Top 5 Practice Management Challenges and Their Solutions

While it's estimated that practices in the U.S. lose $125 billion each year due to poor medical billing operations, the challenges of practice management expand far beyond revenue cycle management. Here, we'll discuss the top 5 practice management challenges and provide resources and solutions that can assist in overcoming them.

Dealing with Increasing Operations Costs

Operating expenses are on the rise, but getting a clear perspective on billing costs can reduce expenses significantly.

An annual review of expenditures such as medical supplies, office supplies, software, and IT support will reveal areas where you can cut operating costs. The following are a few examples of practical changes that can reduce expenses:

  • Go green.

Minimize paper and office supply use by encouraging patients to submit payments electronically. E-billing supported by electronic payments reduces the costs of paper billing, returned postage, and processing. An e-newsletter is an effective way to educate patients on the benefits of e-billing.

  • Establish contracts with vendors to deliver supplies as needed.

Medicine with a short shelf life —  such as vaccines —  cost medical practices thousands of dollars per year. Instead of purchasing vaccines in bulk, order large supplies when the demand is high —  such as during back-to-school season — and lesser amounts when demand is low.

  • Hire in-house IT support.

Outsourcing IT support to maintain the security of office software could be costing medical practices more than it's worth. MGMA member, Barry Howell, reported that outsourcing their IT support cost his orthopedic practice $80,000 on average versus only $42,000 annually to hire an in-house IT manager.

Recruiting and Retaining Medical Billing Staff

Hiring the right medical coding, billing, reimbursement, and front office staff produces better results. Easier said than done, right?

Every practice should know by now that high turnover rates are not only expensive but can negatively affect the patient experience.

Hiring competent team members is one thing but retaining them is another. To find employees that are the best fit for your practice, offer clear expectations in the job description, be open to referrals from internal staff, get feedback from existing employees, and focus on your culture.

Kissmetrics recently published an entire blog on the importance of a great culture and how it's not only imperative for retaining employees, but also for recruiting.

When you focus on your culture, you'll see improvements in employee happiness and eventually a lower turnover rate which can save you significant time and money. Check out the full blog post here to learn about the four elements that make a great culture.


Collecting Payments from Patients

The rising price tag of deductibles and co-pays has resulted in increased collections from medical practices across the U.S. With deductibles ranging from $2,000 to $8,000 annually; medical practices are opting to be more proactive in their efforts to collect patient payments.

Informing patients of updates to collection policies and procedures is imperative to receiving payments on time. Practices can also improve patient pay collections by offering payment plan options. With a payment plan option, patients can pay their bill over time in smaller amounts. More times than not, this will help your practice increase patient pay collections while also helping patients with high deductibles or no insurance at all gain access to the care they need.

Besides offering payment plans, getting started with a credit card on file program can also assist your practice in collecting payment from patients as patient financial responsibility continues to grow.


Proactively checking with insurance companies for co-pays and deductibles before the patient visits your practice is also a best practice when it comes to patient pay collections.

By informing the patient of payment expectations before the appointment, you increase the likelihood of receiving payment upfront, and you can avoid having to chase down payments after the patient leaves your practice.

The Transition to Value-Based Care

The shift from a fee-for-service model to value-based reimbursement poses a number of challenges for practice managers, clinicians, and the healthcare industry in general.

The reimbursement tracking process of quality measures is more complex than the former model, payment responsibility is now placed on providers more than the payor, and since the focus will be on value and not volume, practices must also face the fact that there is a possibility they will miss out on some revenue during the initial transition to value-based care.

According to Medical Economics, in the past three years, only 6 percent of total physician pay was tied to quality measures but is projected to jump to 20 percent under MACRA.

However, the transition to value-based care doesn't have to mean less revenue for your practice. One way to avoid a loss in revenue is to improve your practice's operating costs and place an added emphasis on an efficient and results driven RCM operation.

If you aren't quite sure where to start with improving your RCM process, check out our blog post on the seven areas for improvement when it comes to managing your revenue cycle.

Avoiding a Drop in Revenue During the Transition to Value-Based Care

Another way to avoid losing revenue during the transition to value-based care is to take advantage of the payment opportunities that exist today.

CPT Code 99490 is beneficial to your practice and your patients. Medicare began paying for Chronic Care Management (CCM) in 2015 under code 99490, but many physicians didn't pursue the opportunity to bill for 99490 because of the number of requirements.

The good news? Some of these requirements have changed for 2017. Thanks to the MPFS Final Rule, the Chronic Care Management service elements, and billing requirements will be relaxed starting January 1, 2017. 

These new and revised Medicare payment policies for Chronic Care Management offer new sources of revenue for small practices that are also trying to get a head start on the transition to value-based care. 

To learn more about the revisions taking place with CCM and to view all of the 2017 CPT code revisions, download our complete guide to the 2017 CPT Code changes here

Participating in the Merit-based Incentive Payment System (MIPS)

MIPS will consolidate existing incentive programs like Meaningful Use, PQRS, and the VBM program into one single program where eligible clinicians will be rewarded or penalized based on performance.

The Merit-based Incentive Payment System will measure performance in four categories: quality, resource use, clinical practice improvement activities, and advancing care information.

Educating clinicians on these four performance categories and how they can be successful in each of them starting this year will help practices avoid a negative payment adjustment in the coming years.

Practices should strive to create a supportive and collaborative environment for providers that are aiming to reach performance goals under MIPS. When value metrics are met by providers, practices can expect a boost in revenue and a boost in overall patient satisfaction. 

According to the American Academy of Family Physicians, "MIPS is the first opportunity for high-performing physicians to earn substantial bonuses, and for all physicians to avoid penalties if they meet prospectively established quality thresholds."

end-to-end rcm solution

Demand more from your revenue cycle.

Our integrated solution brings together robust data, intelligent claim handling, and performance consulting to guarantee a 10% increase in cash flow.

Learn More


The Advantage of Using RCM Experts When Acquiring a Medical Practice
The Advantage of Using RCM Experts When Acquiring a Medical Practice
How to Boost Revenue Using RCM for Medical Practices
How to Boost Revenue Using RCM for Medical Practices
How to Optimize Your Clinical Workflow for Telehealth
How to Optimize Your Clinical Workflow for Telehealth
Five Reasons You Shouldn’t Piece Together Your Healthcare RCM
Five Reasons You Shouldn’t Piece Together Your Healthcare RCM
7 Revenue Cycle Management Best Practices
7 Revenue Cycle Management Best Practices

Join the 1,000+ healthcare professionals already receiving updates.