'Thinking Smart' in Tough Times
By Judith Philipps Otto There's no question that O&P providers are taking a beating
today as never before, with assaults on virtually all fronts:
increasing costs, price freezes, CMS audits, encroachment from
other fields, deep discounting demands, reimbursement woes,
collections nightmares, coding confusion, and more.
Even the good news has its dark side: while it may appear that
technology is improving how we can do business and the olutions we
can offer patients, this technology is costly and requires
education before it can be used effectively. And while the numbers
of potential clients are rapidly increasing--due to the return of
injured veterans of the Iraqi war and the aging of a healthy,
active, and longer-lived population--that too can be a double-edged
sword. Not only are there not enough hours in the day to handle the
increased workload, but also in some cases diminishing returns
actually create a negative bottom line.
 Consultant John Michael, CPO,
FAAOP, puts it in a rather grim perspective: "The only way
to maximize resources without sacrificing quality is to increase
efficiency. My personal opinion is that you can only increase
efficiency so many times--and I think we may have passed that point
some time ago."
He adds, "It may be time to acknowledge that quality is going to
start suffering."
Even if one agrees with such an outlook, effort needs to be made
in order to keep matters from getting worse.
Computer Tech: Not a Luxury
O&P professionals need to be as electronically savvy as
possible, Michael says, since computer skills minimize time spent
on paperwork, enabling facilities to spend more time on other
essential tasks. "It's no longer a luxury of the large facilities.
Electronic billing, electronic charting--as many things as we can
automate--I think that's the best chance we have."
It may be a painful, time-intensive and costly investment, but
biting the bullet appears to be the only reasonable way to remain
competitive and profitable. "To become more efficient, you first
have to become less efficient; to become more profitable, you have
to first become less profitable," Michael advises. "So you may have
to make a capital investment even though you don't have a
comfortable surplus that's going to make that a painless process.
Then you make the time commitment to go through the learning curve
to master the new technology, based on the hope that at the end of
the process you will have a more efficient practice and therefore
can maintain quality."
Dan Oglesby, CPO, Birmingham Limb
& Brace, Birmingham, Alabama, is also a believer in
the power of technology. Four years ago, his company, which has
been family-owned for over 100 years, was at a crossroads.
"Clinical care is the lifeblood of our company, but at that point,
practice management and administrative accountability became our
main focus," says Oglesby.
 Computer technology proved to be the answer. The
company is now into its third generation of computer hardware and
second software system. Says Oglesby, "These moves have allowed us
to reduce paper claims by 90 percent, control accounts payable, and
take advantage of supplier discounts." Computer technology has also
benefited the clinical side by "allowing us to develop better
patient care, with a combination of 40-plus years of technical
experience and CAD technology in both prosthetics and
orthotics."
His choices seem to be working. In looking at the American
Orthotic & Prosthetic Association (AOPA) practice survey,
Oglesby says, "By their standards, the size of our four-
practitioner practice is in that middle range--we're not large and
not small--and from their perspective, it was one of the more
expensive practices to run. Yet we have succeeded in increasing
profitability to the extent that we now fall into the medium to
medium-high range."
While he does use central fabrication for spinal orthotics,
Oglesby stresses that modifications are done in-house via computer,
which is provided to the central fab instead of a plaster model. "I
[also] use central fab with diagnostic sockets for prosthetics,
because I can modify that image with the computer, probably using
30 percent of the time it would take me to do it physically
myself."
Saving on Purchasing
 Purchasing is another area where practices can
learn to do more with less.
Micki Pawlowski of Calumet Orthopedic & Prosthetic
Co., Hobart, Indiana, suggests taking advantage of
discounts when offered and consolidating orders to save on shipping
charges. "If suppliers give you ten days with a two-percent
discount, pay your bill within that period," she says. "Take
advantage of discounts, take advantage of rebates, and that's where
your profit is going to be, because insurance companies are already
cutting your profit margin by their reimbursement rate."
 Consolidation of orders is another cost-cutter,
Pawlowski says. In the past, if a practitioner was fabricating a
limb and realized he needed a component, he would simply pick up
the phone and order it. However, when the company assessed its
expenditures, "I realized that if we waited and ordered all the
needed items on a weekly basis, we could save on shipping charges.
So we started to plan ahead, and we were able to place larger
orders and bring down the cost of shipping significantly."
Consolidating purchases through a limited number of suppliers and
distributors may enable you to take advantage of added discounts,
points out Michael Oros, CPO, vice
president of Scheck & Siress, Oakbrook Terrace,
Illinois.
"And if you're so small that you don't really receive any
significant discount, then the next best thing is to join up with a
group," continues Oros, who is a board member of the POINT network.
