As hospitals employ physicians or acquire practices, management of the new entity is frequently a challenge. The issues in a practice differ from the hospital and the scale of the operations is much smaller. That means that mistakes are magnified, quickly showing up on the practice bottom line.
The result is often an underperforming practice. This is always a problem, but a bigger one if the Board is focused on and concerned about the performance. Hospitals often find that interim management arrangements are useful in such an environment.
One advantage is that your organization can increase the talent and experience level of the staff focusing on the problem. Another is that an outsider can be a more effective change agent, better able to implement needed change and make the necessary restructuring decisions.
Such turnaround projects take 3-4 months at a minimum. However, in situations with major problems, we have stayed engaged for up to three years. Those engagements have represented turnarounds of up to $10 million, something that required a longer term commitment.
What should an interim management firm do in that time? The first step is to assess the situation, compare the practice to relevant benchmarks, understand the contractual relationships, and understand the factors that are leading to poor performance. That process will help the interim manager identify the leverage points that will make a difference in the practice results. It will also help the practice to define targets, essentially the results it wants to achieve.
The second thing the interim manager should do is to develop action plans that will guide the implementation of the improvement plan. Based on the findings of the assessment, those action plans can address a number of issues, and are likely to include many of the following:
- Review of contractual relationships with the providers and identification of issues that should be modified.
- Defining volume expectations and other standards for each physician.
- Improvements to the revenue cycle management processes.
- Changes in personnel or personnel training to address deficiencies in skills.
- Changes in personnel policies.
- Management structure changes.
- Recruitment plan for a permanent group manager.
- Definition of the strategic direction of the group, along with senior management.
- Financial modeling of the proposed changes and development of a budget.
Most importantly, the interim manager can begin implementation. In the 3-4 month timeframe, results can be produced and the practice dynamics changed. That creates an environment in which the new manager can be successful.
Learn more about how interim management can address healthcare industry stressors.
