:
      • - looking for a cultural fit, not just impeccable credentials
      • - being careful to offer competitive compensation
      • - where possible, boosting competitiveness with non-financial perks (such as flexible scheduling or part-time options)
      • - being very clear about the job content and clinical approach
  • Someone asked:
    A nurse practitioner in my 2 physician/3 NP practice resigned. Should I replace her? My administrator says no, arguing “it’s a break-even proposition at best.” But I am not sure this is the right decision.
    • Laurie Morgan replied:
      First, it’s laudable that your administrator is attempting to answer the question as objectively as possible. Data-driven, quantitative analysis is essential to making good business decisions. But a single financial snapshot is unlikely to tell the whole story, so I’m not surprised you have doubts. Digging into a few additional questions might help you determine the best answer for your practice.

      You haven’t mentioned your specialty, and that may make a difference in how an NP or PA’s contributions affect profitability. How non-physician providers fit into your practice is also important to know. For example, if they’re seeing their own patients and billing under their own NPI numbers, it may be easier to get a clear picture of the revenue they bring in. If they’re working primarily as “extenders” and you’re billing incident-to, be sure the data in your system accurately reflects what revenue should be credited to your NPs.

      I’m also interested in why “a break-even proposition at best” was interpreted as “not worth replacing.” This raises more questions, like how were overhead costs allocated? The decision not to replace sounds like it assumes doing so would be at best a wash financially, but I’d want to be sure that’s true. Will the remaining two physicians and two NPs be able to bring in the same amount of revenue as five clinicians are now? If not, be sure the calculation you’re relying on accounts for spreading practice overhead across four revenue streams instead of five.

      Here are a few additional questions to consider:

      • Has the NP who’s leaving reached full productivity? Or might you expect more return on an NP who stays with your practice longer? Today’s “break-even proposition” might be a more clearly profitable contributor with more experience.
      • Will not filling this role put your practice at risk of a more severe crunch if another NP or a physician leaves? Having a little extra capacity in your clinician ranks can protect your practice from disaster if someone unexpectedly departs or needs a leave of absence. With only four total clinicians, this may be a serious risk for your practice.
      • Does having this extra NP allow your physicians to spend time on more complex and highly compensated cases? If your physicians will now earn less per hour for your practice on average (if they have to pick up simpler visits and services the NP would have handled), their profitability will decline. Has the administrator’s analysis accounted for this in the “break-even” calculation?
      • How taxed are your NPs and physicians right now? Is it reasonable to expect them to pick up the slack of the exiting NP? Overburdening your remaining clinicians is another factor I’d take into account.
      • Regarding this last point, you didn’t mention why the NP left, but if she’s moving to another practice in your area, does this signal a morale issue in the NP ranks? And will increasing the other NPs’ workloads make it worse?
  • Someone asked:
    Our practice has the opportunity to hire an experienced clinician in a tight market, but there's a catch: she's the wife of one of our physicians, who wants to return to work after several years off to raise a family. What do you think about hiring family members of other employees?
    • Laurie Morgan replied:
      As a general rule, we would recommend avoiding hiring relatives or close friends of practice employees or partners.
      Medical practice workplaces can be very busy and somewhat stressful. Maintaining policies that don't add to stress and drama is always advisable, and that starts with policies that give employees confidence they'll be treated fairly. A policy against nepotism helps in this way.

      On the other hand, when a practice (or any independent business, really) decides to go the other way (say, because the owners concluded that they can trust a relative more easily), there is a risk of many problems that tie back to the employees' relationship outside of work. For example:

      • Regardless of how hard the employees try to be neutral and fair, even if they're objectively quite successful at keeping their personal relationship out of the workplace, the rest of the team will be wary and could even perceive unfairness that isn't there. Convincing employees that there isn't favoritism can consume a lot of time and energy that could better directed elsewhere.
      • Regardless of how hard the two employees try to be fair and neutral and keep their relationship out of the workplace, they will probably not succeed, and that will cause legitimate concerns on the part of the other employees.
      • You will likely face a very thorny management problem if you hire a relative and that person doesn't perform as expected. Even criticizing an employee in that situation may cause tension in your relationship with their relative -- and if you have to fire the new employee, the one you originally hired (and liked well enough to hire their relative) may leave or start to underperform, compounding your problems.
      • The relationship between the two employees may sour, and that external drama will likely affect your workplace.
      • The employee or partner may think they know more about the skills or work personality of the spouse or sibling or cousin they want you to hire than they actually do.

      There are other reasons to avoid hiring relatives, especially into key roles, that vary depend on your individual practice situation. But the list above is a good starting point for thinking about whether your partner's suggestion that your practice hire her spouse is a lucky find or a potential trap.

      Final thought: there may be some exceptions that are less problematic -- for example, hiring a spouse to do a short-term, temporary project. But as a general rule, we recommend you have a policy that guards against nepotism, and that you uphold it consistently.
  • Someone asked:
    Is it better to outsource billing or keep it in-house?
    • Laurie Morgan replied:
      To give you a detailed answer, we'd need to know more about your practice. The specifics of your practice's situation would be crucial to this important decision. But a few things you might want to think about are:
    • Do you have enough volume to keep a full or half-time biller busy? Have you defined the job in detail?
    • Are qualified people available in your area? If someone on your staff is interested, are you willing to invest in training?
    • Are you satisfied with your software set-up, and is it flexible -- and, if so, how does that affect your hire/outsource options?
    • If you're considering outsourcing, have you thought through your requirements and do you know what you need to know to screen your options?
    • Also, regardless of whether you outsource your billing to a service, it's critical to stay involved -- now more than ever. Capturing every dollar for your practice is a team effort, not just the responsibility of your biller or billing service.

      If you would like more specific feedback on your situation, or are interested in a comprehensive review of your billing set-up and performance to help you decide, please contact us.

About the Author: Laurie Morgan

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