Measuring the Cost of Patient Care in a Massachusetts Health Center Environment 2012 Financial Data

Transcription

1 Primary Care Provider Costs Measuring the Cost of Patient Care in a Massachusetts Health Center Environment 0 Financial Data Massachusetts Respondents Alexander, Aronson, Finning & Co., P.C. (AAF) was engaged to conduct a Statistical Analysis and Cost Survey (the Survey) by the Massachusetts League of Community Health Centers. The Survey was conducted to analyze and tabulate the following Massachusetts Health Center Cost Per Visit calculations: Support Staff Overhead Costs Enabling Costs And More!. Provider. Direct Medical Support 3. Other Primary Care 4. Enabling 5. Overhead 6. Ancillary and Other In addition to the data above, AAF also analyzed and tabulated the following data:. Support Staff FTE to Medical Provider FTE. Productivity Analysis 3. Compensation Analysis of specified health center staff only The Survey 4. Mental Health Cost per Visit 5. Dental Cost per Visit Thirty five health centers were invited to participate in July, 03. As of April, 04, there are respondents representing 8 counties. AAF has excluded one health center from the Survey as it was considered a significant outlier. See Appendix for the distribution of participating centers by county. The Survey results represent data from the fiscal periods ending June 30 and September 30, 0. See Appendix for a description of the Survey methodology and data verification process. Note: All results referenced in this paper relate to the Survey. Alexander Aronson Finning CPAs 60 Federal Street, 3 rd Floor Boston, MA

2 Definitions: Primary Care - Medical, Urgent Care, Mental Health, Dental and School Based Health Center Departments Provider Cost Primary Care provider salaries and related fringe benefits or contractual payments Provider Visit generating billable staff in the Primary Care Departments (excluding Dentists) Direct Medical Support Cost Salaries and related fringe benefits or contractual payments of staff supporting the provider s care in the Primary Care Department (ex: RN, LPN, MA, etc.) Other Primary Care Cost Salaries, related fringe benefits, contractual payments of direct care staff not considered providers, or support staff and all other expenses related to the Primary Care Department (ex: Mental Health) Direct Enabling Services Cost - All costs of the enabling department (Outreach and Enrollment) Overhead Cost All costs of the Facility, Administration (including Billing and Patient Registration), and Fundraising departments Ancillary Medical Care Cost All costs of all medical visit related additional service departments (ex: Pharmacy, Lab, X-Ray) Ancillary Other Care Cost All costs of nonmedical visit related additional service departments (ex: Family Planning, Podiatry, Optometry, Mammography and etc.) Other Care Cost Other specialty departments (ex: HIV, WIC, Residency and etc.) Visits - Defined as visits provided in the Primary Care department FTE Full time equivalent as defined by the hours worked by each Respondent Respondent One of the participants in the Survey COSTS Section : Defining Cost Per Visit Cost per visit is calculated by dividing the cost* of providing patient care by the number of related visits provided. For this survey, costs will be separated into the following components: Provider Cost.Section a Direct Medical Support Cost..Section b Other Primary Care Cost Section c Direct Enabling Services Cost.Section d Overhead Cost...Section e e Ancillary Care Costs...Section f Other Costs..Section g Total Cost Per Visit.Section 3 Splitting the costs into these components creates a comparable base among the Health Centers regardless of the ancillary services provided. Section a g further details excluded and reconciling items for each cost base. VISITS Visits are measured in two forms: Billable Visits which are billable to a third party payor for reimbursement. (Average of 96,468 for the survey participants) All Visits Visits which are billable to a third party payor for reimbursement and those which are not. (Average of 98,09 for the survey participants) All cost per visit calculations reported on in this Survey are based on All Visits unless otherwise noted. These visits represent the actual visits performed. OTHER Other information provided by the Survey: Additional Analysis....Section 4 Respondents..Appendix Methodology. Appendix *Donated amounts are included as expense for the purpose of this survey

