Prescription for business Featured

10:06am EDT July 22, 2002

Marchelle Suppan saw the storm of managed care coming in 1988, but she had no idea how severely it would hit. During the next three years, the now-president of Suppan Foot and Ankle Clinic watched gross revenues plummet 40 percent even though the number of patients remained constant, about 7,000 annually. And she watched cash flow near a crisis as receivables doubled.

The doctors who manage the three-office Suppan practice in Summit, Stark and Wayne counties always believed they provided good medical care. Suddenly, that wasn't enough anymore. They had to start acting smart in business too. Recently the Suppans wrote their first business plan.

"It used to be that the doctor-patient relationship was sacred, and it was just the patient and the doctor," says Jason Suppan, one of six physicians in the practice. "Today, instead of two people in that relationship, there are three-you, the doctor and the insurance company.

"It definitely has forced us to work harder for less money."

Marchelle Suppan, who succeeded her father, Raymond Suppan, as president in 1997, says the last 10 years have been the most difficult in the history of the 44-year-old practice.

"Doctors offices always thought of themselves as a profession," she says. "They were looking for better ways to treat people and focused on continuing education.

"Yes, we do have lifelong learning, but it's going to have to be in business as well. Doctors have had to develop the same practices as other businesses, like total quality and outcomes justification. And we have to work cheaper and faster."

The result: Scores of specialists in Ohio, including podiatrists, have closed business. The number of podiatrists national dropped slightly from 1988 to 1993, though exact figures from the American Podiatric Medical Association weren't available. Today there are 1,070 licensed podiatrists in Ohio.

Locally, two struggling podiatry practices closed last year. The Suppans purchased the client list and equipment of one and is in negotiations with the other.

Marchelle says the partners realized about a decade ago they had two choices: "Either downsize and reduce costs or else hit the gas. We chose to hit the gas."

Expand or else

Raymond Suppan opened his practice in Barberton in 1954. He left that practice and opened his Orrville office in 1968. That might have been enough if not for managed care, which demanded more volume to absorb fixed overhead costs such as a new computer system to allow bills to be filed electronically.

The company's Jackson Township office opened in 1993. Last year, the company expanded to Fairlawn. Today the practice employs 20, six of them podiatrists. The principals are siblings Marchelle, who owns 52 percent, and Jason and Ray, who each owns 24 percent. Founder Raymond Suppan, 67, works part-time since Marchelle has became president. George Kemper, the Suppans' cousin, and Steven Rusher supplement the managing physicians.

The Suppans have employed a number of tactics to become a better business. Among them:

Developing new profit centers

Building the business demanded more than just stealing patients from competitors. The Suppans, for example, last year launched a home-health service marketed in part through home-health nursing services. Home-bound patients might receive general checkups from a nurse, but they're generally not having their feet cared for by a specialist. Problems range from clogged arteries to conditions related to diabetes.

The Suppans' home service treated fewer than 10 patients a month at first; today that number is 250. After the first visit, insurance companies allow the practice to bill home visits just like office visits. Because the offices are still filled with traditional patients, the per-patient overhead costs are reduced.

Jason says 95 percent of the patients were not seeing a podiatrist previously, so the Suppans are tapping a new customer base. "There's such a profound need for it," he says. "When word got out, it just took off."

The practice makes the home visits cost-effective through software that groups patients together by zip code. Today, 60 percent of overall revenues results from traditional patient care; 20 percent comes from home health. The remaining 20 percent is from the Orrville-based orthotics lab, which supplies services for the three Suppan clinics and a variety of other regional practices.

Overhauling the approach to billing

The Suppans spent $60,000 on a software and information system from Canton-based GBS Computer & Communication Systems. The system went live in September 1997.

Doctors' offices are known for inefficient billing. So much time is wasted-and receivables are delayed-when offices bill with the wrong code or outdated insurance information.

So the Suppans converted three office workers into billing specialists through seminars on coding and insurance nuances. The employees today have expertise in Medicare, Medicaid, HMOs and workers' compensation.

The clinic also developed new systems for maintaining updated insurance information and for working with patients on payments.

"I don't think doctors want to think of their patients as customers, but you have to," Jason says. "We're not just serving their medical needs. We're also looking after their ability to pay. It's a whole package."

The average invoice used to be paid in 60 days. By 1996, that jumped to 105 days. In the last year, it's been reduced to 75 days.

Another reason for the improvement includes the hiring of a claims worker who spends all day calling insurance companies in search of specific payments.

Marchelle says the practice has tried to take the burden of insurance bureaucracy away from the patients. Many doctors' offices post signs at the desk saying the bill is ultimately the responsibility of the patient. The Suppans believe that's the wrong approach.

"We have to help them and make dealing with the insurance easier," Marchelle says. "If you don't do it for patients and somebody else will, then you'll lose them."

Realize you have to market like any business

Doctors traditionally listed their practices in the Yellow Pages and didn't really do any marketing. "Not only did most not bother, but advertising used to be frowned on," Jason says.

The Suppans realized that had to change. "When people need a foot doctor, they don't look in the Yellow Pages anyway, they look in their [insurance] provider book," Jason notes.

Suppan Foot and Ankle Clinic tries to get in front of prospective patients in part through company health fairs. If the Suppans hear of an upcoming health fair, they'll ask if they can have a booth to talk about foot health. The Suppans also have sponsored repetitive-injury seminars for corporations, including several Fortune 500 companies. "That generated a lot of referrals," Marchelle says.

Marchelle says all of their tactics have definitely made them a stronger business, but she hopes the pressures stemming from managed care will start easing slightly. Many would agree that managed care changed the climate much too fast. "One of the things I'm banking on as an entrepreneur is the pendulum swinging back a little bit."

Despite the Suppans' new philosophy toward being not just doctors but also businesspeople, Jason says they still wrestle with beliefs that are ingrained. "I have a commitment to healing ... If you think of them as customers, you're going to hate them. If you think of them as patients, that's what keeps you going."