Is Time on Your Side?

By: Mike Fleischman, Principal with Gates, Moore & Company

According to a 2007 study published by Texas A&M University, 392 videotapes of visits by elderly patients to 35 physicians in a variety of clinical specialties revealed that the average visit lasted 17 minutes and covered an average of six topics.  For a primary care physician trying to generate respectable income, obviously time management is one of the keys. 

With respect to time, there are two ways that it can be measured in a medical practice.  The first is how much time does your patient actually spend in the practice?  The second is how much time do the providers actually spend in face to face contact with the patients?  The first question raises a number of issues about practice operations including the interaction of the staff with the patients in regard to registration and routine clinical processing, general patient flow through the facility, and ultimately patient satisfaction. 

The second question regarding time focuses on your potential for revenue generation.  The provision of healthcare is a service industry.  You are providing services by way of diagnosis, treatment, prevention, and education to your patients.  That’s what you get paid for.  In order to be most efficient, it is critical that you spend as much time providing those services as possible. 

And now comes the electronic medical records, or as they are more commonly becoming known, electronic health records (EHR), the panacea to save time.  However, according to many studies and anecdotal accounts, most physicians estimate that they lose about 30% of their productivity as they learn to cope with the complicated new system.  While some systems are not as cumbersome as others, any system that changes the way that things have been done for years is going to be a challenge.  Whether you are using a touch pad, or typing the information into the EHR, your time is being utilized, sometimes not in the best manner. 

As a solution to this, a growing number of physicians in all specialties have determined that scribes are at least a partial solution.  The scribe simply follows the physician from exam room to exam room taking notes as the physician talks.  Following touch screens with clinical algorithms certainly helps to speed the process but even having the scribe type while the physician examines and talks with the patient has also been found to be helpful. 

Of course, there are a couple of caveats associated with this solution.  The scribe must be well versed in the vernacular that is commonly used within the specific medical practice.  Taking someone who has worked with an internist and trying to place them in an orthopaedic practice is probably not a good idea.  Secondly, the scribe must become familiar with the technology itself, since they will be the individual largely responsible for entering the clinical notes and other data.  An interesting solution to these issues has been for some practices to hire medical, nursing or even pharmacy students on a part-time basis to fill the roles of scribes.  In most instances since these are students, they are not expecting a highly competitive wage ($8-$12 per hour in most areas should do), nor do they expect benefits.  Then it simply becomes a question of the math.  If you can generate one more patient visit per hour, let’s say a 99213 reimbursed at a Medicare rate of approximately $62, and you work two three-hour sessions per day, that’s a gross revenue of $372 per day.  Assuming that you are paying your scribe $60 for six hours worth of work, your net profit is $312 per day.  Assuming you work eight clinical sessions per week (a total of 24 hours) and 45 weeks a year, with an associated cost of slightly under $11,000, your net revenue could increase by $46,000. 

Of course we realize that this does not entirely offset the initial cost associated with acquiring the EHR and maintaining it.  However, it does appear that there are some great possibilities here.  In fact, these possibilities are so good that there are companies springing up around the country that provide scribes for medical practices.  Specific among these are Emergency Medicine Scribe Systems in California, ScribeAmerica in Ohio, and PhysAssist Scribes in Forth Worth.  Go figure, if private industry thinks they can make money off of providing scribes, what kind of margin could that potentially add to your bottom line?

Market Spotlight: Buckhead

In this edition of the Dental Real Estate Newsletter, we’re going to take a hard look at the Buckhead Submarket with a particular view on the saturation of medical services in the market.

Those with some knowledge of the market know that Buckhead is one of the city’s more affluent submarkets.  The entire submarket contains 21,782,679 rentable square feet and it is dominated by smaller financial services firms and there are very few large tenants compared with other markets. 

The last cycle left Buckhead extremely overbuilt with construction of 2 new towers where only 5 had been built in the previous ten years.   Vacancy rates which had modulated at 9-13% in the previous five years shot to 21% as these buildings delivered.  Asking rents which peaked at $28.69/sf, have slipped and landlords are offering extremely attractive packages to long term credit tenants. 

There are one hundred and twelve dentists in Buckhead, 105,948 residents in 2009 and total dental sales for $37.8M.  In the Greater Atlanta market as a whole, there are 2,804 dentists and 5.57 million residents.  Total dental sales are close to $1.5 billion.

These numbers may reflect some extenuating factors (i.e. many more people seeking care in this market that are not residents, doctors practicing one or two days a week instead of full time, etc.), but when compared against each other, the Greater Atlanta vs. Buckhead comparison is interesting.  While sales per dentist were lower ($410K vs. $338K), the average resident seeking care in Buckhead spent 72% more annually than those in the Greater Atlanta market. 

