i g l o u h Practical Neurology

Transcription

1 s rose in2004, th g n i eb i yb ott g o om o r u in ne h e g u sa o gg th A ed. 32 Practica Neuroogy May 2005

2 By Jack Persico, Editor-in-Chief Wh at s how d, an s t i f dragging down pro May 2005 Practica Neuroogy ou y n ca rn tu ro a it d? n u 33

3 Income Survey The cinica chaenges that are the stock in trade of the neuroogy subspeciaty often pae in comparison to the equay frustrating demands of managing the practice s finances and ooking out for one s own persona earnings from the endeavor. In fact, more often than not, what happens in the front office paraes the sorts of patient histories typicay seen the exam room. Net persona incomes for neuroogists, particuar those in private practice, tend to experience a reapsing-remitting course as capricious as a case of mutipe scerosis, and third-party reimbursement eves undergo the same reentess and ineuctabe erosion of vitaity seen in a typica Azheimer s or Parkinson s patient. But just as with your patient care efforts, so too do you have a number of effective interventiona strategies you can administer in an effort to restore your practice s financia heath modest though the performance gains may be in both cases. Each spring, we ask our readers to share with us seected diagnostic information about the heath of their practices. As aways, the resuts this year present a sobering view of trends toward reduced reimbursements and increase overhead, tempered by sma but significant gimpses of growth areas that aow one to harbor optimism for a brighter future. What s the prognosis for your practice in 2005? Read on to compare your practice s vita signs with those of its cohorts across the country. Net & Gross Income, Reading the Patient s Chart As aways, bear in mind that our survey acks statistica rigor; there was no attempt to contro for the many variabes that might skew the resuts. However, with our annua income survey now in its fourth year, we are abe to ook at cumuative resuts and draw some concusions that, whie not definitive, revea a number of thought-provoking trends. First the good news: After years weathering a steady decine in biings, neuroogists reported a rebound in their incomes ast year, with increases in both gross and net revenues on average. Persona gross income improved the most, jumping from an average for a respondents of $263,525 in 2003 to $296,925 in 2004, a one-year increase of 12.7 percent. And neary haf (47 percent) of a respondents to our survey tod us they experienced an increase in their persona net income from 2003 to Among this year s survey respondents, average net persona income was $176,685, an increase of 3.2 percent from the $171,050 average reported in It s a sign of the times that 3.2 percent growth essentiay a cost of iving increase might be treated as good news in the famousy disma word of physician reimbursement. Athough that increase may be modest, it s certainy better than the previous year, in which we found a 10 percent decine in average net income. However, we found some backsiding on profitabiity. In 2003, the siver ining to that year s drop in income was an impressive increase in net-to-gross ratio, from 59.2 percent in 2002 to 64.8 percent in In 2004, unfortunatey, profit margins fe to 59.5 percent, virtuay identica to the 2002 eve. Why quibbe over profitabiity when both net and gross incomes have gone up? Easy. Had neuroogists maintained their 2003 profit margins throughout 2004, the average net income for the year woud have been $192,407 rather than $176,685, adding another $15,722 to their individua earnings. Few neuroogists are in a position to Persona Gross Income Persona Net Income forego an extra $1,310 take-home pay each month. What s contributing to the decine in profitabiity? Not surprisingy, one important factor is the cost of medica mapractice insurance. In 2004, 37 percent of readers paid over $15,000 annuay for their poicy. That s 10 percent more neuroogists in the over $15,000 category than 2003 and 22 percent more than in Without 34 Practica Neuroogy May 2005