3 Provider cost includes the salary, fringe benefits, incentives, bonuses and any contractual payments made to employ the following provider types in Primary Care departments: Medical Doctor (all types) Nurse Practitioner Physician Assistant Provider costs are among the highest costs of the Health Center visit, along with Administration, and in some cases, Ancillary Departments. Controlling provider cost per visit is difficult when competing in the current environment. Recruiting qualified and driven providers who are able to maximize the number of patients while remaining effective in their position is challenging. Many Health Centers look to reduce the provider cost by : Sharing providers Offering incentives for productivity Utilizing a heavier support-staff to-provider ratio to decrease provider time spent with a patient and enable the provider to handle a larger patient load. As Healthcare reform progresses including the implementation of Patient Centered Medical Home (PCMH), the cost reduction methods above will also shift. For example, instead of maximizing the number of visits a provider completes, the Health Center may choose to instead offer incentives for new patients, increased patient loads, or improved quality outcomes for future recruitment. The average cost of employing the providers is 0% of the total cost per visit rate. And the average cost for providers per visit is $ Section a: Provider Cost $80.00 $70.00 $60.00 $50.00 $40.00 $30.00 $0.00 $0.00 $ Provider Cost Per Visit Minimum $3.58 Maximum Average - $47.47 Median - $5.5 Provider Cost Per Visit Provider Cost Per Visit $67.55 # of Respondents Normalized Distribution Patient Centered Medical Home (PCMH) To aid in the efficient use of provider costs, Health Centers should consider separating patients into risk based groups as suggested below:. High Risk Specialized and frequent care including Provider time and care. Medium Risk Bi-annual or annual care with minimal provider time 3. Low Risk Minimal provider intervention necessary; support staff able to provide most care By providing care based upon risk and need, Health Centers can maximize the profits earned in the Global Payment System. 3

4 Section b: Direct Medical Support Cost Direct Medical Support Cost includes the salary, fringe benefits, incentives, bonuses and any contractual payments made to employ the following provider types in Primary Care departments: Registered Nurses (RN) Licensed Practical Nurses (LPN) Medical Assistants (MA) Technical Providers Aides Financial Counselors Translators Drivers and; Anyone else who contributes care or access to Primary Care in a supporting function The extent to which support staff is used varies greatly. The average cost per visit of supplying these staff is $43.43 or an average 8% of the total cost per visit. $60.00 Direct Medical Support $50.00 $5.33 $40.00 $30.00 $0.00 $4.0 $0.00 $- Minimum Maximum Average - $43.43 Median - $4.5 Support to Provider FTE Effectively leveraging support staff can lead to increased billable visits and maintaining a larger patient population by creating additional available time for providers. In order to determine how staff are leveraged, a Direct Medical Support Staff FTE to Provider FTE comparison was done. On average for every Medical provider FTE employed, there is.67 support staff FTE employed. The range of support staff used was zero to.3 FTE. For Dental support, on average, for every Dentist FTE employed, there is.5 Hygienist FTE employed. The range of support staff used was zero to.88 FTE. 4

5 Section c: Other Primary Care Cost $60.00 $50.00 $40.00 $30.00 $0.00 $0.00 $- Other Primary Care Cost Per Visit Other Primary Care Cost Per Visit Other Primary Care Cost Per Visit Minimum $5.7 Maximum $50.95 Average - $5.3 Median - $30.79 # of Respondents Normalized Distribution Other Primary Care Cost per visit is comprised of two main components:. Salaries, fringe benefits, incentives, bonuses and contract dollars paid to all Primary Care staff who are not considered Providers (a) or Support Staff (b). For Example Health Center A has the following employees who are considered other primary care: Licensed Social Workers (LSW) Psychiatrist Non-certified behavioral health providers Dentists and Hygienists. All other direct costs (supplies, fees, contracted services and patient costs) in the Primary Care Department For Example Health Center A has the following costs which are considered other primary care: Medical Supplies Temporary Help Trainings & Conferences WHY SO LOW? The minimum rate per visit above ($5.7) is calculated on a Health Center whose productivity is comparably high. The costs of other primary care are spread over greater primary care visits thereby reducing the cost per visit. This Health Center also limits some services (like mental health programs). These costs are meant to include all expenses not yet considered as part of the operations of the Primary Care Department. The average cost per visit for other primary care is $5.3 or 0%. WHY SO HIGH? The maximum rate per visit above ($50.95) is calculated on a Health Center who provides substantial mental health services. 5

6 Section d: Direct Enabling Services Cost Enabling costs are related to the following services: Care Coordination Social Services Outreach Wellness And consists of two major components:. Salaries, fringe benefits, incentives, bonuses and contract dollars paid to staff in the following departments: Community Health Care Outreach Wellness * Social Services** Other Enabling. All other direct costs (supplies, fees, contracted services and patient costs) in the Enabling Department Enabling costs vary greatly between the respondents of the survey and range from.8 cents to $35.99 per visit. The average rate of $3.73 is approximately $ higher than the median rate. Enabling costs are on average only 6% of the total cost per visit..5 Direct Enabling Cost Per Visit Normalized Distribution Cost Per Visit *Excludes Women s, Infant and Children Program (WIC) **Excludes Certified Mental Health Programs considered Primary Care Departments 6