Also, there are significant barriers to entry in this market.  Many Class A Buildings will not accept a dental user, or will only accept one in the entire building.  While office space is plentiful, this established market can sometimes require flexibility to find a workable solution.

In summary, Buckhead is a market that can afford some significant savings in rent and oversized tenant improvement packages.  At the same time, a dentist must have a plan to outpace competition if they’re going to access these higher paying patients.  Marketing dollars are necessary to startup in this market, but once going, competition is likely in place and not increasing.

If you’ve got interest in this market or another, please contact that author at bcornett@ackermanco.net.

Market Spotlight: Buckhead

In this edition of the Medical Real Estate Newsletter, we’re going to take a hard look at the Buckhead Submarket with a particular view on the saturation of medical services in the market.

Those with some knowledge of the market know that Buckhead is one of the city’s more affluent submarkets.  The entire submarket contains 21,782,679 rentable square feet and it is dominated by smaller financial services firms and there are very few large tenants compared with other markets. 

The last cycle left Buckhead extremely overbuilt with construction of 2 new towers where only 5 had been built in the previous ten years.   Vacancy rates which had modulated at 9-13% in the previous five years shot to 21% as these buildings delivered.  Asking rents which peaked at $28.69/sf, have slipped and landlords are offering extremely attractive packages to long term credit tenants. 

There are nine hundred and fourteen doctors in Buckhead, 105,948 residents in 2009 and total medical sales of $359.9M.  In the Greater Atlanta market as a whole, there are 17,978 doctors and 5.57 million residents.  Total medical sales are close to $7.3 billion.

These numbers may reflect some extenuating factors (i.e. many more people seeking care in this market that are not residents, doctors practicing one or two days a week instead of full time, etc.), but when compared against each other, the Greater Atlanta vs. Buckhead comparison is interesting.  While sales per doctor were lower ($405K vs. $393K), the average resident seeking care in Buckhead spent 205% more annually than those in the Greater Atlanta market. 

Also, there are significant barriers to entry in this market.  Quality physician space often leases at a premium and most specialties are barred from non-medical office product.  Regardless, there are options to achieve maximum visibility in these submarkets without paying a significant premium.

In summary, Buckhead is a market that can afford some significant savings in rent and oversized tenant improvement packages.  At the same time, a dentist must have a plan to outpace competition if they’re going to access these higher paying patients.  Marketing dollars are necessary to startup in this market, but once going, competition is likely in place and not increasing.

 If you’ve got interest in this market or another, please contact that author at bcornett@ackermanco.net

COUNTY SPOTLIGHT: GWINNETT

 

Gwinnett County ruled the region in growth throughout the 1980s and rose to become the fastest growing county in the United States.  As this county shifted from an agrarian to an urban center, the need for healthcare services grew. 

This county was largely in equilibrium throughout the last up cycle.  As new product delivered, it was absorbed by growing demand for medical office space and vacancy levels hovered between 6% and 15% in the ten years preceding the third quarter in 2007. 

But by the fourth quarter of 2007 as the economy became less stable, vacancy in medical office product shot up to over 20% where it has remained through this quarter—topping out at 24% in the third quarter of 2009.  Vacancy can rise this quickly due to one of two events:  an increase in the supply of available medical office space or a decrease in the need for such space driven by medical service providers leaving the market or contracting in size.

In this case, the significant increase in vacancy came as a combination of new delivery to the market that was started in better times but didn’t deliver until late 2007 and a complete drop off in demand for new space by the medical community. 

The over optimism of supply was to be expected, but the drop in demand is the story.  Beginning with the stock market plunge and continuing through the election and healthcare debate, demand for medical office space has shrunk to nearly zero throughout the Greater Atlanta market.  Physicians and hospitals have largely opted to say in short term arrangements and have eschewed growth in their businesses.  We believe this was initially because of the catastrophic drop in personal net worth by physicians (and endowments by hospitals), but eventually because of uncertainty in the healthcare debate. 

As we enter the third quarter of 2010 we expect to see supply remain constant (due to lack of financing and a recuperating developer base in the county) but demand to rise consistently through the second quarter of 2011 and eventually reach equilibrium under 15% by the fourth quarter of 2011.  As demand increases, we expect that incentives (free rent and oversized tenant improvement packages) will be reduced, but that there will be minimal rate growth. 

