Pegasus Knowledge Center

How to Insulate your Practice from the Rapidly Changing Healthcare Environment
Author: Paul Parmar, CEO of Pegasus Blue Star Fund,
A Healthcare focused Private Equity Fund.

Recently we were discussing process optimization with a Radiologist and after a few minutes of discussions he expressed his frustration. "When I was in school, I never even thought about being a businessman, I wanted to be a radiologist and diagnose patient problems by studying their x-rays." He went on to say that it wasn't until he had to deal with all the billing challenges, governmental regulations, and staff related issues that he realized he was a businessman whether he wanted to be one or not.

Managing a medical practice today is far more complex than most other small businesses, and the pace of change in the healthcare industry is only increasing. Medical Practice Managers are searching for some way to insulate their practice from the business related changes occurring in the industry, so they can focus on the medical changes that are occurring.

Figure 1. Internal and External Pressures on Medical Practices:

Many practices today have taken the first step to insulate their business against the internal and external pressures that are buffeting them; they have outsourced their billing operations to Revenue Cycle Management (RCM) Companies. These RCM companies can help shield the practice from some of the impacts of the staff training issues, and some of the impacts from the Public and Private Payers, but in general they are only a partial solution and there is still a great deal of externally generated turmoil that the healthcare professionals have to deal with.

As the CEO of Pegasus Blue Star Fund, a private equity fund specializing in Healthcare Services Investments, I have over 20 years of experience investing and managing Healthcare Services companies in the areas of Cancer treatment centers, Surgery centers, Practice management, Medical Group Purchasing Organizations, EHR, Medical Revenue Cycle Management, Patient Portal, Claims Optimization, Claims Authorization, Patient collections, Bad debt collections etc. In the last 2 years I have seen the industry begin to craft the ultimate solution by the most innovative players in the healthcare support field. One of my Healthcare Holdings, Constellation Healthcare Technologies (CHT) is well on the way to delivering the ultimate solution to insulate the medical practice from the hurricane force winds of change that are blowing through the industry today. I started my career in business as the owner of an IT based management consulting practice that provided services comparable to the then "big six" consulting firms. I am now applying my experiences coaching and guiding Fortune 500 executives in global process and technology optimization initiatives to the development of a holistic, integrated and fully automated solution for the healthcare practice of the 21st century. The major components of the CHT solution will change as technology and business requirements are refined, however there is already a list of industry needs that must be accommodated by support service providers if they are going to be able to perform the task of truly insulating their client's practice from the industry changes.

The optimal Practice Management (PM) Partner in the 21st century will be required to provide a broad range of fully integrated services at a price point well below what can be achieved by large practices and hospitals today. The list below is not complete, but it does provide a good conceptual overview of the holistic solution required.

  • Patient Scheduling, demographics, and pre-authorization,
  • Symptom analysis and diagnostic support,
  • Coordination and scheduling of test procedures and lab analysis,
  • Treatment Planning and Prognostication support from Artificial Intelligence Tools and Databases,
  • Use of Government and Private Knowledge Warehouses to assist with the diagnosis and treatment (e.g. Pharmacies, Centers for disease control, etc.)
  • Electronic storage of patient record storage and retrieval,
  • Voice recognition and automated transcription,
  • Automated coding of procedures based on automated transcription,
  • Automated quality control and coding audit,
  • Automated claims with payers,
  • Automated payments and denials,
  • Comprehensive Security and Compliance Assurance
  • Complete integration of accounts receivable with treasury functions and accounting
  • Complete integration of HR, Payroll, Benefits, Finance, Treasury, Accounting, Taxes, Financial Reporting and Controls, Purchasing and Logistics
  • Electronic Data Interchange with suppliers and partners (Radiology, Labs, Payroll, Billing, etc.)
  • Business Intelligence and Management Reporting

These services must be fully integrated and automated to eliminate redundant data entry and provide on-line drill down reporting of the most granular details of each medical procedure and business activity performed by the practice.

Figure 2. Insulated Medical Practice using PM Partnership model:

Simply put; the solution to insulating your healthcare practice from the forces of change and distraction is to create a partnership with a full service healthcare practice support provider, like Constellation Healthcare Technologies. The model above was created by CHT to help explain how a partnership of this nature eliminates the unwanted distractions, improves overall operational efficiency, and maximizes profitability and patient care quality.

I spoke to Joe Seale, President of Orion HealthCorp, the fifth largest RCM Company in the US today, about how Orion was responding to the new demands by their clients and he quickly confirmed what we have been hearing from other players in the RCM space. Mr. Seale explained that during the past several months they have been making large capital investments in Business Intelligence Tools, expanding their Practice Management offerings, enhancing the offerings of their Group Purchasing Organization, and developing generic integration tools to allow seamless integration with industry leading EHR systems. Mr. Seale was adamant that Orion would be working to provide relief from the downward pressures on reimbursements and the upward pressure of costs that all of their clients are experiencing. He indicated that recently they were finding an increased interest in more holistic and integrated services which are now being provided by Orion and not by the smaller RCM companies currently servicing these practices all around the country.

I believe that increasing numbers of healthcare practices will turn to the largest RCM providers in the country to help them maintain and improve their bottom lines by outsourcing their high cost processes to professional organizations that have optimized and automated these processes so they can deliver higher quality results at a lower cost than the practices can achieve on their own.

Paul Parmar is a thought leader in the Private Equity Space. His primary focus is on transforming industries by creating new business models and optimizing the key business processes in each business and leveraging the appropriate technologies. Although he has successfully owned and managed businesses in several industries (the Healthcare, Private jet industry, the media and entertainment, and Real Estate development) his passion is clearly in the healthcare industry. His Healthcare investments are in the areas of Cancer Centers, Free Standing Surgery Centers, EMR, Patient Portal, Practice Management, RCM Services, RCM software, and GPO's for Physicians. Most recently he has turned his sights on dramatically reducing the cost of healthcare by investing in medical practice management. Mr. Parmar's most recent investments in healthcare are focused on optimizing the business practices, improving the financial transparency and lowering the cost of operations for hospitals and large medical practices.

Pegasus Blue Star Fund is a private equity fund specializing in Healthcare Services Investments, with 20+ years of experience of investing and managing Healthcare Services companies in the areas of Cancer treatment centers, Surgery centers, Practice management, Medical Group Purchasing Organizations, EHR, Medical Revenue Cycle Management, Patient Portal, Claims Optimization, Claims Authorization, Patient collections, Bad debt collections etc.