"There are several buying groups and networks of privately owned
O&P practices that can be joined for an investment cost. You
should certainly be able to recoup that cost, not only in terms of
purchasing discounts, but also by utilizing other value-added
services they provide."
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The workspace of the new ‘APOS’ has been designed for maximum efficiency. Photo courtesy of Scheck & Siress. |
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Although Scheck & Siress has an advantage in
working with suppliers because of its size, small facilities may
not be able to obtain the same advantage without partnering with
someone or joining a network, he points out, adding, "Discounts
start off at some low percentage, and the more you purchase, the
greater that discount percentage becomes."
Oglesby, a PrimeCare O&P network board member, agrees.
"Material cost is always a big problem. Probably the biggest thing
we've done over the last few years is streamlining our purchases
and improving to a point where we are able to take advantage of
discounts for prompt payment."
Changing purchasing patterns may sometimes involve changing the
items purchased. Oros notes that they've had to consider making
sacrifices in the area of soft goods supplies. "Where we've seen
decreased reimbursement for these types of items," he explains,
"and because our costs are relatively fixed on those items, we may
have had to change a supplier and select a comparable item of
slightly less quality--simply to be able to affordably provide the
item.
"Sometimes there is a difference in quality, yet it provides the
same function," he admits. "But there are times that the
reimbursement is less than the acquisition cost, and we have no
choice--unless you consider losing money a viable choice."
Delegating Work Helps
While it's always tempting for business owners to do it
themselves, delegating duties to qualified staff members is a great
way to maximize capabilities.
Michael observes that more people are looking at ways to use
support staff to amplify the effectiveness of the certified staff,
whether through the use of technicians, assistants, pedorthists, or
others. "It often makes sense to have a certified pedorthist on
staff who does most of the ankle-foot care. That frees up the
orthotist to focus on the more complex care and also to step in and
play an assistive role in the extremely difficult cases."
Layering Services
Oros believes in layering services. Since patients will pass
through several stages from the time they walk in the door to the
time when service is completed and they leave with a finished
device, Oros' objective is to optimize the level of care at each
stage without utilizing the highest level personnel for each
task.
"We've tried to determine who is the most efficient person to
handle the service at each level," Oros explains. "Could an
orthotic patient receive service from a fitter instead of a
certified practitioner at that particular stage?" Depending on the
prescription, if it's more cost-effective and still within the
scope of practice for a fitter to provide that type of service,
instead of a certified clinician, that would be the best choice, he
explains.
Oros continues, "The same applies to prosthetic services: When
it is time to shape a cosmetic cover, is that something that a
practitioner needs to be doing, or something that a technician
could handle? And, if so, who's the most cost-effective person to
be providing that service? Again, the technician is certainly the
more cost-effective choice.
"The same kind of layering applies to different services all the
along the line," Oros adds. "From ordering componentry to fitting
and adjusting, to keeping the fitting rooms prepared, it makes
better business sense to utilize the least highly compensated
employee, reserving the more highly trained people to handle the
jobs that only they can do."
Even in smaller practices than Scheck & Siress' ten-facility
business, the same principle can be applied, Oros believes. "As
practitioners, we're most effective when we're seeing patients. If
you can be seeing patients or marketing to physicians, that's more
cost-effective than doing technical work. If you can't afford a
tech, use a central fab facility to get quality, cost-effective
devices fabricated while you're doing more valuable things for your
business."
Play to Your Strengths
Oglesby and Terry Shaw, CPO, FAAOP, BOCPO, Shaw's
Prosthetics Plus, Owensboro, Kentucky, believe in playing
to their personal strengths and skills. "I have found that I have
more energy and do better work in the morning, and that's when I do
my clinical side. Then from mid-afternoon to closing is when I do
my corporate/business side," sayes Oglesby.
Preplanning Saves Time, Money
Shaw stresses the power of organized management, applying
careful preplanning to everything from triage to travel. His firm
sees quite a few patients in outlying areas and surrounding
counties and sets aside one day a week for these visits. Unless
there's an emergency, the scheduling is begun the Wednesday ahead
of the Wednesday for which the visits are planned. "That maximizes
a one-hour trip in any direction so that we're not simply going up
for a heel elevation or something equally minor," he says. "We also
prioritize which patients are emergency cases and which aren't.
Hospital patients get priority through our facility because of the
timeframe allowed to get the job done and to maintain quality
control."
Consolidating Follow-ups
Shaw's practice is optimizing cost-efficiency through other time
management areas. In 2005, he implemented a new plan for handling
follow-ups. "If follow-up patients are doing well, sometimes they
will not keep their appointments, or they'll call to cancel at the
last minute. We are now setting up follow-up visits on one day each
week, when we can normally see a large number of patients in a
short period of time. If they cancel, they're scheduled in such a
fashion that it's not going to leave us with an odd hour of idle
time--not really long enough to work on anything else. Hopefully
this new approach to follow-ups will give us a little bit more time
with those patients who are in the evaluation or fitting
stage."
