Behind Every Successful Practice – Sound Data — Neurosurgical Practice Survey Results

No neurosurgeon would consider initiating a surgical procedure without first obtaining a wealth of diagnostic information for planning a prudent operative course. Similarly, neither neurosurgeons nor their practice managers would consider proceeding with fiscal planning in the absence of sound data that demonstrates how the practice has been performing as a business.

The significance of reliable practice data has increased as practices strive for success in a challenging climate of increasing cost and declining reimbursement. An individual neurosurgical practice’s own performance indicators reveal important trends within the practice, but stop short of depicting the practice’s position in a competitive marketplace.

NERVES Survey
A wealth of benchmarking data that allows neurosurgical practices to compare their own data to the consolidated data of practices across the country is the product of the inaugural NERVES Neurosurgery Practice Annual Survey. Results of the 2004 report, which is based on 2003 data, were presented to members of NERVES, the Neurosurgery Executives’ Research and Education Society, at the group’s annual meeting in April. Results are available in their entirety to NERVES members. Results additionally were presented to the leadership of the AANS, the Congress of Neurological Surgeons, and the Council of State Neurosurgical Societies, the organization that fostered establishment of NERVES as an independent entity.

“What had been missing before the NERVES practice survey was reliable neurosurgery-specific benchmarking data that allows comparison of a practice’s performance with that of other neurosurgery practices,” said Mark Mason, immediate past president of NERVES. “For practice administrators in search of areas where costs can still be trimmed and productivity maximized, this survey is a life preserver thrown just in time to help them blunt the effects of the anticipated deep Medicare cuts beginning in 2006.”

Mason stressed that a primary aim of the annual survey is to reveal trends in neurosurgery. “Like a gold mine, the survey will pay off over time as the data is mined,” he said. “The real treasure will be the trending data at five, 10, and 20 years, but the benchmarking data for even one year is worth its weight in gold.”

Survey Design
The questionnaire, designed over the course of a year by practice administrators and neurosurgeons, was prepared in compliance with the requirements of the Department of Justice and the Office of the Inspector General. It was distributed in spreadsheet form via e-mail to NERVES members (approximately 225 practices) in July 2004. Fifty-four practices representing 359 neurosurgeons returned surveys, generating a strong response rate of 24 percent. Results were tabulated in fall 2004 and winter 2005 by the accountancy consulting firm of Heaton and Eadie, the only entity with access to the raw data.

The survey design features an eight-question “total practice” section that covers demographic data as well as accounts receivable and outside income information. A 19-question “relevant issues” section covers a range of miscellaneous yet important data, such as the number of practices that employ certified professional coders (43 percent) and the number of practices that use a picture archive and communication system known as PACS (41 percent). Other survey sections delve into full-time provider compensation and production, full-time support staff, and operating costs. The specialties of neurology, physiatry, pain management, interventional radiology and diagnostic radiology also were surveyed, but the relatively low response rate for each precluded use of that data in the report.

“In general the survey appears to validate what every neurosurgeon has presumed,” Mason said. “Work RVUs averaging more than 10,400 per neurosurgeon suggest that while they are working harder than ever, neurosurgeons are collecting less than 36 cents on every dollar, and almost 45 percent of what is collected goes to overhead.”

Productivity Measures
The NERVES survey addressed a number of productivity measures — gross charges, gross collections, the number of new patient visits, the number of surgeries performed — and others, including relative value units, or RVUs. Work RVUs, the portion of Medicare’s resource-based relative value scale that computes the physician’s time, skill, and physical and mental effort required to perform a procedure, typically accounts for 52 percent of each service’s total relative value. The use of work RVUs as a standard productivity measure is gaining healthcare industry acceptance, according to healthcare consultant Max Reiboldt in the 2002 edition of Financial Management of the Medical Practice. Reiboldt holds that the RVU system is advantageous because “it eliminates the disparities in reimbursement for similar services from one third-party payer to another.”

In its annual practice survey, the American Group Management Association has tracked work RVUs for group practices since 1996. According to the AMGA’s 2005 Medical Group Compensation and Financial Survey, a trend toward the use of RVUs is evidenced: “Work RVUs are becoming the primary measure of a physician’s productivity.” The AMGA survey indicates that practices basing at least 50 percent of compensation on a work or financial measure prefer work RVUs as the standard measurement; work RVUs were the productivity measurement of choice of more than 40 percent of the AMGA survey’s respondents.

The NERVES survey showed that 39 percent of neurosurgery practices use work RVUs for practice management or compensation purposes. The overall mean, or average, number of annual work RVUs per full-time provider reported by NERVES survey respondents was 10,479. The table below (Figure 2) illustrates productivity variations by geographic region and classification, practice type, size of practice and years in practice. Of note, those in academic practice fell between those in single specialty practice, who averaged 9,301 work RVUs per year, and those in multispecialty practice, who averaged 14,459 work RVUs per year. As might be expected, those in practice less than six years generated far fewer work RVUs than other neurosurgeons. The survey also showed wide variation between neurosurgeons in the east and those in the west: 6,700 compared with 13,979 work RVUs per year.

Neurosurgery’s overall average figure of 10,479 work RVUs is very near the neurosurgery figure shown in the above table of 2005 academic practice data (Figure 3). This table compares work RVUs for select surgical specialties and shows neurosurgery at 10,414 annual work RVUs per full-time provider, ranking second only to cardiac surgery by this measure of productivity.