We’ve seen hints of it already, but an additional Thirty Million insured in this country will likely place hospitals as the big winners in this new era.  We predict that the old lines of genteel competition among hospital systems will come down as hospitals rush to compete for a new 10% of the population that are brought from the worst paying patients up into better than average category. 

Gwinnett County will be ground zero for this increased competition.  Gwinnett has traditionally been dominated by Gwinnett Medical Center, but we are already seeing intrusions by other competing hospital systems providing urgent care, primary care and imaging services.  We also predict a shift from on campus real estate into community nodes that will bring critical services to the consumer.

TAKE TWO TWEETS AND CALL ME IN THE MORNING

Physicians Venture Out into Social Networking with Caution

Dr. Mark Perloe’s website has come a long way since the mid-1990’s.

Back then, www.IVF.com was a simple homemade website more designed to promote Georgia Reproductive Specialists than much else.  As the 90’s came into the 2000’s, Dr. Perloe, Medical Director at GRS, noticed that websites began to make a transition from promotional to informational.

“I saw what did well.  In order for the Internet to work, it wasn’t to promote my story,” Perloe said.  Instead, the better websites were becoming informational.  And so, GRS’s site embraced social networking.

“In order to make informed decisions, the more information a patient can have, particularly in a specialty like ours, the better a couple is able to decide what options they’d consider,” he said. 

Aside from www.IVF.com, GRS has an active Facebook and Twitter accounts and even holds webinars – online video conferences – which gives GRS and Dr. Perloe global exposure.

GRS is one of many practices and individual physicians who have taken to social media, both as a means to share knowledge and information and to promote expertise.  But the move has also opened new potential pitfalls with HIPAA and privacy issues.

In one high profile incident, a Mississippi University Medical Center employee resigned after she Tweeted a message to Governor Haley Barbour that inferred he went for a check up at the medical center the previous weekend.  The employee resigned after her message created a firestorm of accusations that she violated HIPAA laws.

Dr. Thomas Wascher is very aware of privacy concerns when he engages in social media.  Wascher is a physician at the NeuroSpine Center of Wisconsin and operates his own website at www.tomwaschermd.com, a Facebook page, a blog and a Twitter account.

“My goal is to have a very educated patient, so I use social media to publish my outcomes, patient case studies and video,” he said.  But in every case, he gets explicit prior permission.

For Dr. Perloe, the move into social media has been transforming to GRS.  But he does mitigate HIPAA risks, including gaining patient permission for case studies, using “composites” to make a point, and never venturing into diagnosis online, Perloe said.

“You’re not my patient until you come in here and establish a relationship,” he said.

Maureen Uy, the managing partner of Milwakee-based Uy Creative, who handles social media for medical clients, offers these five steps to avoid privacy issues:

1. Focus on Educating Readers versus Self Promotion
2. Get Patient release for any case studies or information you may broadcast, even if the patient is not specifically identified.
3. Defer questions and advice that require diagnosis to in-house medical visits. Do not try to confer with potential patients online.
4. Avoid specifics that could lead to identification.
5. Always monitor responses and posts on all your social media platforms.

WELCOME TO THE METRICS

For Dr. Robert Finkle, it was enough twenty years ago just to hang a sign out on the shingles and expect patients to come through the door.  Back then, the industry was fairly standard.

 “In previous decades, 10% of the dental population went to the lower quality dental clinics. And about 10% went to higher end dentists. So 80% of the dental population went to your solo or group dental practitioner,” Finkle said.

 Today?  Throw that formula out the window, said Finkle, who operates two Atlanta-area dental offices.

 “Demographics have become increasingly important if you’re going to continue to be viable,” he said. 

 And it’s not just demographic profiling. It’s cost/benefit analysis. It’s automated billing and scheduling.  It’s medical procedure coding.  It’s electronic marketing.  The dental industry has revolutionized itself in the past decade relying on metrics to manage practices and create more efficiency.  It’s partly the reason why software to handle these tasks rakes in billions of dollars a year for growing dental practices across the country.

 “Overhead has lately skyrocketed in certain areas. But you can do more with computers now, so where as before you needed more people, now you may chose to use outsourcing and an in-house computer,” Finkle said. “It’s much more computer intensive and less fly-by-the-seat-of-your-pants.”

 But with the integration of metrics technologies also comes the increase of complications and real problems for growing practices that lead some experts to caution their excessive use or immediate reliance.

 ”If the doctor doesn’t know what they’re messing with they’re going to be a real world of [explitive],” quipped Tom Limoli, president of Memphis-based Limoli & Associates, a dental practice consulting firm.

 Limoli said he encounters many cases where dentists rely too much on the software systems in place, and not enough on humans.  And that can easily lead to costly errors, creating financial or legal headaches down the road.

