Make Your Practice Successful Despite Today's Challenges: How to Compete With Retail and Minute Clinics

; Judith Aburmishan, MBA, CPA, CHBC

Disclosures

January 27, 2010

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Leslie Kane: Welcome to this Medscape Web Presentation entitled, "Make Your Practice More Successful Despite Today's Challenges." My name is Leslie Kane. I'm Editorial Director of Medscape's Business of Medicine site. I moderated a roundtable discussion at the National Society of Certified Healthcare Business Consultants in October 2009 in Washington, DC. Three medical practice management experts gave advice on different areas that doctors can address to help boost their practice profitability.

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Our first speaker was Judith Aburmishan, MBA, CPA, CHBC, of FGMK, LLC, in Bannockburn, Illinois. Judy will talk about how doctors can compete with retail and minute clinics. The voice you'll hear on the next to last slide belongs to a participant at the NSCHBC roundtable. Let’s listen to Judy now.

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Judith Aburmishan, MBA, CPA, CHBC: What I want to talk to you about are the minute clinics. First of all, according to a recent survey conducted by the Rand Corporation, there are about 1000 retail medical clinics around the country. Seventy percent are run by big chains like CVS and Caremark. You know once people get used to Walgreens for their immunizations, their next step is a clinic, and let's see how we can get to their clinics.

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The other thing that is interesting is that the key element in this is they don't require appointments. They have expanded hours, short wait times, you can get your prescription filled on your way out, convenient. Overall costs are lower than doctors' offices, urgent care centers, and emergency departments. Over 50% of an internal medicine physician's revenue is generated from office visits. So if this becomes a real trend, you can see what the impact is going to be on our primary care physicians. And retail healthcare providers don't -- I mean, retail healthcare providers like Wal-Mart and Walgreens, they understand marketing. There is going to be a real impact unless [doctors] are ready to begin running their practices like businesses.

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The key retail draw is convenience: longer, better hours; immediate access; short lines -- you don't have to wait like you're waiting in an urgent care center or emergency room; easier physical access. You do not have a long parking walk from a hospital. You don't have a hassle. You go into Walgreens, you're in, you're out, you're back home. Control -- patients more and more want control over their schedules and nonemergent medical services; and transparency -- many of the larger box companies will be providing a clearly posted menu of what they provide along with the cost. So [patients] really get to cross shop. And Target and Wal-Mart are known for advertising pricing discounts. This is going to be the kind of thing that they advertise around the doctors. They will also be posting outcomes and rates of complications. And this is, again, something that our physicians really haven't gotten a hold of.

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So my recommendation, when I go talk to my clients, is: first of all, they need to really think about their practice like a business. What product are they offering; what sets them apart from that same competition and/or that alternative competition? Most physicians out there today do not have business training. So, once you get them to at least have that conversation, you then have to talk about what will set you apart and what will make you different.

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The first, and, I think, easiest thing for our clients to look at is expanding hours. If you have a single-doc office, it's a lot more difficult, but if you have a multiple physician office, and especially if you have a nurse practitioner, you can expand your hours. We have usually recommended time to open up as early as 7:00 in the morning and stay open as late as 8:00 at night. Sometimes they do this on alternative days. Sometimes they try to do it within the same day because you're competing with the hours of Wal-Mart, Target, and Walgreens. Right now, I think the Walgreens' hours are 8:00 am to 7:30 pm Monday through Friday and 9:00 am to 4:00 pm on Saturday and Sunday.

Now that's another thing that the physicians have to really begin to understand: their patients don't stop being sick on Saturday and Sunday, and they don't get sick from 9-5. And while this is uncomfortable, if you have a multiphysician practice, you can get everybody to take a little bit. In one practice that I had, because they agreed to go along with the hospitalist program, they're not rounding as much so they are willing to put in these hours to come in at 7:00 in the morning, and another physician comes in at the later hours.

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If you can put a program like this into place, as I explained to one of my clients, you don't put it into place and then not tell anybody about it. What you also have to understand is that you need to advertise. Advertising doesn't have to be sleazy, advertising services like, you know, we'll give you better outcomes or, you know, what they would think of not being ethical. But you should advertise expanded hours, you should advertise, "we're there when you need us," especially in a community that has working mothers, people who these hours really matter to. I had a 3-doctor medical practice that opened up from scratch, and they used their alternative hours and newspaper advertising as their only method of bringing in clients. They got up and running in no time.

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Set fee schedules that are within reach for noncovered services and display them. During the fee schedule heyday, when I was helping my clients with fee schedules, we normally set fee schedules for 3-4 times Medicare because we wanted to get the upside of all payers in the market. That has become not such big issue anymore, and especially for office visits. If you know what the Medicare rate is and you know what the bulk of your payers are, at least in my client base, you get something like 80% coverage with Medicare and Blue Cross, and right now Blue Cross is paying about 103%-105% Medicare. So we know if you can do 110% of Medicare or 115%, you're going to get the bulk of your client base, and you don't have to do it across all services. You do it across the office visit that you know people are going to pay attention to. We've seen a lot of negative feedback where clients come in, and they say, "How can your office visit be $250?" We don't get that from most of the payers, but we'll set our fees to show that. Patients don't like feeling that you are oversetting your fees just so that you can get the maximum reimbursement.