7 Overhead Costs consist of two main components:. Salaries, fringe benefits, incentives, bonuses and contract dollars paid to staff in the following departments: Administration Clerical/Reception Facility & Maintenance Fundraising* Human Resources Billing / Patient Accounts Medical Records *See e for detailed breakout. All other direct costs related to these departments such as: Depreciation and Amortization Rent Utilities Interest Expense Equipment Expense Insurance Property taxes Overhead cost per visit greatly varies among the respondents for the following reasons: Contracted patient accounts staff versus salaried staff (Contract is generally higher) Fundraising departments may or may not exist Facility costs are highly variable depending upon size of the Health Center and type of ownership of their facilities The average overhead cost per visit was $70.49 or 8% of the total cost per visit. Definitions: Fixed Overhead - Costs that are not directly related to providing a visit and may remain substantially the same within a large range of visits provided. Ex. Rent, Administration, etc. Variable Overhead Costs that vary in direct proportion to the number of visits provided such as medical records supplies and financial counselor compensation $0.00 $00.00 $80.00 $60.00 $40.00 $0.00 $- Section e: Overhead Cost Overhead Cost Per Visit Minimum $4.68 Maximum Average - $70.49 Median - $83.60 $07.56 LOOKING TO CUT COSTS? An electronic medical records system can be a substantial investment especially in the first two years of implementation. On top of the cost of the system, there is measurable reduction in efficiency of Medical and Administrative Staff. Though, the benefit of the system is expected to significantly reduce costs in years after the implementation phase. Not only is billing done in a more timely manner, but less Medical Records staff are needed. In addition, Meaningful Use funding can be used to defray costs in the first years of implementation. Reducing overhead per visit cost is imperative as these costs are fixed and do not typically fluctuate depending on the visits provided. Overhead Cost Per Visit Cost Per Visit # of Respondents Normalized Distribution 7

8 Section e: Fundraising Cost Fundraising costs were included in the Overhead Cost Per Visit as presented in the previous Section e. As these costs are not incurred or separated by all Health Centers, they have been summarized here in order to verify the impact on the Overhead Cost Per Visit Calculation. Fundraising costs include:. Salaries, fringe benefits, incentives, bonuses and contract dollars paid and. All other direct costs related to this department such as: Printing Publication Supplies and etc. The average cost per visit is only $.78 and ranges from zero to $3.49. This cost is so minimal, it can be assumed the effect on the Overhead Cost Per Visit is not skewed by the inclusion of these costs into the Survey data. To further illustrate this, the Overhead Cost Per Visit table is shown below without the Fundraising costs included. Note that the average cost per visit was reduced by only $.78, while the range of costs remained the same. $0.00 $00.00 Overhead Cost Per Visit Excluding Fundraising $07.56 $80.00 $60.00 $40.00 $4.68 $0.00 $- Minimum Maximum Average - $69.7 Median - $80.0 For the final survey results, these fundraising costs are included in the Cost Per Visit as shown in Section 3. 8

9 Section f: Ancillary Care Costs Healthcare reform is based upon becoming the one stop shop for a patient and coordinating all types of required care through one group of providers. Those Health Centers who offer various ancillary services are more equipped to respond to the new Healthcare environment. Those who provide little to no ancillary care, need to collaborate with other healthcare providers to ensure coordinated care of the patient. Ancillary Care Costs include all salaries, fringe benefits, incentives, bonuses and contract dollars paid to staff as well as, all other costs of running the department(s). For purposes of this the Survey, ancillary expenses were broken into two categories: Medical Lab X-Ray Pharmacy* Other Optometry Mammography Family Planning Podiatry *Pharmacy programs exclude the cost of pharmaceuticals RESULTS Ancillary Medical Survey results ranged from zero to $39.0. The average rate was $.46 while the median was significantly lower at $4.47. This illustrates the minimal Ancillary Medical Services offered by most Health Centers, while only a small portion of the Health Centers offer a significant amount of Ancillary Medical Services. The average percentage of total Cost Per Visit was 5% Ancillary Medical Care Cost Per Visit Cost Per Visit # of Respondents Normalized Distribution Ancillary Other Survey results ranged from zero to $.73. The average rate was $3.7 while the median was $5.07. This illustrates the minimal services offered by most Health Centers (typically only one of the above listed programs each). The average percentage of total Cost Per Visit was %. Ancillary Total In total, Ancillary costs averaged 6% of the total Cost Per Visit. The participants offered ancillary services between zero and five programs. The costs of these services include both direct and contracted expenses. 9

