‘Thinking Smart’ in Tough Times

There's no question that O&P providers are taking a beating today as never before, with assaults on virtually all fronts: increasing costs, price freezes, CMS audits, encroachment from other fields, deep discounting demands, reimbursement woes, collections nightmares, coding confusion, and more. Even the good news has its dark side: while it may appear that technology is improving how we can do business and the olutions we can offer patients, this technology is costly and requires education before it can be used effectively. And while the numbers of potential clients are rapidly increasing--due to the return of injured veterans of the Iraqi war and the aging of a healthy, active, and longer-lived population--that too can be a double-edged sword. Not only are there not enough hours in the day to handle the increased workload, but also in some cases diminishing returns actually create a negative bottom line. Consultant John Michael, CPO, FAAOP , puts it in a rather grim perspective: "The only way to maximize resources without sacrificing quality is to increase efficiency. My personal opinion is that you can only increase efficiency so many times--and I think we may have passed that point some time ago." He adds, "It may be time to acknowledge that quality is going to start suffering." Even if one agrees with such an outlook, effort needs to be made in order to keep matters from getting worse. Computer Tech: Not a Luxury O&P professionals need to be as electronically savvy as possible, Michael says, since computer skills minimize time spent on paperwork, enabling facilities to spend more time on other essential tasks. "It's no longer a luxury of the large facilities. Electronic billing, electronic charting--as many things as we can automate--I think that's the best chance we have." It may be a painful, time-intensive and costly investment, but biting the bullet appears to be the only reasonable way to remain competitive and profitable. "To become more efficient, you first have to become less efficient; to become more profitable, you have to first become less profitable," Michael advises. "So you may have to make a capital investment even though you don't have a comfortable surplus that's going to make that a painless process. Then you make the time commitment to go through the learning curve to master the new technology, based on the hope that at the end of the process you will have a more efficient practice and therefore can maintain quality." Dan Oglesby, CPO, Birmingham Limb & Brace , Birmingham, Alabama, is also a believer in the power of technology. Four years ago, his company, which has been family-owned for over 100 years, was at a crossroads. "Clinical care is the lifeblood of our company, but at that point, practice management and administrative accountability became our main focus," says Oglesby. Computer technology proved to be the answer. The company is now into its third generation of computer hardware and second software system. Says Oglesby, "These moves have allowed us to reduce paper claims by 90 percent, control accounts payable, and take advantage of supplier discounts." Computer technology has also benefited the clinical side by "allowing us to develop better patient care, with a combination of 40-plus years of technical experience and CAD technology in both prosthetics and orthotics." His choices seem to be working. In looking at the American Orthotic & Prosthetic Association (AOPA) practice survey, Oglesby says, "By their standards, the size of our four- practitioner practice is in that middle range--we're not large and not small--and from their perspective, it was one of the more expensive practices to run. Yet we have succeeded in increasing profitability to the extent that we now fall into the medium to medium-high range." While he does use central fabrication for spinal orthotics, Oglesby stresses that modifications are done in-house via computer, which is provided to the central fab instead of a plaster model. "I [also] use central fab with diagnostic sockets for prosthetics, because I can modify that image with the computer, probably using 30 percent of the time it would take me to do it physically myself." Saving on Purchasing Purchasing is another area where practices can learn to do more with less. Micki Pawlowski of Calumet Orthopedic & Prosthetic Co. , Hobart, Indiana, suggests taking advantage of discounts when offered and consolidating orders to save on shipping charges. "If suppliers give you ten days with a two-percent discount, pay your bill within that period," she says. "Take advantage of discounts, take advantage of rebates, and that's where your profit is going to be, because insurance companies are already cutting your profit margin by their reimbursement rate." Consolidation of orders is another cost-cutter, Pawlowski says. In the past, if a practitioner was fabricating a limb and realized he needed a component, he would simply pick up the phone and order it. However, when the company assessed its expenditures, "I realized that if we waited and ordered all the needed items on a weekly basis, we could save on shipping charges. So we started to plan ahead, and we were able to place larger orders and bring down the cost of shipping significantly." Consolidating purchases through a limited number of suppliers and distributors may enable you to take advantage of added discounts, points out Michael Oros, CPO , vice president of Scheck & Siress , Oakbrook Terrace, Illinois. "And if you're so small that you don't really receive any significant discount, then the next best thing is to join up with a group," continues Oros, who is a board member of the POINT network. "There are several buying groups and networks of privately owned O&P practices that can be joined for an investment cost. You should certainly be able to recoup that cost, not only in terms of purchasing