PREFACE
We are here to make another world.
T—W. Edwards Deming
he practice of medicine is one of the oldest and most honorable of professions, but it is facing a revolution that is unprecedented. Navigating this revolution will require skilled and well-prepared practice managers and leaders.
In many ways, the opening quote to this section of the book exemplifies the intention of this text and the current state of medical practice management as a field. Deming, widely considered the father of the quality revolution, often said understanding the “why,” not simply the “what,” of our work is essential to provide superior services and performance. I had the good fortune to learn from Deming and experience firsthand the foundations of quality management. Through this experience, I gleaned many important insights about the operation of successful practices. Many years have passed since I realized the profound impact of this experience, but Deming’s teachings are more relevant today than ever before. Much of his approach has been repackaged for today’s industries, but the basis of its truths lies in the tenets Deming demonstrated decades ago.
The true meaning and philosophy of quality and performance excellence get lost in the details of targets, processes, and tools. The details do not replace wisdom or developing an appreciation for what it means to demonstrate excellence and be guided by quality principles. Simply documenting the “right” targets and adopting the right tools is not enough to succeed; process without purpose is pointless. We need to focus less on the
completion of discrete functions and more on understanding that function’s purpose so that we can know how to improve it. To that end, education for practice managers must incorporate development of deep knowledge of healthcare delivery by the medical practice and its processes. Additionally, today’s practice manager must recognize and embrace the need for change in the healthcare industry to provide the care patients need and deserve. Practice management encompasses a broad range of activities. In large practice organizations, the manager may have responsibility for a narrow range of functions, but many practices are small organizations, in which the management must assume multiple roles. These may include all aspects of operating the enterprise, much like the responsibilities of a small-business owner. So, although practice managers indeed have a lot of “how-to” to learn, this book is more than a how-to text; it is intended to encourage the reader to think about why medical practice managers do what they do and how the roles of other stakeholders interplay with the manager’s. How-to textbooks in healthcare become obsolete almost before they are published because the facts are constantly changing. To maintain their relevance, healthcare management texts must also teach when to carry out the tasks and process and why they should be done. Above all else, healthcare education books should emphasize, “First, do the right thing, and then, do it correctly,” not unlike the often-repeated words of the Hippocratic Oath, “First, do no harm.”
This text focuses on fundamental concepts and knowledge essential to manage, lead, and develop the wisdom to make the changes needed in medical practices to ensure a prosperous and sustainable future. Using strategies that are good for all stakeholders is necessary because healthcare must pose a value proposition for patients and society. This book is ambitious in its coverage of the field and does not assume the reader has prior knowledge of practice management; however, it may not cover particular topics to the depth that some may wish. A book covering every topic applicable to the healthcare administrator would span many volumes.
Although this text discusses many practical topics, from contract law to information technology, its primary focus is on people. We live in a time of diminished emotional, societal, and economic returns from quick-fix accommodations and processes. John Nash recognized this trend in his Nobel Prize–winning research on game theory: Cooperation is often better than competition for all to achieve their objects (Kuhn et al. 1994). This text aims to demonstrate that working together and putting people first is the best way to be successful in healthcare.
As noted in the first chapter, most people agree that the US medical delivery system needs to change, requiring strong, intelligent leaders and managers with a will to see a better future come to fruition. As Ian Malcolm said to John Hammond in the movie Jurassic Park, “Your scientists were so preoccupied with whether they could do it that they didn’t stop to think if they should” (Spielberg 1993). This dialogue sums up much of what has happened in the practice of medicine over the past several decades. The industry has responded to shortterm incentives and fragmented laws, rules, programs, and policies without a clear, unified strategy for the entire healthcare system. Most segments of US healthcare have worked to
serve their own interests, so past policies, regulations, advocacy efforts, and so on have made sense from that narrow point of view (Heineman and Froemke 2012). That time has passed.
