By Bartley R. Simeral, Esq.

Published December 1996

Outsourcing

An administrative and service structure can be designed by the group to accomplish transcriptions, billing, coding, collections, accounting, tax, payroll, employee benefits and insurance, all facilitated by the group's management information system. I use the word "accomplish," since in a modern practice setting with a proper computer and software system, all of the above functions can be "outsourced." By outsourced, I mean that the group can contract with one or more service contractors offsite to provide services at a substantial cost savings. Offsite may mean anywhere in the country or the world.

A Typical Equipment Configuration

The physicians in their respective offices will be linked together in a local and wide area network to a central computer file server. A fully installed and warranted file server system should cost approximately $35,000 for the average size practice. This number will vary depending on the bells and whistles requested, the number of remote locations and the pricing in the locality. Servers do cost that much, but I was speaking about "a typical equipment configuration" which is the server with software installed in a dialup and leased line network with LAN and WAN lines. It's difficult to speak in generalities about cost because of the variables. the physicians' office locations with their own equipment, which most modern practices do have, is not included in this pricing.

Equipment failure can be costly to the practice. Most files servers have duplicated, called "mirrored," hard drives, with daily tape back-ups. Contingency plans will be developed to allow direct communication between the physician's offices and outside contractors, including the express mailing of billing records for processing. Since every medical office has computer equipment of some kind, most of the existing hardware will be utilized to create the output end of the network from the physicians to their staff, insurers, their contractors and perhaps eventually via the internet to the patients over their own home computer systems.

Voice and Data Lines

Information will flow from the treating physician to the central computer and out to the service contractors over secure communications lines. Using telephone company and television cable company high speed communication lines when they become available, the distance of the contractors from the group's practice location becomes irrelevant.

These lines are rated at multiples of Kilo (1000) or Mega (1 million) bites per second. Your telephone connection (a voice line) can transmit at 28.8 Kbps, and anyone can lease a Data Service 56 kbps line from any telephone company linking any two points in their system. At a higher cost, a 1.544 Mbps data linkage (T carrier Level 1 or "T-1") can be readily obtained. The higher baud rates allow back and forth, almost instantaneous, transmission of data.

45 Mbps is the lowest transmission rate on the internet backbone, and there are higher multiples which will be utilized depending on the route the packet of bites takes (which, while not random, is variable).

Once the connection is made by the physicians to the much higher transmission rates (45 Mbps and upwards) found on the internet, world wide communication is achievable by any business. The outsourcing, by way of the communication network described here, is not available in the future, it is available now. Because of the very high transmission rates mentioned above, almost all the above outsourced work can be accomplished in the group's central file server by the remote contractors, allowing the group physical control of their own electronic ledgers and databases.

Effect of Regulation

Presently, use of the internet is only regulated by the free speech constraints of the First Amendment and by the right of privacy, considered to be one of our inalienable rights. Present attempts by the federal government in the passage of the Telecommunications Act to censor content, or even by the telephone companies to place tariffs on internet usage, have been blocked. State and federal law does guarantee the right of privacy to patients of their medical records, which can be easily intercepted on the internet as a patient's packet of electronic information passes through the many service points on the way to the intended recipient.

A data transmission line with only the physician's terminal and the service contractor's computer terminal connected represents a secure line. Internet transmission of the same information requires some form of encryption or coding of the information, rendering the patient's record inaccessible. It's interesting to note that, presently, federal law prohibits encryption of data that can not be accessed by the government. Almost anywhere else in the world, true encryption of data is allowed without the possibility of interception. Please also be aware that certain medical information may not be transmitted internationally depending on the laws and regulations of the countries involved.

Insourcing

Not everything the group will do should be accomplished by outside subcontractors at remote distances from the practice location. Essential services requiring personal contact should be "insourced." It is beneficial to control disbursement as closely as possible, so payables can be reconciled and processed at the group's central offices. The registration and verification of insurance coverage for patients, centralized scheduling of appointments, market development, quality assurance, community relations, human relations services including training, administration of regulatory matters, as well as communication with managed care and insurers can be done locally. Again, some of these internal services may be done on a contract basis, but usually on or near the group's premises.

Clinical Practice Efficiencies

The management information system also has clinical applications. The system, once developed by the group, is really an integrated collection of computer applications working together in a "once through" system. "Once through" means that once the data is entered in the computer terminals, it does not have to be reentered, and can be used to build and review a patient's case history upon examination, generate a bill, or automatically compile a report detailing a monthly summary of the outcomes of each physicians treatments, examinations, procedures or consults (the "utilization report"). Some data base computer applications provide an additional clinical system interface to generate complete records of the patient encounter through a hand-held electronic notepad used by the primary care doctor. Similar systems are now available on the market at nominal cost.

The costs of the computer hardware and software, including communications lines, have been constantly decreasing. But, there is a price to be paid by the physician and his staff to qualify on what will become a data base management system. There will be a transition period during which old computer files are converted and new systems mastered. Ultimately, efficient usage of the MIS system will decrease existing costs, provide greater utilization efficiencies and grant the physician more time for his practice and family life. Ultimately, groups that utilize such technology will prevail over practitioners that do not.

Bartley R. Simeral, Esq., practices in State College, Pa.