4 curbs on mapractice premiums, neuroogists can ook forward to continued erosion of profit margins in 2005 and beyond. In fact, readers who responded to our survey are guarded in their outooks for this year. Athough 47 percent reported an increase in net income in 2004, ony 35 percent say they expect an increase again in The deterioration in profitabiity from 2003 to 2004 aso seems to be refected in our findings on income satisfaction. Athough 63 percent of readers tod us they are either very satisfied or somewhat satisfied with their 2004 net income, the number who say they re very satisfied dropped from 34 percent in 2003 to 28 percent in Somewhat surprisingy, private practitioners fared ess we than their empoyed coeagues, at first bush, with ony 38 percent of sef-empoyed readers reporting an increase in 2004 net earnings vs. 54 percent of saaried neuroogists. Unike previous surveys, this year sef-empoyed neuroogists earned sighty ess than saaried empoyees, netting $171,367 on average vs. $182,486 for the typica saaried neuroogist. However, sef-empoyed neuroogists practicing on a part-time basis owered the averages for both absoute and reative income eves. I am working part-time because of chidren, said one reader. Unfortunatey, there is no such thing as part-time overhead, sad to say. When eiminating the data for neuroogists who see fewer than 25 patients per week, the earnings for private practice neuroogists jumped to a more impressive $194,240. Chid-care obigations are probaby aso to bame for the income disparity among our survey participants aong gender ines. Femae respondents, who were more ikey to work part-time schedues to free up time for chid care, netted just $123,933 whie maes achieved average net incomes of $192,338. Not surprisingy, ony 42 Satisfaction with 2004 Net Income Very Satisfied Somewhat Satisfied Not Too Satisfied Not At A Satisfied Percents indicate number of respondents in each category. Change in Persona Net Income 31% 35% 6% 28% Anticipated Note: Percents indicate number of respondents in each category, not doar figures May 2005 Practica Neuroogy 35

5 Income Survey Medica Mapractice Premiums Percent of respondents in each category percent of femae neuroogists said they were very or somewhat satisfied with their income as compared with 72 percent of men. The simpe ife seemed to dramaticay boost earnings and job satisfaction eves: in our survey, 85 percent of neuroogists who practice in sma towns (popuation of 50,000 or ess) were either very or somewhat satisfied with their financia performance. Rura or sma-town neuroogists see 63.3 patients per week and earn average an net income of $194,813, not to mention the benefits to be had from ower cost of iving in rura areas and sma towns. Gross Anatomy Gross incomes for neuroogists grew by neary 13 percent from 2003 to 2004 but net income growth faied to keep pace, growing at ony about one quarter the rate of growth in biings. Why the substantiay different growth rates? As is typica of most medica speciaties, neuroogists in our survey overwhemingy beieve that seeing more patients and working onger hours is the most reiabe (though hardy the most desirabe) strategy to increase net revenue. Fifty-eight of respondents expect that an increase in patient voume wi transate into a heathier bottom ine, and 40 percent say they pan to extend their daiy work hours and/or add weekend hours in an effort to boost net income. That may not necessariy be the wisest choice, however. In addition to the adverse impact on quaity of ife, it may not pay off financiay Productivity gains are far more important a goa. As one Pennsyvania neuroogist in our survey put it, private practice is a disaster uness you run patients through quicky. Since phone cas from patients with foow-up questions are an a-too-frequent (and unbiabe) distraction, one ow-cost way to mitigate this drain on productive time is to offer thorough onine patient education via a practice web site that you can direct patient phone cas to. Be sure to promote this in your office, and incude your web site address on business cards and a patient education handouts. In ast year s survey, over one-third of respondents (37 percent) tod us they panned to work onger hours in 2004 in an effort to increase their net incomes. Comparing those intentions with the resuts reported this time around, we found that patient voume didn t increase substantiay. In 2004 neuroogists treated an average of 57.8 patients per week, virtuay identica to that of 2003 (56.8 patients/week). Those additiona hours spent at the office didn t substantiay increase patient voume or net income. Neuroogists woud do better to ook for ways to increase productivity and per-patient profitabiity than simpy shoudering an additiona burden that may not necessariy transate into net income gains. If neuroogists are having this much troube hoding onto a arger share of their tota receipts in a year when gross revenues increased by 12.7 percent, just imagine the chaenges in store for 2006, when the 1.5 percent Medicare increase becomes a five percent cut, for a one-year hit of 6.5 percent. Increasing productivity and diversifying the range of service provided are more ikey to boster profits than simpy adding to the ranks of your patient base. We have thrived by doing three things, said a reader from Ohio who runs a husband-and-wife practice. First, we don t accept hospita consuts. Second, we emphasize EMGs. Third, we keep a sharp eye on the business. To achieve a cost effective productivity boost, consider hiring a nurse practitioner or physician assistant and deegating responsibiities to the fu extent aowed by aw. Bringing in a junior neuroogist to cover E/M responsibiities wi free you up to provide more profitabe procedures. I wi have to hire a second neuroogist ASAP so that I can focus more on the income-generating portions such as cinica research, seep, Botox, etc, a reader from Iinois tod us. 36 Practica Neuroogy May 2005

