ACMPE Paper, October 2007

Centralizing Operational Functions to Reduce Staffing Expenses

By: Sheila H. Coffee, FACMPE

This case study manuscript is submitted in partial fulfillment of the requirements for
election to Fellow status in the American College of Medical Practice Executives
This manuscript was prepared as part of meeting various recognition criteria as set forth
and may be changed from time to time by the American College of the Medical Practice
Executives (ACMPE). The experiences, thought, ideas and opinions set forth are solely
those of the author.
They do not reflect any position on the part of ACMPE with respect to their
completeness, correctness or accuracy of the papers contents, for example, on points of
law or accountancy in effect at the time of or subsequent to the date of paper completion.

American College of Medical Practice Executives

Case Study Manuscript
May 14, 2007
Resubmit August 3, 2007

Title: Centralizing Operational Functions To Reduce Staffing Expenses

Situation Faced and Need for Corrective Action
The primary care and multi-specialty clinic was composed of surgery, pediatrics,
obstetrics/gynecology, physical medicine & rehabilitation, neurology, internal medicine
and family medicine specialties, which were located in separate office suites. During the
Governing Board and Operation Management Board discussions about relocating the
offices to a new, central location, it was decided that some of the departments should be
merged in order to reduce expenses by sharing scheduling, registration, check-in and
checkout functions. Operating the different departments independently in separate areas
resulted in duplication and unnecessary expense. This expense would continue to grow
unless action was taken.
Alternatives Considered
Since pediatrics and OB/GYN were large departments, they would continue to
operate independently. Surgery, because of its uniqueness, would remain in its own
department as well. There was discussion at the Board level about creating a department
of medicine that would bring together the specialties of family medicine, internal
medicine, physical medicine & rehabilitation and neurology. Since family medicine was
limited to adult medicine, as was internal medicine, it was felt they could merge to form

one department. Since these two remaining practices, physical medicine & rehabilitation
and neurology were relatively small and relied on referral business, it was decided that
this would be a good match with family medicine and internal medicine.
Initially, consideration was given to continue having each specialty occupy a
separate space; however, it was felt that this would increase construction costs and not
allow for sharing of common expenses, such as personnel. The only plus to this choice
was that it would keep the smaller practices from being overwhelmed when merging with
larger ones.
Also considered was allowing each office to stay in their current space. This was
not practical because all of these practices had outgrown their current space. This choice
would also take away the feeling of being one entity operating as a team. One pro to this
option was that the patients would feel more comfortable with the status quo because it
was felt that some of the patients of the smaller practices would resist being part of a
much bigger practice.
The third option was to locate these departments together in order to share
scheduling, registration, check-in and checkout personnel and reduce staff costs.
Decision
After carefully reviewing and weighing the pros and cons in light of the overall
goal to save money by reducing personnel, the Governing Board and Operations
Management Board decided to pursue the third option of locating the departments
together to allow them to achieve staffing reductions and efficiencies by centralizing
front office operations.

Planning and Implementation

The architects met with administration, physicians, CEO and COO often to
discuss plans for the building and obtain approval of drawings. Once construction was
started, the construction manager met frequently with administration to monitor progress
and discuss any issues or concerns. It was decided that family medicine would move in
first so that they could get settled before the larger internal medicine practice moved in.
Internal medicine and the specialties would follow.
Four major issues had to be addressed as the departments came together. These
issues were: management responsibility, staffing levels, phone system centralization and
staff cohesiveness.
Management Responsibility
Initially, there were two administrators for these practices. Each administrator
would continue to manage the employees they were responsible for before the merge. It
would be their responsibility to plan for and oversee all operational functions during and
after the merge.
The CEO, COO and CFO met weekly with the administrators to make plans and
discuss operational and financial issues.
Due to the fact that there were two practice administrators, staff became confused
about to whom they should report. This situation was further complicated because each
administrator managed both front and back office staff.

This resulted in staff

dissatisfaction. To resolve staff concerns, the administrators decided to reorganize their

responsibilities. The decision was made to have one administrator, who was a licensed

practical nurse, manage the clinical staff.

The other administrator had a business

background and would manage front office staff. This seemed to improve staff morale
and made things flow much better. Staff felt that they knew whom they answered to and
liked the fact that the same administrator managed everyone working beside them. Flow
was much better because each administrator was only responsible for one area instead of
two and could focus full attention to that area.
Staffing Levels
Initially, each department brought its current personnel to the new location. Over
time, staff reductions were made due to the ability to use central appointment scheduling,
registration, check-in and checkout. Within one year, staff was reduced by 3 FTEs.
Included in this reduction were one appointment scheduler, one check-in person and one
checkout person.
The decision to reduce each of these positions was made after months of
reviewing these positions and finding that these areas were overstaffed. Deciding which
employees would be laid off was very difficult. It was important to both administrators
that all three of these employees not come from the same practice because it was felt that
would cause employee morale problems. After much discussion, it was decided that the
employees who were substandard in job performance and customer service skills would
be laid off. The employees with the best job performance and customer service skills
were retained. Each employee laid off would receive two weeks severance pay as well as
being paid for all accrued vacation time.
The administrators & CEO met with staff immediately after the lay-offs.
Remaining staff members were quite upset at first. Many were fearful for their jobs.

