Guide one6 minute read
Questions to ask before changing your practice's payment model
A working list of the questions that tend to determine whether a payment change is workable, grouped by the part of the practice they affect.
Start with why, in specific terms
Most physicians who look at this are responding to something concrete: administrative burden, declining margin on particular services, staffing costs, or a sense that the practice has drifted away from the medicine. Naming the specific pressure matters, because different pressures point toward different solutions.
If the underlying problem is the cost of billing, a payment model change may help directly. If the problem is volume in a saturated market, it may not. Being precise here saves a great deal of work later.
Questions about your current position
- What share of your revenue comes from each payer, including Medicare?
- Which services carry your margin today, and which do not?
- What does it cost you to bill and collect, counting staff time and software?
- What do your payer agreements say about notice, termination, and continuity of care?
- Are you employed, in a group, or otherwise bound by agreements that limit your options?
Questions about the model you are considering
- Which services would move to direct payment, and which would stay as they are?
- How would you price them, and what is that price based on?
- How many patients would need to accept that price for the practice to work?
- Is there evidence of demand at that price in your market, or is it an assumption?
- Does the arrangement change your obligations to any payer or program?
Questions about the transition itself
- How long is the gap between the last claim paid and a steady new revenue pattern?
- How much cash does the practice need to hold through that gap?
- What is the sequence, and what has to happen before anything is visible to patients?
- Who on your team needs to be informed, and when?
- What would tell you early that the plan is not working as expected?
Questions to hand to your advisers
Some of these questions are not ours to answer, and you should be wary of anyone who answers them without reviewing your documents. Take the regulatory questions to a healthcare attorney, the tax and cash-flow questions to your accountant, and the coding and claims questions to your billing adviser.
Arriving at those conversations with a written list saves professional time and produces better answers.