Year-end Crunch
Sometimes it is difficult to make the call to outsource a
device, especially during the year-end crunch. Shaw, who is not
only a practitioner but also the secondary technician, often works
12-16 hour days, especially during the year-end holiday period, to
make sure devices meet quality standards as well as getting to the
patient in a timely fashion. "That's when central fab comes
in--when I'm just falling over," he says.
As year-end approaches, other forces influence decisions, Shaw
says. "Sometimes the priority is just getting the orthoses and
prostheses out before the end of the year, before the deductibles
start again. I've often had to tell patients that we are just not
going to be able to get it out by the end of the year, and then
give them the choice of whether or not to stay with us or go
elsewhere."
He continues, "Amazingly, in eight years, we've never had to
turn someone away just because of time constraints or quality.
We've been able to discuss it with them, and they've normally
stayed with us. We do our darnedest--sometimes you forego your
vacations as well as time off with the family, which doesn't make
the family too happy. But as a single practitioner, you'll be
called in on every major holiday and in the middle of your
vacation. But sometimes that's the price of quality service."
Value of 'Personal Touch'
Never underestimate the value of that dedicated personal
touch--the "human" value of your human resources. Pawlowski notes
that much of the success of her purchasing cost-cutting strategy
relies on the support of personnel.
"When our order consolidation started to have an impact, I
advised the employees--the technicians especially--of the success
of the cost-cutting efforts. I try to keep our staff abreast of
what is happening by creating a newsletter that also alerts them to
where the costs are going. It helps for them to be informed and a
part of the team approach to problem-solving and maintaining a
quality practice."
The Pawlowskis are understandably proud of their reputation for
quality--reflected in a Presidential letter of congratulation
received on the practice's 50th anniversary last year.
As a small business, Pawlowski emphasizes the importance of
getting involved in the community, not just limiting marketing and
education efforts to newspaper advertising. "A Little League came
knocking on the door asking for sponsorship. What better goodwill
can you have? They print our logo on their team shirts; they're
promoting our name in the community.
"Don't just join the Chamber of Commerce," she adds. "Attend
their luncheon meetings; host a business after hours' event where
you bring the community into your facility. There you can educate
them about the cost to fabricate your custom items and show them
what you have to offer. If patients understand the processes and
costs involved, they are more receptive and compliant, thus
improving the provision of quality service."
Compliance Issues Raise Cost
Other factors are adding to the pressures on facility owners,
making it increasingly difficult to maintain quality service.
"Compliance issues seem to be coming with increasing frequency
and have a much larger impact than anybody had anticipated,"
Michael points out. "That takes up further time, and there's really
no great way to avoid that inefficiency. Even though there are some
commercial products that can help you achieve compliance in less
time than if you do it on your own, there is still a substantial
time commitment to learn the process."
Since a new HIPAA version goes into effect in April, and a
variety of Medicare compliance requirements are also unavoidable,
O&P business owners face a growing stack of "homework" new
methods to learn, new assignments to submit.
Facility Design
Facility design offers another significant opportunity to
optimize clinical care.
Oglesby just moved to a new location in January. "The new
facility is better organized, with task-specific areas that should
make us more efficient," he notes. For example, there is a
dedicated area for the company's expanding CAD operations.
"Facility design is critical when fine-tuning your business."
Does Size Count?
How significant an advantage is practice size in maximizing
resources? It depends on whom you're talking to. Oglesby has
clearly made a success of his medium-sized business through careful
planning and clinical management; Oros equates Scheck &
Siress's size with increased bargaining power and better discounts;
and Pawlowski is quick to emphasize the flexibility and rapid
responsiveness of a smaller facility.
Oglesby offers sound advice. "It's just as critical for a small
independent O&P provider as for a larger corporate provider to
have a long-term strategy with well-defined goals. You may not
always reach your goals, but you need to have a business plan that
you're always working toward--yet still be flexible enough to
realize when you need to make changes."
A Happy Ending?
Does this story have a happy ending? We won't know until we get
there. Meanwhile, as we struggle to discover ways to help us hang
on, it's encouraging to know that many of the people who were in
this business solely in search of large financial rewards are being
weeded out by contemporary hard times. The ones who remain are
those who are genuinely committed to their profession and dedicated
to their patients, striving to maintain quality standards even as
they tighten their belts. And that can be a source of pride for the
O&P profession. A graduate of the University of Missouri School of Journalism, Judith Philipps Otto has been a newspaper writer and editor and has won national and international awards as a broadcast writer-producer. She also has assisted with marketing and public relations for various clients in the O&P industry. 
Table Of Contents - March 2005
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