10 Section g: Other Costs In addition to the ancillary services provided, some Health Centers choose to offer even more specialized programs which can increase the access to patients who might otherwise not be accessible to the Center. These programs are often funded by State, local and private contracts and can be more profitable than third party revenue funded programs. For purposes of this the Survey, Other Costs include the following programs: Residency Women, Infant and Children HIV Prevention, Counseling and Testing Specific Disease or Ethnic Group Initiatives Nutritional Support Programs The costs to run these programs varies greatly and can inflate the Cost Per Visit by a significant amount depending upon the complexity of the program, or the number of programs offered. For this reason, these costs have been broken out separately in order to see the total effect on the Cost Per Visit. The average other cost per visit was $8.05 which was significantly more than the median of $0.04. This illustrates the high cost and variability of these programs. The results ranged from zero to $9.60 of other costs per visit provided. 3.5 Other Costs Per Visit Cost Per Visit Normalized Distribution These centers offer one or two Other Cost Programs This Center offers three Other Cost Programs 0

11 Section 3: Cost Per Visit The combination of all the aforementioned components provides the true cost per visit of patient care. A summary and breakdown of those costs based on the respondents of the survey is below: The cost per visit rate is complex in its calculation and makeup and it can vary greatly depending upon the types of services offered, types of staff used, geographic location and organizational structure. One characteristic that does not fluctuate between Health Centers is the consistent rising cost of healthcare. This trend is only expected to continue as healthcare reform is making sweeping changes to the reimbursement model, including a heavy focus on preventative visits. In order to control this rising cost trend, Health Centers should focus on fixed overhead. The reduction of provider costs and direct support costs typically have a direct relationship with a reduction in visits and therefore, do not make as great an impact on the rate. ALIGNING COSTS WITH REIMBURSEMENT The Health Centers need to focus on cost control while increasing the number of patients in order to maximize reimbursement and control risks. Continued implementation of PCMH will be critical to achieve these objectives. Considerations are as follows:. Healthcare reform: Shifting from a visit basis to a patient base. How can the Health Center increase its patients?. Funding: Fundraising and Grants can help to offset rising costs. Does your Health Center have a dedicated person charged with finding grants to fund its initiatives? 3. Controlling Costs: Sharing costs and outsourcing are some methods used to significantly reduce the cost per visit. How can your Health Center control costs? 4. High Profit Programs: Pharmacy and Other Programs can be highly profitable programs which can offset deficits in other programs. If your Health Center does not offer these programs, why not? And is it possible? 5. Population Health: As part of Health Center patient outreach programs, the focus should be on attracting healthy, young and lowrisk type patients, while maintaining a balance of all patient types.

12 ADDITIONAL ANALYSIS OF CERTAIN COSTS PER VISIT Section 4: Additional Analysis As part of the survey, specific cost per visit data was tabulated. The data, which was included in certain Costs Per Visit calculated in the previous section, is shown below and is a summary of total costs by department type: Of all Departments costs tabulated in the survey, Urgent Care was the highest across all respondents. The Medical and Mental Health Departments typically shared the second or third spot. COMPENSATION ANALYSIS Compensation analysis was gathered on all Health Center staff. Below (and continued on the next page) are summarized key positions and their average salary per FTE, and Total Compensation per FTE. The difference between Salary and Total Compensation was typically Bonuses and Incentive payments.

13 COMPENSATION ANALYSIS Continued Section 4: Additional Analysis Continued PRODUCTIVITY ANALYSIS Total visits (billable and non-billable per FTE were also calculated in order to provide an average visit per FTE calculation. This calculation is shown for the direct care visit producing staff: 3

14 Appendix : Respondents The twelve respondents represented 8 counties as shown below: 3 4

15 Appendix : Methodology The Survey invited 35 Free Standing Massachusetts Health Centers to participate via a secured online survey site and secured portal site. The list of invited Centers was provided by the Massachusetts League of Community Health Centers. Respondents were asked to complete a spreadsheet tabulating all expenses, FTE and visits into identified departments for fiscal year 0 data. The Respondents were also asked to provide general information such as:. Contact information. Hours per week 3. Listing departments above and beyond primary care departments All submitted data was compared to audited financial statements, cost report filings, tax returns and employee listings for data verification. When necessary, additional information was requested from and provided by the Respondents. Data was not included in the Survey when it was deemed potentially inaccurate. One Health Center Respondent was excluded from the Survey due to the unusual operations and revenue sources held by the Center. The overall rate per visit of this respondent was approximately $00 above the highest other respondent. For this reason, AAF chose to eliminate this respondent from the data in order to maintain the usefulness and representative nature of the Survey. By controlling the calculation of costs from each submitted spreadsheet, AAF can be assured that the rates are comparable. However, the submitted data could potentially be inaccurate and therefore, AAF cannot provide assurance that the Survey results are completely accurate. 5