 For instance, in one case, the coding between what the dentist believed and what the software program considered a certain procedure was vastly different by the hundreds of dollars.  And given that the system is automated, the mistake wasn’t discovered until much later – and at a great expense, Limoli said.

 “You have to be careful and make sure you have the appropriate training and appropriate ethics in using the software and using the technology,” he said. “If the staff is not trained properly and ethically, and the doctor is not monitoring what the staff is doing, a doctor can get ripped off by this technology.”

 Still, the ultimate benefits of metrics tracking and software cannot be denied, especially in today’s harsh economic and political climate.

 “This is very much helping the bottom line,” Limoli said. “In today’s economy and over the last 10 -15 years, at a typical dental office with one or two dentists, you’d have three or four people in the front desk. Today you need only one if you put the right systems in place.” 

Graph: Willeford Group Dental Practice Advisors 2010 http://www.thewillefordgroup.com//

Atlanta Industrial Market Still Buckling Under Pressure

Atlanta’s industrial market continues to buckle under the strains of the recession as landlords lose further ground during the first quarter of 2010.

Metro Atlanta tallied 1.5 million square feet in negative net absorption, led specifically by the northeast submarket with 1.17 million square feet in negative net absorption – and area that was the hottest industrial submarket during the middle of this decade.

Dismal absorption performance continues to rack up, causing industrial landlords to erase more than 7 million square feet from their rent rolls since the downturn took effect in mid-2008.

With rents pushed down to record low pricing and overall economic activity picking up slightly – although tenuous – companies have been scratching for new deals. There are a number of big box tenants kicking tires, which has led to some large deals in the past few months, including Smuckers’ 556,800-square-foot lease at 1525 Oakley Industrial Blvd in South Atlanta and clothing maker Phillip Van Heusen Corp.’s more than 400,000-square-foot lease at 420 Lee Industrial Blvd. in Douglasville, according to CoStar Group Inc.

The exception seems to be in the city’s industrial core. The I-20/Fulton Industrial submarket pulled in a strong 600,000 square feet in positive absorption for the quarter.

If You Dress Up….

Here’s an experiment.

Go to an upscale retailer wearing jeans and a tee-shirt. Then go the next day in a suit.

On which visit will you receive more attention?

The salesperson at Neiman Marcus pays more attention to the person who looks like a better prospect.  The same goes for companies looking to lease office space.  In today’s economy, companies can achieve rental rates and concessions from landlords not seen in a generation, impacting the bottom line and freeing up capital. 

And the “best dressed” companies get the biggest concessions.

SHOW YOUR HAND

The most important thing you can offer a landlord (or a lender) today is certainty of payment.  The more certain the landlord can be that you can pay your rent, the better deal you’ll recieve.  There are a number of ways this can be accomplished.

The most effective negotiating tool is revealing the company’s audited financial statements for the past three years very early in negotiations. You can also offer references from banks or previous landlords if they are favorable.

For stable companies, locking in a long-term lease is a great way to reap the benefits of today’s soft market for years to come.  In today’s marketplace, a company can see as much as 25% to 35% savings on a ten-year deal.  Inducements can include up to two years of free rent on a 10-year lease, lower annual rate hikes and higher tenant improvement allowances.

Fair warning: The demonstration of good credit should go both ways.  Some companies today discover that landlords are unable to fund all the promises made due to stressed capital arrangements with lenders.  A company’s best bet is to limit its search to office buildings at least half leased, but no more than 80%.  In general, most of these landlords will be hurting and motivated enough to make a deal, but still financially sound enough to hold its end of a bargain.  Companies should avoid landlords who are on life support.  And make sure to get a non-disturbance agreement with the lender in exchange for a 10-year committment.  That way, in the event the lender takes title to the property, it must recognize the lease already in place.

FOR THE LESS-THAN-STELLAR

Short-term leases are another popular solution for tenants who don’t have as much financial strength.  These leases allow a landlord cover expenses while awaiting the market to return to health.

For instance, if a company is willing to lease a space as is — in other words, very little retrofitting on a space, an expense that is typically amortized over the life of a lease, but is a big expense for the landlord in the near-term — a tenant can see rate discounts as much as 40% — perhaps even more.  These deals can be done directly with landlords or, better yet, with subleases from companies who have committed to space that is no longer needed.

Buildings owned by a private investor or a REIT are more able and willing to negotiate.  These owners also typically have the flexibility to make deals quickly.

Hello world!

Welcome to WordPress.com. This is your first post. Edit or delete it and start blogging!