Due to all the challenges facing the healthcare system, change is essential to the future of the medical practice. Furthermore, practices need to lead that change, not follow the unsatisfactory solutions offered by those who know less about the care of patients than practice managers, staff, and clinicians. The modern practice manager and leader must have courage and the ability to see beyond the immediate and the expedient to do what is necessary for the long-term viability of healthcare practices. Courage is required to face the numerous challenges confronted at every turn without taking the easy route.
To quote one final thought from Deming (2016), “A bad system will beat a good person every time.” The objective of this text is to not only provide knowledge but also to change the reader’s mind-set about the action, attitude, and fortitude necessary for a new era of practice management to emerge.
r eferences
Deming Institute. 2016. “It’s Time for a Systems View of Your Organization.” Accessed April 13, 2017. https://deming.org/past-events/2016/leading-with-a-systems-view-may.
Heineman, M., and S. Froemke (directors). 2012. Escape Fire: The Fight to Rescue American Healthcare. Documentary film. Aisle C Productions and Our Time Projects.
Kuhn, H. W., J. C. Harsanyi, R. Selten, J. W. Weibull, E. van Damme, J. C. Nash Jr., and P. Hammerstein. 1994. “The Work of John C. Nash in Game Theory.” Published December 8. www. nobelprize.org/nobel_prizes/economic-sciences/laureates/1994/nash-lecture.pdf.
Spielberg, S. (director). 1993. Jurassic Park. Motion picture. Universal Pictures and Amblin Entertainment.
I nstructor r esources
This book’s Instructor Resources include an instructor’s manual and test bank questions.
For the most up-to-date information about this book and its Instructor Resources, go to ache.org/HAP and browse for the book’s title or author name.
The Instructor Resources are available to instructors who adopt this book for use in their course. For access information, please e-mail hapbooks@ache.org.
THE ORIGINS AND HISTORY OF MEDICINE AND MEDICAL PRACTICE
Not everything that counts can be counted, and not everything that can be counted counts.
—William Bruce Cameron
L earn I ng o bject I ves
➤ Appreciate the history of medical practice.
➤ Explore the eight domains of medical practice management.
➤ Understand the forces of change affecting medical practice.
➤ Develop a perspective on the changes affecting medical practice.
➤ Understand the importance of the medical practitioner.
I ntroduct I on
Healthcare tends to be an accurate barometer of US society. Consider that virtually every aspect of social dysfunction, or of the human enterprise in general, becomes intertwined with the healthcare system. Most of the US population is born in a hospital, and many die
there. The healthcare system is a place of joy and sorrow, hope and despair. The importance of the health system is hard to overstate, and the role that the medical providers play is a key factor in how the future system of care will take shape. This near-universal involvement with the healthcare system of virtually every person makes healthcare an accurate barometer of our society.
Often, the physician practice is the first line of care delivery, and for many patients, the physician provides the longitudinal care that sustains health and well-being (DiMatteo 1998). Therefore, the medical practice is a fundamental component of the healthcare delivery system, making the management and leadership of the medical practice a key to reforming that system. Because the physician practice is often the entry point for most patients into the healthcare system, in many ways it embodies the challenges of practice management, and the choices made to overcome these challenges may be endless and require achieving a careful balance of the art and the science of management.
This balance requires what W. Edwards Deming, the father of modern quality management, referred to as “profound knowledge,” as well as the expertise to know when and how to use it (Deming Institute 2016). Deming’s concept of profound knowledge is based in systems theory. It holds that every organization is composed of four main interrelated components, people, and processes, which depend on management to carefully orchestrate this interaction:
◆ Appreciation of a system
◆ Theory of knowledge
◆ Psychology of change
◆ Knowledge about variation
How do we keep up with the rapidly changing environment of healthcare in this new era? What metrics do we use, and what do we ignore? This journey demands that we answer these and more questions to bring about change in our healthcare system. It requires the full engagement of the provider community if meaningful and lasting change is to occur. Once change is effected, a new paradigm of care delivery will require a new mind-set that moves the industry from healthcare as the goal of the US healthcare system to well-being (Gawande 2014, 2016). Although health is critical to overall well-being, it is not the only issue. This text provides technical information on the management of the medical practice, but it also offers insight into necessary new skill sets providers and other healthcare leaders must have and roles they must play to create a paradigm of sustainable care for the future to optimize well-being as well as health.