discounts, but also by utilizing other value-added services they provide." The workspace of the new 'APOS' has been designed for maximum efficiency. Photo courtesy of Scheck & Siress. Although Scheck & Siress has an advantage in working with suppliers because of its size, small facilities may not be able to obtain the same advantage without partnering with someone or joining a network, he points out, adding, "Discounts start off at some low percentage, and the more you purchase, the greater that discount percentage becomes." Oglesby, a PrimeCare O&P network board member, agrees. "Material cost is always a big problem. Probably the biggest thing we've done over the last few years is streamlining our purchases and improving to a point where we are able to take advantage of discounts for prompt payment." Changing purchasing patterns may sometimes involve changing the items purchased. Oros notes that they've had to consider making sacrifices in the area of soft goods supplies. "Where we've seen decreased reimbursement for these types of items," he explains, "and because our costs are relatively fixed on those items, we may have had to change a supplier and select a comparable item of slightly less quality--simply to be able to affordably provide the item. "Sometimes there is a difference in quality, yet it provides the same function," he admits. "But there are times that the reimbursement is less than the acquisition cost, and we have no choice--unless you consider losing money a viable choice." Delegating Work Helps While it's always tempting for business owners to do it themselves, delegating duties to qualified staff members is a great way to maximize capabilities. Michael observes that more people are looking at ways to use support staff to amplify the effectiveness of the certified staff, whether through the use of technicians, assistants, pedorthists, or others. "It often makes sense to have a certified pedorthist on staff who does most of the ankle-foot care. That frees up the orthotist to focus on the more complex care and also to step in and play an assistive role in the extremely difficult cases." Layering Services Oros believes in layering services. Since patients will pass through several stages from the time they walk in the door to the time when service is completed and they leave with a finished device, Oros' objective is to optimize the level of care at each stage without utilizing the highest level personnel for each task. "We've tried to determine who is the most efficient person to handle the service at each level," Oros explains. "Could an orthotic patient receive service from a fitter instead of a certified practitioner at that particular stage?" Depending on the prescription, if it's more cost-effective and still within the scope of practice for a fitter to provide that type of service, instead of a certified clinician, that would be the best choice, he explains. Oros continues, "The same applies to prosthetic services: When it is time to shape a cosmetic cover, is that something that a practitioner needs to be doing, or something that a technician could handle? And, if so, who's the most cost-effective person to be providing that service? Again, the technician is certainly the more cost-effective choice. "The same kind of layering applies to different services all the along the line," Oros adds. "From ordering componentry to fitting and adjusting, to keeping the fitting rooms prepared, it makes better business sense to utilize the least highly compensated employee, reserving the more highly trained people to handle the jobs that only they can do." Even in smaller practices than Scheck & Siress' ten-facility business, the same principle can be applied, Oros believes. "As practitioners, we're most effective when we're seeing patients. If you can be seeing patients or marketing to physicians, that's more cost-effective than doing technical work. If you can't afford a tech, use a central fab facility to get quality, cost-effective devices fabricated while you're doing more valuable things for your business." Play to Your Strengths Oglesby and Terry Shaw, CPO, FAAOP, BOCPO, Shaw's Prosthetics Plus , Owensboro, Kentucky, believe in playing to their personal strengths and skills. "I have found that I have more energy and do better work in the morning, and that's when I do my clinical side. Then from mid-afternoon to closing is when I do my corporate/business side," sayes Oglesby. Preplanning Saves Time, Money Shaw stresses the power of organized management, applying careful preplanning to everything from triage to travel. His firm sees quite a few patients in outlying areas and surrounding counties and sets aside one day a week for these visits. Unless there's an emergency, the scheduling is begun the Wednesday ahead of the Wednesday for which the visits are planned. "That maximizes a one-hour trip in any direction so that we're not simply going up for a heel elevation or something equally minor," he says. "We also prioritize which patients are emergency cases and which aren't. Hospital patients get priority through our facility because of the timeframe allowed to get the job done and to maintain quality control." Consolidating Follow-ups Shaw's practice is optimizing cost-efficiency through other time management areas. In 2005, he implemented a new plan for handling follow-ups. "If follow-up patients are doing well, sometimes they will not keep their appointments, or they'll call to cancel at the last minute. We are now setting up follow-up visits on one day each week, when we can normally see a large number of patients in a short period of time. If they cancel, they're scheduled in such a fashion that it's not going to leave us with an odd hour of idle time--not really long enough to work on anything else. Hopefully this new approach to follow-ups will give us a little bit more time with those patients who are in