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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 academic medical centers want to remain leaders in health care. This project assesses the financial impact of procedural portfolio planning on an academic plastic surgery practice.
METHODS:
We tracked the top 50 procedures, defined as total charges per CPT code, that were performed from FY09 through FY10, for the 6 providers in a stable plastic surgery practice. At the end of FY09, we implemented 3 types of strategic changes: growth of areas with high contribution margin (laser ablation), curtailment of high-risk procedures with negative contribution margin (panniculectomy), and improved efficiency of mission-critical services with high resource consumption (free-flap breast reconstruction). During this 2-year 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 RVUs, OR room times, idle times (room time less case time), receipts/minute in OR, uncompensated charity care, and patient satisfaction (Press-Gainey scores). Prior to the study period, incremental growth in our practice was 1% from FY08 to FY09, in terms of charges and receipts.
RESULTS:
After implementation of our procedural portfolio planning project, the financial position of our division improved dramatically, with patient satisfaction rates increasing from 85.5% to 94.1% and charity care remaining constant at $407K/year. Encounters, wRVUs, charges, and receipts all increased by 16-27%, with receipts/minute increasing from $5.60/minute to $7.28/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 ($23.87), whereas one of the lowest receipt/minute cases was muscle free flap ($3.07). Selected procedures are summarized in the table.
CONCLUSION:
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.

Comparison of FY09 (pre-portfolio analysis) and FY10 (post-portfolio implementation)

	Encounters (clinic visits and OR cases)	wRVUs	Charges ($)	Receipts ($)	A/R ($)	Gross collection rate	Room time (mins)/ case	OR idle time (mins)/ case	Receipts ($)/ minute
FY09	15.3K	34.0K	7.18M	2.39M	1.26M	35.9%	200	44.4	5.6
FY10	18.6K	39.4K	8.35M	3.03M	1.41M	36.3%	168	34.6	7.8
variance	22%	16%	16%	27%	12%	1%	-22%	-22%	30%

Selected CPT codes with financial profiles

CPT code	description	Total charges ($)	Total receipts ($)	# of cases	Charge ($)/ unit	Revenue ($)/ unit	Allowable ($)	Room time (mins)	Revenue ($)/ minute
15100	split-thickness skin graft	121K	43K	79	1534	543	1314	125	4.34
14300	adjacent tissue rearrangement	173K	48K	59	2925	807	1454	54	14.94
17107	laser ablation of vascular lesion	106K	39K	85	1250	453	766	19	23.87
15756	muscle free flap	94K	19K	15	6274	1267	3233	413	3.07
19350	nipple areolar reconstruction	119K	62K	49	2428	1259	1202	98	12.85
19357	breast reconstruction with tissue expander	379K	196K	95	3986	2059	2192	157	13.12
42200	cleft palate repair	106K	36K	41	2596	877	1218	180	4.87