Procedural Portfolio planning in plastic surgery, Part 1: Strategic changes in clinical practice to increase physician revenue, improve operative throughput, and maintain patient satisfaction

Purpose: Portfolio planning in health care represents the strategic prioritization of services that permits an organization to better achieve its goals of margin and mission. Because of recent volatility in the economy, declining reimbursement, and rising costs of providing care, such strategic planning has become increasingly important if physicians want to remain leaders in health care. This project assesses the financial impact of procedural portfolio planning on an academic plastic surgery practice from the physician's perspective. Methods:We tracked the top 50 procedures, defined as total charges per CPT code, that were performed in our baseline year, for 6 providers in a stable plastic surgery practice. At the end of the first year, we implemented 3 types of strategic changes: growth of areas with high contribution margin (laser resurfacing of burn scars), curtailment of high-risk procedures with negative contributionmargin (panniculectomy in smokers), and improved efficiency of mission-critical services with high resource consumption (free-flap breast reconstruction). During the 2-year study period, we had no turnover in faculty, did not pursue any formal marketing, did not change our surgical fees or billing system, provided care independent of payer mix, and maintained our commitment to indigent care. Outcome measures included procedural charges and revenue, collection rates, work relative value units, operating room times, idle times (room time less case time), receipts/minute in operating room, uncompensated charity care, and patient satisfaction (Press-Gainey scores). Before the study period, annual incremental growth in our practice was 1% to 2%, in terms of charges and receipts. Results: After implementation of the portfolio planning project, the financial position of our division improved significantly, with patient satisfaction rates increasing from 85.5% to 94.1% and charity care remaining constant at US $400,000 per year. Encounters, work relative value units, charges, and receipts all increased by 16% to 27%, with receipts/minute increasing from US $5.60 per minute to US $7.28 per minute. Interestingly, but not surprisingly, highest margin cases did not correspond with highest volume or highest revenue cases; portfolio analysis helped us to align these parameters, without sacrificing patient satisfaction or commitment to indigent care. The highest receipt/minute procedure was laser ablation of vascular lesions (US $23.87), whereas one of the lowest receipt/minute cases was muscle free flap (US $3.07). Conclusions: Procedural portfolio analysis is a powerful tool that can guide strategy and positively impact the financial position and clinical value of the services provided by an academic plastic surgery practice. Identifying high margin procedures allows the surgeon to focus marketing efforts, target areas of future growth, and optimize the blend of margin and mission.