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So you should have clear-stated fees and post them or even have a menu of what those fees are going to be for the key services. Another one of my real soap boxes is charging for physicals. Most of my physician clients really strongly believe that they should do a physical in a sick exam. People come in and they do a patient-focused issue and then they do a full physical on them and charge it as a 91214 because they say if they tell their patients they have to come in for a physical and charge for those physicals, they will lose all their patients. Well, over time, the practices who have come to work with me have found that they won't lose their patients. So if they reasonably price the physical and explain it to their patients as something they really think they should do, they are going to have more of a chance to actually interact with their patients in an economic model that makes sense.

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Physicians also have to be ready for a conversation with their patients, have data handy about their practices showing good outcomes, have published crisis data and hours. They need to be talking to their patients on an ongoing basis about how they are changing their practice to be more retail friendly, more patient friendly. Consider sending mailers or advertising in papers that show your expanded hours and convenience.

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Then just like the retail stores are selling items and then trying to cross over and trying to sell service, we need to have our clients who are selling service cross over and begin to think about selling more items. There are a lot of companies out there right now that are encouraging physicians to bring items into their office. The one that I thought was the most interesting is a Website called Simply Retail, and they talk about having displays of different items that relate to health along with the convenience of having them there and even providing gift certificates for family members who can come in and get this ongoing products that they can provide for them at the doctor's office. So as people want more and more convenience, rather than going to Walgreens to get your medicine and your doctor, we need to start explaining to our clients that it would be better for the one stop to be the doctor where they can get their medication, or they get their brace for their knee, or they can get the different things that would be the over-the-counter Walgreens-type products rather than having to go get a prescription for what they need and then having to make a second stop at their Walgreens store.

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Well one of the issues that we got into a conversation about was drugs. On our list, there was a conversation about dispensing medications, and the problem is that it is very difficult to compete price-wise with Wal-Mart, but I would think even if you sell it for what you pay for it, if you could keep that patient in your office, then it would be a better marketing tactic then actually letting them go to Walgreens or Wal-Mart to fill their prescriptions. There are other items, such as support hose or any of the things that you see in Walgreens that if you had them available for your patients, I think the patients would be just as happy to buy them from you as anywhere else. But the mark-up, again, you are going to be competing with Wal-Mart, but in certain cases they may pay an extra dollar to get it from you. Your principal income is not from these items, so you don't have to have the same mark-up that a normal retail store would. You just need to cover the cost of the display area that you have.

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The other thing that I think they need to discuss is, just like every other business that has got a marketing plan, they need to put together some type of a plan that focuses on how they are going to get and retain the loyalty of the patients, not necessarily just react when a patient comes and presents in their office, but take control and ownership of that patient's illness. So many of our clients, although they care about their patients and want to be their resource, won't do things like call them and remind them of their appointments. If you have a diabetic patient who needs to come in 4 times a year, they may not go and call the patient when they miss their first or second appointment. I guarantee you, with my dentist, if I miss a check-up, my dentist is on the phone with me every week or every other week reminding me that I have missed an appointment and I need to reschedule. These are the kinds of retail-focused issues that actually provide better service to the patient, but the physicians have to put together a plan and have that plan be consistent and not just go to it whenever there are not enough patients in the office or when they are bringing in a new doctor.

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Then, lastly, one of my suggestions is: if you can't beat them, join them. I think it would be worthwhile for physicians to contact their local Walgreens, Target, any of the places that are offering these services, and offer to be their back-up service. In other words, if a patient comes in who is beyond what their resource is and is not necessarily in an urgent situation where they need to go to the hospital, be their back-up physician, be their place next door that that patient can be sent to when they are beyond their abilities. Some of our clients are not that unhappy that their patients are getting their shots at Walgreens because they don’t really want to be giving those shots. They don't always make money on them. But, on the other hand, don't let them get into Walgreens and see that as a resource. See this as becoming a team concept where you are actually working together.

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Participant: I would supplement Judy’s comments with regard to our clients who are doing a sick call or a sick clinic in the morning. The doctors will take turns with the nurse practitioner, but they will basically be open from 7 to 9, and no appointments are required. Physicians report that the night you are on call that the call is better because the patients know they can come in first thing in the morning so they are not calling the doc at 9:00 at night telling him that they have had the flu for 4 or 5 days. So really from the marketing perspective and competing with that, adding that daily sick call has been very positive.

Participant: Actually, I have another client who set up a sick bay where they set up one area that was almost like an emergency room that just had a couple of areas that were marked off by drapes, and they had a nurse there. You could show up at the doctor's office any time you wanted if you were ill, and the nurse would see you and deal with whatever issues had to be dealt with, but the physicians would step in if it became something that was of a more serious nature. So they basically said make your appointments for physicals and ongoing routine check-ups, but if you are ill just show up, and that gives you the convenience that these stores are offering.

Leslie Kane: Thank you for listening to Medscape's roundtable discussion at the National Society of Certified Healthcare Business Consultants' mid-winter meeting on National Issues.

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