the evaluation or fitting stage." Year-end Crunch Sometimes it is difficult to make the call to outsource a device, especially during the year-end crunch. Shaw, who is not only a practitioner but also the secondary technician, often works 12-16 hour days, especially during the year-end holiday period, to make sure devices meet quality standards as well as getting to the patient in a timely fashion. "That's when central fab comes in--when I'm just falling over," he says. As year-end approaches, other forces influence decisions, Shaw says. "Sometimes the priority is just getting the orthoses and prostheses out before the end of the year, before the deductibles start again. I've often had to tell patients that we are just not going to be able to get it out by the end of the year, and then give them the choice of whether or not to stay with us or go elsewhere." He continues, "Amazingly, in eight years, we've never had to turn someone away just because of time constraints or quality. We've been able to discuss it with them, and they've normally stayed with us. We do our darnedest--sometimes you forego your vacations as well as time off with the family, which doesn't make the family too happy. But as a single practitioner, you'll be called in on every major holiday and in the middle of your vacation. But sometimes that's the price of quality service." Value of 'Personal Touch' Never underestimate the value of that dedicated personal touch--the "human" value of your human resources. Pawlowski notes that much of the success of her purchasing cost-cutting strategy relies on the support of personnel. "When our order consolidation started to have an impact, I advised the employees--the technicians especially--of the success of the cost-cutting efforts. I try to keep our staff abreast of what is happening by creating a newsletter that also alerts them to where the costs are going. It helps for them to be informed and a part of the team approach to problem-solving and maintaining a quality practice." The Pawlowskis are understandably proud of their reputation for quality--reflected in a Presidential letter of congratulation received on the practice's 50th anniversary last year. As a small business, Pawlowski emphasizes the importance of getting involved in the community, not just limiting marketing and education efforts to newspaper advertising. "A Little League came knocking on the door asking for sponsorship. What better goodwill can you have? They print our logo on their team shirts; they're promoting our name in the community. "Don't just join the Chamber of Commerce," she adds. "Attend their luncheon meetings; host a business after hours' event where you bring the community into your facility. There you can educate them about the cost to fabricate your custom items and show them what you have to offer. If patients understand the processes and costs involved, they are more receptive and compliant, thus improving the provision of quality service." Compliance Issues Raise Cost Other factors are adding to the pressures on facility owners, making it increasingly difficult to maintain quality service. "Compliance issues seem to be coming with increasing frequency and have a much larger impact than anybody had anticipated," Michael points out. "That takes up further time, and there's really no great way to avoid that inefficiency. Even though there are some commercial products that can help you achieve compliance in less time than if you do it on your own, there is still a substantial time commitment to learn the process." Since a new HIPAA version goes into effect in April, and a variety of Medicare compliance requirements are also unavoidable, O&P business owners face a growing stack of "homework" new methods to learn, new assignments to submit. Facility Design Facility design offers another significant opportunity to optimize clinical care. Oglesby just moved to a new location in January. "The new facility is better organized, with task-specific areas that should make us more efficient," he notes. For example, there is a dedicated area for the company's expanding CAD operations. "Facility design is critical when fine-tuning your business." Does Size Count? How significant an advantage is practice size in maximizing resources? It depends on whom you're talking to. Oglesby has clearly made a success of his medium-sized business through careful planning and clinical management; Oros equates Scheck & Siress's size with increased bargaining power and better discounts; and Pawlowski is quick to emphasize the flexibility and rapid responsiveness of a smaller facility. Oglesby offers sound advice. "It's just as critical for a small independent O&P provider as for a larger corporate provider to have a long-term strategy with well-defined goals. You may not always reach your goals, but you need to have a business plan that you're always working toward--yet still be flexible enough to realize when you need to make changes." A Happy Ending? Does this story have a happy ending? We won't know until we get there. Meanwhile, as we struggle to discover ways to help us hang on, it's encouraging to know that many of the people who were in this business solely in search of large financial rewards are being weeded out by contemporary hard times. The ones who remain are those who are genuinely committed to their profession and dedicated to their patients, striving to maintain quality standards even as they tighten their belts. And that can be a source of pride for the O&P profession. A graduate of the University of Missouri School of Journalism, Judith Philipps Otto has been a newspaper writer and editor and has won national and international awards as a broadcast writer-producer. She also has assisted with marketing and public relations for various clients in the O&P industry.

‘Thinking Smart’ in Tough Times

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