With only one year of data in hand for neurosurgery, trends in work RVUs are impossible to identify. However, a look at four years of data for other specialties suggests a trend toward an increase in work RVUs. The AMGA median figures from 2001 to 2004 for the specialties shown in the graph on page 14 (Figure 4) indicate an overall increase of about 4 percent in the work RVUs for group practices. Neurosurgery’s overall median figure for annual work RVUs per full-time provider in 2003 was 8,702; that is, when RVUs were ranked highest to lowest, half fell below 8,702 and half ranked above it.

Besides work RVUs, other productivity measures include the number of new patient visits per year and the surgical caseload. According to the NERVES survey, the average neurosurgeon saw 478 new patients per year, or about 10 new patients per week over 48 weeks. The number varied from an average of 300 to 800 new patients per year, with private practices averaging about 510 new referrals per year and academic neurosurgeons, about 370 per year.

There was wide variation in the surgical caseload per neurosurgeon. The NERVES survey reported an average figure of 335 cases per year, with caseload varying by neurosurgeon age and years in practice and peaking at 381 cases between six and 15 years of practice. There was a substantial difference in surgical caseload by practice type. Academic neurosurgeons averaged 239 cases annually, while those in single specialty practice averaged 345 cases, and those in multispecialty practice, 393 cases.

The table shows the mean number of annual neurosurgery procedures per full-time neurosurgeon by Current Procedural Terminology code.

Sources of Income
The NERVES survey reported revenue by location and by payer type. By location, 59 percent of income was attributed to inpatient services, and 36 percent, to outpatient services. By payer type, only 31 percent of reimbursement came from government sources, while the vast majority, 67 percent, came from nongovernmental sources.

The survey also asked respondents to report income not based on RVUs. Outside sources, ranked from source of most income to source of least were: ambulatory services (although there were only two respondents), call coverage, emergency room coverage, management, research, directorship, and legal.

Providing ancillary services can be a convenience to patients and to the practice, as well as a source of additional practice income. NERVES survey results showed the top ranking service to be general X-ray, but even this service was offered by fewer than a quarter of respondents. After X-ray, magnetic resonance imaging and the grouped triad of electroencephalogram, electromyogram and Doppler ultrasound were each offered by 17 percent of practices. Fluoroscopy and physical therapy were each offered by 11 percent of respondents, while computed tomographic scanning, occupational therapy, neuro-opthalmology and “other services” were offered by less than 10 percent of practices.

Cost and Profitability Measures
One indicator of practice profitability is the ratio of operating costs to collections. The NERVES survey put neurosurgery’s average operating cost at 45 percent of receipts, a figure that compares favorably with the 44 percent average practice expense component target of Medicare’s resource-based relative value scale, as well as with similar data for other specialties, as shown at (Figure 5).

The relationship of operating costs to collections is further illustrated in the table (Figure 6). The cost of support staff averaged 21 percent of receipts. The average number of support staff, including various administrative, technical and medical staff, was 4.5 people per full-time neurosurgeon. As shown in the table, the cost of malpractice insurance averaged 7.5 percent of receipts, approximately twice the amount allocated for the malpractice component of Medicare’s RBRVS.

The number of days a patient account is maintained in accounts receivable status is widely recognized as a critical measure of practice profitability. The longer an account is on the books, the more it depletes the working capital required to maintain the practice’s cash flow. The NERVES survey reported an overall average of 101 days of gross charges in accounts receivable, and a median figure of 63 days. These figures suggest that while a few accounts lengthen the mean considerably, neurosurgery’s true performance, demonstrated by the median number, is quite respectable. These figures also compare favorably with 2003 AMGA overall figures for group practices, with a mean of 95 A/R days and a median of 92 A/R days.

The NERVES survey additionally indicated two areas where significant practice expenditures were anticipated in the next 12 months: Nearly 60 percent of practices planned to recruit new providers in the next year, and almost 40 percent of practices planned to implement an electronic medical record in the next year, for which cost estimates can range from $20,000 on a small scale to more than $100,000 for larger clinics. The survey also indicated that 22 percent of practices already were using an EMR.

For Further Information American Group Management Association, www.amga.org Medical Economics, www.memag.com NERVES, Neurosurgery Executives’ Research and Education Society, www.nervesadmin.org

You Are Not Alone
This article represents a small but tantalizing sampling of the data available in the first NERVES Neurosurgery Practice Annual Survey. This first survey’s message clearly is that you are not alone. Colleagues across the country are facing similar challenges, and the benchmarking data in this 2004 report may reveal that your practice is meeting those challenges as well as most practices and perhaps better than you expected.

The NERVES Board of Directors already is anticipating the ability to start tracking trends in neurosurgical practice when the second practice survey is released next spring.

“The 2005 survey of practice data for 2004 will provide the comparative data needed to begin drawing conclusions about the economic state and future direction of neurosurgery,” said Mason. “This data will be a powerful weapon in the battle for economic justice, and NERVES and the NERVES survey are ready for service in that battle.”

The 2005 survey, underway this fall, is expected to be released at the NERVES annual meeting next April in San Francisco. NERVES information is available at www.nervesadmin.com.

Manda J. Seaver is staff editor of the AANS Bulletin.

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