Friendships had been formed with these laid off employees, making this a very emotional
issue as well. The CEO and administrators reassured remaining staff that there was no
need to be fearful of losing their jobs. It was explained that this was a business decision
that had been very difficult for administrators to make as well. Staff seemed to respond
well to this meeting and things were back to normal very quickly. There was no cycle of
staff turnover from this because remaining staff realized quickly that things would still
flow smoothly and trusted that they were not in danger of losing their jobs.
Phone System
The clinic administrators met with the CEO and clinic phone system administrator
to select a phone system that could be used by the new department. The plan was to be
able to have a system that would allow all phone calls to come through the same
switchboard.
One administrator was assigned to a team that would choose the system. The
team visited other facilities to look at phone systems to assure the best choice was made.
Time was also spent talking to administrators of businesses that used each phone system
being considered.
After all of the information was gathered, the team met several times before a
final decision was made. The team decided on a phone system that would allow all
practices to keep their current phone numbers. All calls would be directed to one phone
tree. The switchboard operator would answer as many calls as possible. Calls not
answered would be directed to a phone tree with menu options the caller could choose
from to be directed to the appropriate area, i.e. nurses, appointments, referrals, etc.

A major factor in the decision on a phone system was the reporting capability.
The system chosen would allow calls to be monitored for call times which would allow
schedules to be made to cover peak call times. Reports from the system would also
provide number of calls received, number of calls answered, length of time to answer
calls and number of calls transferred to voicemail. These reports would be invaluable in
managing the phone system.
Creating Employee Cohesiveness
To improve the cohesiveness of the newly merged employees, a picnic was held
at a local park right before the move. All employees and their families were invited.
Teambuilding exercises were instrumental in making them feel more at ease with each
other. Games and activities were available for their children. The family atmosphere
was also very helpful in making employees feel comfortable with each other. The picnic
proved invaluable because staff became comfortable with each other prior to the merge.
To assist staff in the transition, workstation notebooks were made for each
employee. This would assist them with issues related to merging with different practices.
The appointment schedulers were given instructions in their notebook about length of
appointment types for each practice as well as physician guidelines for appointments.
Insurance personnel would receive coding education for different practices.
Clinical staff would be cross-trained to allow for optimal coverage. This would
also familiarize them with how other practices worked.
Summary of Outcomes and Findings
The move-in seemed to go well. Employees seemed happy with new facility and
seemed to get along well. The transition was smooth due to pre-planning. Bringing staff

together to socialize prior to the merge was invaluable because it reduced the
apprehension of working with strangers. Teambuilding exercises were instrumental in
this process. Also, having staff members bring their families to the picnic proved to be a
great idea. This seemed to really break the ice as their children played together and their
spouses talked to each other.
The phone system that was chosen was less than optimal at first. The switchboard
operator was unable to determine which practice was receiving a call because all calls
were directed to the same phone tree. Central appointment scheduling and triage were
inundated with voicemails. Patients did not like the idea of not always being able to speak
to a live person. Some of them refused to leave voicemails and complained loudly about
the phone system. In hindsight, it seems the phone vendor chosen had not worked with
any medical offices. This prohibited them from understanding how our system needed to
be set up. The front office administrator set up meetings with phone system company
administrators and technicians to work out some of these issues. The changes made as a
result of this meeting resulted in better patient satisfaction with the phone system.
One of the changes made to the phone system was shortening the time a patient
had to wait before being transferred to voicemail. The phone system company also
suggested that we streamline the number of options on the phone tree.

After

implementing these suggestions, the number of patient complaints was greatly reduced.
In fact, patient complaints about the phone system virtually went away. Many patients
stated that the system was much better. Patients liked not having to wait so long to be
sent to voicemail as well as not having as many options to choose from in the phone tree.

Personnel costs were reduced by the ability to use central appointment scheduling,
check-in, checkout and triage. Within one year, staff was reduced by three FTEs. At an
average yearly salary of $27,040 per employee, approximately $81,150 fell directly to the
bottom line. This figure doesnt include the benefits that these employees received, so
the actual savings enjoyed was even greater. Included in this reduction were one
appointment scheduler, one check-in person and one checkout person. As previously
discussed, staff reduction was accomplished through lay-offs. While lay-offs were scary
to both management and staff, it took very little time for things to smooth out. Within
two years, department management was reduced from two FTEs to one FTE because one
administrator was moved to an open management position within the company.
The administrator that was moved was the administrator responsible for the back
office staff.

The decision to move the administrator was made by the CEO and

physicians.

There were multiple factors considered, but it was felt moving this

administrator was best for the practices because the other administrator knew all financial
and practice management systems and had managed clinical staff in the past.
Lessons Learned
Throughout this process, there were some tough lessons learned. The initial setup of the phone system was detrimental. More thought should have been given to
selecting a vendor that had experience with medical practices. Much time was spent on
this selection process and the vendor chosen was unable to help as much with issues
related to a medical practice. The selection committee had no experience with this type
of merge and was limited in knowing all issues that were pertinent.

In this merge, two practice administrators had to be reduced to one due to

financial issues related to paying two administrators. As previously discussed, the CEO
and physicians looked at what was best for the practices. The administrator with the
greatest knowledge of the practice management software system and business practices
was retained. The other administrator was moved to an open position elsewhere in the
clinic. The CEO felt that the move was necessary so that staff would become accustomed
with answering to the remaining supervisor. The CEO and practice administrator also
needed to reduce personnel expenses, especially as related to administrative staff. This
move would result in a big reduction in that area.
Recommendations
For those considering this type of a merge, it would be prudent to meet with
physicians and staff early and often to assure optimal outcome. Care should be taken not
to overlook or de-emphasize important decisions, such as phone system selection.
While this type of process can be intimidating, it can work out well for patients,
physicians and staff. Building plans, staffing plans and all other decisions that are
required can be difficult at best.
Building unity after such a merge can be challenging, but it is vital. It is an
ongoing process. Staffing and morale problems will most certainly come up in any
practice and must be dealt with quickly and appropriately. With good planning and
leadership and good communication, unity can be achieved.

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