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Strategic Planning

The Problem

A large medical group practice experienced five straight years of significant losses in profitability after it was acquired by a local health system. The practice’s overhead was approximately 80%, it was taking an average of 189 days to collect a claim and more than 45% of the dollars outstanding were at least 120 days past due. In addition, the practice had extremely high turnover as a result of no teamwork, lack of accountability or inappropriate human resource management.

The Solution

The following initiatives were utilized by MDmanagement to improve the financial and operational performance of the practice:

  • Recommended and facilitated the buy-back of the practice from the health system;
  • Provided interim Director of Operations to formulate an organizational structure;
  • Implemented an employee performance review system to identify and retain skilled staff;
  • Recruited sub-specialty physicians to capture revenue which was otherwise being referred to other practices;
  • Reengineered the billing / collection process to accelerate cash flow
  • Purchased real estate to expand the practice and add an ambulatory surgery center (ASC) to increase their marketshare.

The Results

As a result of MDmanagement implementing the above initiatives, the practice achieved the following results over the ensuing three years:

  • Decreased overhead from 80% to 56%
  • Reduced days in accounts receivable to 45 days
  • Increased revenue by 46%
  • Increased net distributable income by 167%
  • Reduced staff turnover to less than 5%
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