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Healthcare - Regional Physician-Hospital Organization

Case Study:

Chief Operating Officer and Practice Administrator

Physician-Hospital Organization

Business Stabilization and Transition

The Company: The Company is a pediatric sub-specialty group practice serving Central Texas. This 501(a) corporation is sponsored by the largest health service company in Central Texas. At this time, the corporate sponsor employed these pediatric sub-specialists, and a number of family practice physicians, internal medicine physicians, and trauma surgeons. It also owned a management service organization (“MSO”).

The Challenge: During this early stage of the healthcare networks physician-hospital organization development, the MSO and other hospital based support services were not properly focused to meet the operating requirements of the physician organizations. This created financial risk for the corporate member and it strained relationships between the physicians and the corporate member.

The Solution: The corporate sponsor initially engaged Doug Simpson CPA for six months to provide leadership and technical expertise required to improve its MSO operations. When the risk assessment phase was completed, the corporate member and physician leaders agreed to dismantle the existing MSO and build a new physician support service organization. Doug identified an outsource billing solution to protect the integrity of the old accounts receivable, designed and implemented front end business office processes to improve collections of current accounts receivable, then helped identify software solutions and permanent leadership to build and manage the new MSO service environment for the family practice physicians, internal medicine physicians and trauma surgeons. Doug remained with the leadership team as a coach and adviser until operations were up and successfully functioning.

The pediatric sub-specialty group practice then contracted with Doug Simpson, CPA to serve as its first Chief Operating Officer and Practice Administrator. Doug joined the physician group with the express purpose of improving the physician-hospital relationship and assembling the type of support structure required to attract and retain sub-specialist physician leaders needed to build a new children’s hospital in Austin, Texas. Reporting to the Board President, took responsibility for the leadership and assumed responsibility and accountability for the overall strategic planning, business development, and financial and operations of the group practice. This included a strong focus on physician recruitment, managed care contracting, incentive based cost management, team development, central business office operations, clinic operations, compliance, and financial reporting.

The Results: Doug Simpson CPA contributed in significant ways to the financial and operational success the group practice enjoys. Working closely with the President and the Medical Board of Directors, implemented business strategies and new financial operating systems needed to comply with HHS/OIG compliance programs, to improve cash flow, to contain costs, and to establish key decision-maker confidence in financial and operational data-integrity presented to the Sponsoring Organization’s Board and to the Medical Board of Directors.

Brought the billing and collection function “in-house,” significantly improving cash collections while reducing overall operating expense: completed product evaluations and purchased billing and collection software and hardware systems; wrote detailed front-end and back-end business office policies and procedures to accurately interface with the new billing and collection system; hired and trained staff and supervisors, then wrote manual and custom database management reports to monitor physician and payor performance.
Stabilized business office operations and established key decision-maker confidence in financial and operational data-integrity by establishing basic administrative support functions to include credentialing, accounts payable, payroll, accounts receivable, general ledger and activity based accounting, and contract management business functions and operating systems.
Collaborated with other 501(a) corporations included in the Healthcare Network to develop an employee compensation model to more accurately reflect the private physician practice employment market in Central Texas.
Substantially increased cash flow by standardizing fee schedule pricing methodology and by utilizing the group’s market strength negotiated very favorable rates with each of the major third party payors and IPAs serving the Central Texas patient population.
Developed a Relative Value Unit (RBRVS) based accounting system to measure physician productivity and costs, then implemented a productivity-based compensation model to more fairly distribute physician profits and to recruit top notch less experienced physicians to the group.
Working with physician and children hospital leadership, recruited ten additional pediatric sub-specialists to the group.
Earned positive net operating margins each six month measurement period, increasing salaries and awarding bonuses for each “at-risk” physician the last measurement period.

The Outcome: The physician-hospital relationship and the operating environment was stabilized, an atmosphere for success and physician satisfaction was created, and quality pediatric sub-specialists have continued to be recruited to the group practice and to the corporate members medical community. In 2005, in collaboration with the pediatric medical community, the corporate member agreed that a new, larger children’s hospital was crucial to meet the demand of one of the fastest growing regions in the country. Dell Children’s Medical Center of Central Texas opened on June 30, 2007.

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Healthcare - Regional Physician-Hospital Organization