• Wm MacMillan Rodney and Ricardo G Hahn.
• Department of Family and Community Medicine, Meharry Medical College, Nashville, TN 37208-3599, USA.
• J Am Board Fam Pract. 2002 May 1;15(3):191-200.

BackgroundSome doubt the desirability and cost-effectiveness of continuing to provide an expanded scope of primary care practice. Additionally, there has been concern about declining reimbursement from Medicaid and Medicare. Although an expanded scope of patient care services are required for training, we wanted to determine whether these services drain resources and time from other primary care activities.MethodsTo determine the financial impact of deleting services other than office visits from an urban primary care practice, we tabulated charges, economic case mix, and actual collections during 12 consecutive months. Using regional and national norms, the practice set charges for hospital services, office visits, and procedures at approximately 50th percentile as a maximum. Common diagnostic and therapeutic procedures were tabulated, and gross charges per item per year were tabulated. To validate net collection predictions for a predominately TennCare (Medicaid) practice and compare these with projected net collections from private practice, charges were compared with projected collections using two expectations (40% net and 80% net). Overall collections were projected and then compared with actual collection. For hospital services and office procedures, costs were attributed to equipment, training, liability insurance, and lost opportunity for office visits. The setting was an urban family practice teaching program providing hospital services, hospital deliveries, newborn care, office visits, and a variety of office procedures. There were 30,262 office visits, 510 non-pregnant hospitalizations, 252 deliveries, 1,352 office radiographs, and a variety of common office-based diagnostic and therapeutic procedures, such as electrocardiograms (408), skin surgeries (265), gastrointestinal endoscopies (306), diagnostic obstetric sonograms (525), non-stress tests (95), and colposcopy (161). The main outcome measures were the financial values calculated after subtracting costs for hospitalist services, office visits, and procedures.ResultsAfter lost opportunities for office visits are deducted, hospital services created positive revenue ranging from $167,306 to $340,612, depending on the net collection scenario chosen (ie, worst case versus best case).ConclusionsRevenue was adequate for reimbursement of equipment, staff, and physician time in either case. For procedural activities in the office, there was a net gain of $372,974 in charges once opportunities for lost office visits were deducted. Even within the 40% net collection scenario, revenue was more than adequate to pay for overhead and equipment. For this practice with 84% Medicaid-Medicare accounts, projected collections of 40% underestimated slightly the actual net revenue.

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