L I fe L ong L earn I ng
Practice management is changing rapidly in response to the ever-changing landscape of healthcare and the medical practice. Practice managers need to be committed to lifelong learning and be active in our professional organizations to ensure they are up-to-date on current knowledge.
The Medical Group Management Association (MGMA), with its academic arm, the American College of Medical Practice Executives (ACMPE), is the premier practice management education and networking group for practice managers. The organization dates back to 1926 and represents more than 33,000 administrators and executives in 18,000 healthcare organizations in which 385,000 physicians practice. MGMA (2016a) has been instrumental in advancing the knowledge of practice management, and ACMPE offers a rigorous certification program in practice management that is widely recognized in the industry.
ACMPE has identified eight areas that are essential for the practice manager to understand (exhibit 1.1).
This text examines each of these domains of the practice management body of knowledge to provide a sound, fundamental base for practice managers and practice leaders. It includes a comprehensive overview that does not assume a great deal of prior education in the field of practice management. Furthermore, it seeks to provide not only specific information about the management of the medical practice but also context in the larger US healthcare system. Too often, different segments of the healthcare system see themselves as operating in isolation. This point of view must change if medical practices are to transform and if managers are to lead successful practices in the future, whether a small, free-standing practice or a large practice integrated with a major healthcare system.
Another prominent organization for the education and advancement of practice management is the American College of Healthcare Executives (ACHE). ACHE is a professional organization of more than 40,000 US and international healthcare executives who
Business operations
Human resource management
Organizational governance
Quality management
Source: MGMA (2016b).
Financial management
Information management
Patient care systems
Risk management
Certification
A voluntary system of standards that practitioners meet to demonstrate accomplishment or ability in their profession. Certification standards are generally set by nongovernmental agencies or associations.
exhIbIt 1.1
The Eight Domains of the Body of Knowledge for Practice Managers
Behavior
How an individual acts, especially toward others.
lead healthcare systems, hospitals, and other healthcare organizations. Currently with 78 chapters, ACHE offers board certification in healthcare management as a Fellow of ACHE, a highly regarded designation for healthcare management professionals (ACHE 2016).
t he a mer I can h ea Lthcare s ystem
The practice of medicine drives the US healthcare system and its components, and medicine is heavily influenced by the system as well. Medical practice and the healthcare system both are built on the foundation of the physician–patient relationship. Although the percentage of total healthcare costs attributed to physicians and other clinical practitioners was 20 percent in 2015, the so-called clinician’s pen, representing the prescribing and referral power of medical practice clinicians, indirectly accounts for most healthcare system costs. Administrators do not prescribe medication, admit patients, or order tests and services. This fact is just one illustration of a fragmented system whose segments can act independently. This fragmentation must be addressed if medical practices are to provide high-quality healthcare to patients at the lowest cost possible.
To begin our study of practice management, the book first offers some perspective of medical practices in terms of the overall US healthcare system. A complete history of the practice of medicine is beyond the scope of this text, but the lengthy and enduring nature of medical practice is important to recognize. The first known mention of the practice of medicine is from the Old Kingdom of Ancient Egypt, dating back to about 2600 BC. Later, the first known code of conduct, the Code of Hammurabi, dealt with many aspects of human behavior and, most importantly for our study, established laws governing the practice of medicine. The first medical text was written about 250 years later (Nunn 2002).