6 Income Survey Surviva Strategies Neuroogists Shoud Add New Biabe Cinica Procedures to Improve Revenue 33% 11% 54% 2% 34% Agree Strongy Agree Somewhat Disagree Somewhat Disagree Strongy More difficut strategies to boost profitabiity, of course, are to negotiate better reimbursements from third-party payers and/or cut overhead costs. Five percent of our survey respondents said they intend to drop Medicare and/or especiay ow-paying HMO insurers this year. Whie it is difficut to radicay change the composition of your patient base, especiay in the short term, you can augment your diagnostic services with more procedures and market them effectivey to the community. Neuroogists have ong known there are heathier profit margins in the CPT codebook rather than the ICD-9. Fifty-four percent of our survey respondents said they strongy agree that neuroogists need to add more procedures (EMG, seep studies, Botox) to their patient care mix in order to be more profitabe, and 27 percent said they pan to add new procedures in the coming year. In order to maintain and increase income potentia, neuroogists need to become more forward-thinking about the services they provide, says a reader from Ohio, echoing the sentiments of many. Doing procedures aows you to afford to sti do good E/M patient care, a neuroogist from Caifornia points out. Prescription for the Future Physicians need to abandon the mindset that onger hours equas higher biings. That may be true in terms of gross revenue but it conceas profit margin effects that can undermine the benefit to be had from the extra effort, as we saw in this year s survey. Neuroogists Must Take Responsibiity for the Financia Heath of Their Practice 62% 4% Perhaps not surprisingy, neuroogists who embrace business management responsibiities with gusto seem to do much better financiay. Average net persona income was an impressive $221,228 for the 62 percent of readers who strongy agreed with the foowing statement: Neuroogists need to take responsibiity for deveoping their own business and practice management skis if they expect their persona and practice income to improve. These individuas ceary have the business acumen to match their enthusiasm. Of this group, 58 percent saw an increase in persona net in 2004 (vs. 47 percent for the sampe as a whoe), the average profit margin was 63.7 percent (vs percent for a) and 39 percent said they were very satisfied with their net income (vs. 28 percent for a respondents). Our business-savvy neuroogists see 65 patients per week on average, more than the average of 57.8 but not so much voume that the workoad becomes onerous. With Medicare rates sated to drop by five percent per year for the foreseeabe future beginning in January 2006, neuroogists need to ook toward other sources of revenue beyond patient care. In fact, this continues to gain in prominence. Income from non-patient care sources of revenue (e.g., cinica trias for manufacturers, ecturing engagements, expert witness testimony) increased from an average of $15,191 in 2003 to $19,549 in Its contribution to net income grew from nine percent in 2003 to 11 percent in Significanty, survey participants who said they are either very or somewhat satisfied with their 2004 earnings took home $26,641 from activities other than patient care, a 36 percent higher eve than the survey respondents as a whoe. Again, we found a gender distinction in this category: femae neuroogists were ess abe to deveop additiona sources of revenue. Earnings from non-patient care activities were $12,752 on average for women vs. $21,815 for men. To survive and thrive, neuroogists need to meet the modern business chaenges of medicine head-on. I quit neuroogy practice in 2002 because reimbursement rates were a joke and an insut, said a disiusioned reader from Washington state who opted for premature retirement. I otherwise woud have continued for 8-10 years. The steps you take today, and your enthusiasm for the process, shoud prevent a simiar fate. PN 38 Practica Neuroogy May 2005