Improving income in primary pediatric office practices

April 2004

At our recent local pediatric department business meeting, many pediatricians took time to speak with me about my last column in this newspaper, the purpose of which was to share some of our policies and provoke discussion among pediatricians about novel strategies to turn losses to small profits. The column focused on our office policies for charging for vaccines and rapid tests for influenza.

Most of my colleagues were complimentary. Those who were critical expressed concern that instituting a fee-for-service charge for administration of the influenza vaccine or an on-site rapid test for influenza would incur the anger of managed care administrators and lawyers. They feared that such a risk was not worth the economic gain that would occur as a result of the charges.

Their concern is well-taken, and in fact they may be correct. Nonetheless, the need to increase office revenue is acute. It is increasingly difficult for a small pediatric practice located in a large metropolitan area or its suburbs to turn a reasonable profit. Salaries of nurses, receptionists, business office personnel and referral personnel have increased faster than have the increases in managed care reimbursement for routine office visits. Rent for office space in our area averages $26 to $30 per square foot. The cost of malpractice insurance has also increased sharply.

In light of this situation and to continue the dialogue begun last month, this month’s column highlights a few additional policies that we have initiated to increase income at our office. These include charges for after-hours telephone advice and surcharges for evening and weekend office visits. They also include surcharges for selected laboratory tests and in-office C-reactive protein determinations for acute occult febrile illnesses, which aid in reducing antibiotic prescriptions.

After-hours calls

At the start of this year, we instituted a charge for after-hours phone calls to our advice nurses. We encourage parents to call our office for all serious emergencies, which we define as those that cannot or should not wait until our office opens. We employ advice nurses who staff our office phones around the clock on weekends. Before introducing the policy, we calculated the total costs of providing the service, divided it by the number of calls received, and determined that it cost our practice $6 for every telephone call made to an advice nurse after hours. We therefore decided to pass this cost on to our callers and now charge that amount for every after-hours call. When a parent calls our office after hours, a taped message informs him or her of the policy. We also include information about the charge in a “Dear Parents” letter, which we give to all parents when they register for an office visit. The letter says in part: “We are requesting your consent to absorb the $6.00 fee. Managed care does not consider emergency telephone calls to be reimbursable. Every weekend, it costs us $85 to $150 for direct payment to our advice nurses. Every weekday, it costs us a minimum of $30 for providing a vital service to your family. Some insurance companies offer after-hours advice either online or by telephone. If you prefer, your insurance plan may provide free telephone advice or online triage service.”

The charge is not imposed on physicians, hospital nurses, urgent care centers, emergency rooms and laboratories that are calling with stat results. We bill the families for any after-hours calls directly or through their credit cards. This is done the business day following the call.

In the first 60 days, after-hours calls have decreased by 25% or more. We have deliberately kept the cost low to reduce malcontent and complaints to managed care customer relations. Some parents have complained, and we have held individual discussions with them about this and tried to explain our situation. Our advice nurses have been instructed to forgo the $6 charge if a parent strongly resents it.

Three years ago, we instituted a $10 cover charge for our evening and Saturday morning office hours. This is in addition to the usual co-payment for our patients. When parents call to schedule an appointment at these times, they are told about the additional charge, and they always have the option to schedule during our regular daytime hours. The extra charge is waived for all newborns and for all patients when our daytime schedule is filled and only evening hours are free.

Charges for certain tests

More than a year ago we instituted additional charges for selected in-office lab tests and immunizations that are not reimbursed by many managed care plans. We have a form letter that explains the need for additional charges for these services. We ask parents to read and sign the letter giving informed consent before we provide these services, which include rapid tests for respiratory syncytial virus ($20), rotavirus ($20) and mononucleosis ($10). Although we do not have antiviral therapy for these illnesses, results of specific tests are helpful in formulating a treatment plan and predicting the clinical course of the disease. Fee-for-service charges are believed to be necessary because many medical insurance companies reimburse barely enough to cover our cost of the kit without reimbursement for nurse or physician time. We have a blood drawing fee ($5 for finger stick hemoglobin or blood sugar), a fee for venipuncture or neonatal bilirubin test ($10), a fee-for-service for hepatitis A vaccine ($40) and a fee for polysaccharide meningococcal vaccine ($75).

We also charge $5 for school, camp and sports forms, which is justified because of the extra time it takes to fill in immunization records, vital signs and other data — five extra minutes for each form.

Some can call our system nickel-and-dime pediatrics; we believe it is prudent economic survival pediatrics.

Legally speaking

Are such practices legal and can we be held in breach of our contract with the managed care plans? We are not sure. We are aware, however, that several group obstetric/gynecology practices in northern Virginia have instituted a cover charge of $6 per patient to help defray the mushrooming cost of malpractice insurance for that specialty. Although several managed care corporations have threatened those practices with punishment or legal action, our OB/GYN colleagues, to their credit, have held firm. So far the policy is still in effect, and no repercussions from this novel approach have ensued.

While many pediatricians might find these policies to be offensive and to run counter to their personal practice philosophy, others may want to discuss institution of similar policies for their office.