A hospital in central North Carolina employed twenty-nine physicians in eight practice locations. Physician productivity was as low as 31% of MGMA reported median per specialty, physician salaries were uniformly higher than market-based medians and cost of practice was 72%, excluding administrative cost allocation. The hospital was losing $3.2 million annually on their physician network.
The hospital CEO was referred to HMR by external legal counsel following a board meeting in which the directive was given, "turn the performance around or divest the network." HMR had worked on several network re-engineering projects with the attorney and he was familiar with our track record of facilitating turnarounds without creating provider attrition.
HMR began by performing a thorough analysis of physician productivity, an evaluation of the effectiveness of the then current physician compensation plan, and performing a detailed operational assessment of the practices and central billing office. Through these analytical processes HMR developed a turnaround plan for the network that included a comprehensive overhaul of the central business office, implementation of a 100% productivity-based compensation plan, an intensive training program for providers to upgrade documentation standards and achieve maximum coding accuracy, and an ongoing staff development program to hone core competencies within the administrative support staff.
The hospital granted HMR and the network management team one year to accomplish the turnaround of the network’s financial performance. At the end of twelve months, annualized run-rate losses had been reduced to less than $33,000 per physician — and only one physician had been lost to the community. In the first full year immediately following the engagement of HMR, total cash subsidy has been reduced from over $3.2 million to less than $800,000. Client reference to validate this case study is available to qualified, interested parties. Please contact us.