Exhibit 1.2 provides a sample of some significant points in the development of the physician medical practice from ancient times to the present. The reader may wonder why such a diverse series of events is listed, ranging from the recognition of the first physician to the occurrence of natural disasters and terrorist acts. Medicine, whether directly or indirectly, influences virtually every aspect of human life. Events such as Hurricane Katrina, the 9/11 terrorist attacks, the emergence of the human immunodeficiency virus (HIV), and the Ebola virus outbreak have had major impacts on the healthcare system and physician practice. Before 9/11, medical practices thought little about emergency preparedness and management; such activities were seen as under the purview of government agencies. Until HIV was identified in 1983 as the cause of acquired immunodeficiency syndrome (AIDS), and reinforced by the Ebola crisis of 2014, medical practices spent few resources and little time thinking about deadly infectious disease and the potential for it to arrive from distant locales.
A traveler can reach virtually any destination in the world within a 24-hour period, which is well within the incubation period of most infectious agents. Modern air travel has made the world of disease a single place, so practices must be mindful of patients’ origins and travels.
2600 BC Imhotep, a famous doctor, is the first physician mentioned in recorded history. After his death he is worshiped as a god. (Hurry 1978)
1792–1750 BC The Code of Hammurabi is written, establishing laws governing the practice of medicine. (Johns 2000)
1500 BC The Ebers Papyrus is the first known medical book. (Hinrichs’sche, Wreszinski, and Umschrift 1913)
500 BC Alcamaeon of Croton in Italy says that a body is healthy as long as it has the right balance of hot and cold, wet and dry. If the balance is upset, the body falls ill. (Jones 1979)
460–370 BC Hippocrates lives. He stresses careful observation and the importance of nutrition. (Jones 1868)
384–322 BC Aristotle lives. He says the body is made up of 4 humors or liquids: phlegm, blood, yellow bile, and black bile. (Greek Medicine.net 2016)
130–200 AD Roman doctor Galen lives. Over following centuries, his writings become very influential. (Sarton 1951)
1100–1300 AD Schools of medicine are founded in Europe. In the 13th century, barber-surgeons begin to work in towns. The church runs the only hospitals. (Cobban 1999; Rashdall 1895)
1543 Andreas Vesalius publishes The Fabric of the Human Body. (Garrison and Hast 2014)
1628 William Harvey publishes his discovery of how the blood circulates in the body. (Harvey 1993)
1796 Edward Jenner invents vaccination against smallpox. (Winkelstein 1992)
1816 Rene Laennec invents the stethoscope. (Roguin 2006)
1847 Chloroform is used as an anesthetic by James Simpson. (Ball 1996)
1865 Joseph Lister develops antiseptic surgery. (Bankston 2004)
1870 The Medical Practice Act is passed. Licensure of physicians becomes a state function. (Stevens 1971)
1876 The American Association of Medical Colleges is founded. (Coggeshall 1965)
1880 Louis Pasteur invents a vaccine for chicken cholera. (Debré 2000)
exhIbIt 1.2 Selected Major Events in the History of Medicine and Medical Practice (continued on next page)
exhIbIt 1.2
Selected Major Events in the History of Medicine and Medical Practice (continued)
1895
1910
1928
1929
1931
1943
1951
1953
1953
1965
1967
1971
1973
1989
1996
2001
2003
2005
2008
Wilhelm Conrad Röntgen discovers X-rays. (Glasser 1933)
The Abraham Flexner report on medical education is published. (Flexner 1910)
Penicillin is discovered by Scottish scientist Alexander Fleming, and it is established that the drug can be used in medicine. (Ligon 2004)
The first employer-sponsored health insurance is created at Baylor Teachers College as Blue Cross. (Buchmueller and Monheit 2009)
The electron microscope is invented. (Palucka 2002)
Willem Johan Kolff invents the first artificial kidney (dialysis) machine. (Heiney 2003)
Epidemiology studies identify cigarette smoking as a cause of lung cancer. Sir Richard Doll is the first to make this link. (Keating 2009)
Jonas Salk announces he has developed a vaccine for polio. (Koprowski 1960)
