Merged Group Medical Practice

Turning Around Financial Performance

Challenge
Two primary care physician practices and a large nonprofit hospital entered into an agreement to operate as their parish’s “full-service” family practice. The assets of the physician practices combined with the capital invested by the hospital provided an opportunity to create an entity that could offer the highest quality of care to its patients while also providing a substantial return on investment to its owners; however, the new organization struggled to achieve this reality. The organization engaged SSA to help reverse the negative trends in revenue and patient volume and bring its escalating costs under control.

Approach
SSA conducted a comprehensive study of the organization’s costs, revenues and staffing levels compared to national benchmarked data to identify significant opportunities to improve the organization’s financial performance. From its findings, SSA recommended cost item reductions and eliminations, and implemented a new cost control system and annual review of all expenditures. The SSA project team also reviewed all of the organization’s provider contracts and recommended the renegotiation of several contracts as a result of their analysis. To address the organizational structure, SSA analyzed the capabilities of the management team and assisted in the recruitment of additional talent.

Impact
The organization's operating income improved from a net loss of more than $1 million in its first two years of operation to a net gain. The entities’ expenses reduced by $950,000 and revenues increased by more than $1 million. Moreover, patient volume increased after two years of steady decline and the practice is now a stable, growing, profitable entity.

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