The structure of DNA is determined. (Dahm 2008)
Medicare and Medicaid are passed into Law. (Social Security Administration 2016)
The first heart transplant is performed by Christiaan Barnard. (Barnard 2011)
MRI scanning is invented. (Lauterbur 1973)
The HMO Act is passed. (Dorsey 1975)
President George W. Bush signs the Omnibus Budget Reconciliation Act of 1989, enacting a physician payment schedule based on a resource-based relative value scale. (AMA 2017)
The Health Insurance Portability and Accountability Act is passed as an amendment to the HMO Act. (Atchinson and Fox 1997)
The 9/11 terrorist attacks occur. (Bernstein 2003)
The human genome is sequenced. (National Human Genome Research Institute 2010)
Hurricane Katrina devastates the Gulf Coast, including New Orleans. (Knabb, Rhome, and Brown 2005)
The Triple Aim for healthcare delivery is proposed by the Institute for Healthcare Improvement. (Berwick, Nolan, and Whittington 2008)
2008 Medicare Part D is enacted. (Hargrave et al. 2007)
2010 The Affordable Care Act is passed. (HHS 2010)
2012 High-deductible health plans become more common. (Bundorf 2012)
2014 The Ebola crisis emerges in West Africa. (CDC 2016b)
2016 Zika virus becomes a serious health threat. (CDC 2016c; Wang and Barry 2016)
The evolution of medical practices has coincided with and been driven in part by the development of medical technology and the scientific revolution. Medicine was limited in scope and primitive until the middle of the nineteenth century. Theories of disease were arcane, and diagnostic tools were largely absent (Rosenberg and Vogel 1979). Prior to 1850, medical education constituted an apprenticeship that was inconsistent and poorly preceptored, with no standard curriculum (Rothstein 1972). Procedures focused on expelling the disease with bleedings and emetics. Surgery was limited because of the lack of anesthesia, and as a result, being fast was better than being good. Patients often directed the physician as to the care they should receive. One might say early medical practice was the first iteration of patient-centered care (Burke 1985).
P ract I ce m anagement r esources
Now, however, the amount of information available about medicine and medical practice management is virtually endless, representing many points of view; ideas; political world views; notions about funding and access; and the numerous disciplines in the broader management field, such as accounting, finance, human resources management, organization development, and logistics. With the vast expanse of knowledge available, students of healthcare and practice management are encouraged to develop lifelong learning skills. The field is changing so rapidly that the need for continuous updating of knowledge and skills is essential.
For example, practice managers need to build a virtual library of accurate and reliable sources. The list that follows comprises the foundation of that library, which should be referred to frequently (see the appendix to this text for each resource’s website):
◆ Centers for Medicare & Medicaid Services (CMS) ◆ Advisory Board
exhIbIt 1.2 Selected Major Events in the History of Medicine and Medical Practice (continued)
Accounting
A system for keeping score in business, using dollars.
Governance
A system of policies and procedures designed to facilitate oversight of the management of the enterprise. Serves as the foundation of how the practice will behave, compete, and document its actions.
Goal
A specific target that an individual or a company tries to achieve.
◆ Dartmouth Atlas
◆ National Committee for Quality Assurance
◆ Institute for Healthcare Improvement
◆ Institute of Medicine
◆ Institute for Health Policy and Innovation
◆ Kaiser Family Foundation
◆ Robert Wood Johnson Foundation
◆ Annenberg Foundation
◆ Commonwealth Fund
◆ Centers for Disease Control and Prevention
◆ Agency for Healthcare Research and Quality
t he d I mens I ons of m ed I ca L P ract I ce
Medical practices can take many forms, ranging from small sole proprietorships to large multispecialty medical practices. Recent years have seen more medical practices embedded in large healthcare organizations, which also may be solo practices or large multispecialty entities (see exhibit 1.3).
A group practice is defined as a medical practice consisting of two or more practitioners working in a common management and administrative structure. Single-specialty groups are those that focus on one aspect of medicine, such as general surgery, family practice, orthopedics, cardiology, or internal medicine. Multispecialty medical groups contain more than one medical specialty in the organization. Multispecialty practices are highly integrated, with a common governance leadership and common management structure, and they have a highly developed corporate system for managing finances and dealing with regulatory agencies. Their operation and function are much more complex than those of solo or small practices.
Integrated delivery systems (IDSs) are networks of healthcare organizations under a single holding company or parent organization that contain multiple components of healthcare delivery. An IDS often includes hospitals, physicians and other clinicians, and payment organizations, often referred to as third-party payer organizations. The goal is to provide as complete a continuum of care as possible.
Solo Practice Integrated System Group Practice
t y P es of P ract I t I oners
Physicians have, of course, played a pivotal role in the US healthcare system since its inception. Physicians—and now, other nonphysician providers such as nurse practitioners (discussed later)—care for patients by
◆ assessing the patient’s health status,
◆ diagnosing the patient’s condition, and
◆ prescribing and performing treatment.
It has been said that the most expensive instrument in the healthcare industry is the provider’s pen. An amusing statement, it also carries a lot of truth because all diagnostic and surgical procedures as well as office-based and hospital-based assessments—in fact, all care in general—is either performed or ordered by a provider.
Furthermore, the medical practice is unlike any other organization in the medical field because the nature and identity of the practice is closely linked to the individual providers in the practice. The providers are the primary producers and the primary governance body, and they are held accountable for the performance of the practice in a personal way. Their income is directly tied to the practice’s performance, more closely than for other medical field workers. Exhibit 1.4 shows the fundamental components of a medical practice.
Often, the challenge in practice management is to serve the interests of the providers while maintaining a focus on the patient, with patient focus being the True North of the practice.
exhIbIt 1.4
The Practice Management Model Strategic Planning and Decision Making
exhIbIt 1.5
Total Active Physicians in the United States, April 2017
Continue to measure each step
“True North” is a concept taken from Lean management that embodies the ideal state of a practice, its providers’ vision of perfection, and the type and quality of practice it should strive to achieve every day. True North should transcend the individual and his or her personal goals or actions. Achieving personal objectives is not mutually exclusive but coincidental with True North.
Exhibit 1.5 shows the number of physicians practicing in the United States. This number can be further broken down into the number of practices by size and multispecialty versus single specialty, as shown in exhibit 1.6. Note the increasing size of practices over time, a trend that is expected to continue.
Source: Kaiser Family Foundation (2017).
Number of Physicians
Source: Kane (2014).
A primary care physician (PCP) is often the first contact for a patient with an undiagnosed health concern. In addition, PCPs frequently provide continuing care for many medical conditions that are not limited by cause, organ system, or diagnosis. This purview of practice differs from that of a medical specialist, who has completed advanced education and clinical training in a specific area of medicine and typically focuses on the diagnosis and treatment of one organ system of the body and its diseases.
Nurse practitioners and physician assistants are a growing segment of medical service provider, as seen in exhibit 1.7. A physician assistant (PA) is a nationally certified and state-licensed medical professional. PAs practice medicine with physicians and other providers and are allowed to prescribe medication in all 50 states, the District of Columbia, the majority of US territories, and the uniformed services. A nurse practitioner (NP) is a registered nurse qualified, through advanced training, to assume some of the duties and responsibilities of a physician.
PAs and NPs are sometimes referred to as advanced practice professionals or midlevel providers; however, the term mid-level provider is considered obsolete.
State laws vary as to the specific duties PAs and NPs are allowed to perform, so the practice manager must be fully informed on these regulations.
Advanced practice professionals are becoming increasingly important to medical practices because they can replace physicians in care delivery for many services, reserving the physician for more complex care requiring their expertise. For example, PAs and NPs often work as part of a care team with physicians. They may examine the patient first; collect facts and findings; and then, in collaboration with the physician, make a diagnosis
exhIbIt 1.6 Distribution of Single- and Multispecialty Physicians by Practice Size, 2014
