What is Medical Practice Management?

Posted by: Alok Prasad

Schedule Free Demo & Consultation

What is Practice Management?


Medical Practice management is the process of coordination and administration of tasks that are an integral part of managing the finance and administration of a doctor's office or an office of a medical professional. It comprises of :

  1. Financial management
  2. Patient Management
  3. Human Resource Management
  4. Information technology and medical practice management systems
  5. Compliance, quality control and risk management
  6. Business Operations Management

    Practice Management

Change occurs in every industry, and healthcare is no exception. New technologies, trends, regulations, and research continually shape the industry. The implementation more than a decade ago of the Affordable Care Act and the move from fee-for-service to value-based care have impacted patient care and the way physician practices operate.

Although doctors have administrative tasks in addition to their focus on patient care, it’s almost impossible for them to manage their practice without assistance. That’s where practice management comes in.

According to the American Academy of Professional Coders (AAPC), the role of a practice manager is to manage all aspects of a medical practice, including financials, human resources, information technology, compliance, marketing, and operations. Their goal is to enhance patient care, ensure day-to-day operations of the practice run smoothly, and alleviate administrative burden on the physician(s).

1. Role of a Practice Manager in Financial Management of a Practice?

The key component to running a successful physician practice is proficient financial management. Even if a clinician provides excellent care to his or her patients, the practice isn’t going to be sustainable without the necessary revenue.

Myriad facets are necessary to achieve and maintain streamlined financial operations, and many of them fall into the category of revenue cycle management (RCM).

RCM is defined as all administrative, financial, and clinical functions that contribute to the capture, billing, collection, and management of patient service revenue.” Some of these functions include:

  • Monitoring key financial and performance indicators (KPIs)
  • Enhancing front-office processes (patient eligibility, authorization, and check-in)
  • Analyzing medical billing and collections
  • Overseeing practice reimbursement initiatives
  • Planning and budgeting to improve revenue and reduce costs
  • Conducting coding, accounts receivable (A/R) closeout and other end-of-month functions
  • Managing denials
  • Producing and analyzing various financial reports
  • Benchmarking to evaluate practice performance and comparing it to competitors
  • Monitoring industry trends, expenses and productivity
  • Negotiating resource allocation
  • Handling payer contract management and negotiation
  • Keeping provider credentials updated with payers
  • Keeping up-to-date on government payment regulations
  • Designing and monitoring systems of checks and balances and internal controls to safeguard practice assets
  • Conducting regular coding audits
  • Performing billing audits at a pre-determined frequency

One metric many practice managers utilize to accomplish these functions is relative value units (RVUs). Through a cost analysis based on RVUs, physician practices are able to establish productivity-based compensation, evaluate and renegotiate payer contracts, evaluate procedures and services, and set practice fees.

Two key functions that should be included in financial management of a practice are medical billing and coding audits. By auditing and analyzing past results of your practice, you achieve an in-depth review of your practice’s performance and identify what improvements might be needed for optimal efficiency.

References on Financial Resource Management

  • Financial management toolkit from The American College of Physicians (ACP) to help you monitor key financial indicators within your practice
  • A series of online education modules is provided by the American Academy of Family Physicians (AAFP) to assist you in understanding the key metrics for financial success in your practice
  • Top tangible and intangible benefits of Implementing a practice management system that can be achieved by practices of all sizes

2. Role of a Practice Manager in Patient Management

Focusing on patient care should be the goal of every physician. As noted by MGMA, patient-centered care refers to the ability to create an environment and develop processes that support the best possible patient encounters. A practice manager can assist in that endeavor by performing care coordination, striving to ensure patient safety, and optimizing office workflow to promote patient satisfaction.

Patient satisfaction can be increased through patient engagement because those who are fully engaged in their care are more likely to maintain treatment plans, track their health and ask their providers questions. Technologies such as patient portals, automated appointment reminder systems, check-in applications, telehealth, digital payment options, and data analytics have been found to have profound impacts on both patient engagement and practice workflow.

Another role of a practice manager in patient management is supporting and overseeing quality initiatives and measurement activities. There are three types of quality measures in healthcare: structural, process, and outcome. One such measure is the Institute for Healthcare Improvement (IHI) Triple Aim of healthcare, which is designed to improve the patient experience of care and the health of populations and reduce the per capita cost of healthcare.

References on Patient Management

  • Learn the basics of patient safety and its effect on the quality of healthcare
  • Patient engagement and strategies to enhance patient engagement
  • Patient Cycle Tool to measure office visit cycle time

3. Role of a Practice Manager in Human Resource Management

It takes a skilled team of physicians, nurses and support staff to run a successful practice. Most functions of the office that center on these employees are the job of a practice manager. However, human resource management is not solely about recruiting, hiring, retaining, and dismissing staff members. It’s about handling the scheduling, processing payroll, conducting clinical and administrative training, developing personnel policies and procedures, performing staff evaluations, and more.

Developing and administering compensation and benefits programs for practice employees is essential in human resource management. Processing payroll is just one part of this process. A practice manager has to have knowledge of different physician compensation models, ensure compliance with federal, state, and local employment laws and regulations, and which benefits best assist in recruiting and retaining staff members.

Before hiring a new physician, a practice manager must perform medical credentialing. Also referred to as provider or physician credentialing, it’s an extensive process that examines and reviews a provider's qualifications and career experience and is required to be completed before he or she is hired. Areas covered during medical credentialing include education, certification, training, and licensing.

According to the American College of Medical Practice Executives (ACMPE) Guide to the Body of Knowledge for Medical Practice Management, additional human resource management skills are:

  • Developing human resource measurement/monitoring systems
  • Explaining pros and cons of different models of compensation and getting physician buy-in
  • Giving/receiving feedback to improve individual and organizational performance
  • Analyzing cost/benefit tradeoffs of HR practices and the financial impacts on the practice
  • Negotiating employee relations matters fairly to prevent labor disagreements and to ensure the safety of practice personnel
  • Tolerating and understanding the stress, criticism, and conflict related to HR matters, including disciplinary issues
  • Identifying core competencies and job responsibilities specific to medical services and creating clear job descriptions
  • Designing recruitment/selection processes to ensure new personnel match practice position needs and staffing/strategic plans
  • Understanding the basis for physician behavior and dealing with it effectively
  • Monitoring and updating HR practice’s pay policies with today’s dynamic and diverse labor/industry trends and medical practice goals

References on Human Resource Management

  • Human Resources Management 101 for Physician Practice Owners
  • Selection and employment contracting processes including physician employment contracts, income distribution and partner buy-ins, and effective personnel evaluation
  • Common human resource challenges and solutions for physician practices

4. Information Technology and Medical Practice Software Management

Utilizing technology in healthcare can reduce costs by automating administrative tasks for more efficient use of physicians’ time, lowering staffing costs by using scheduling apps, reaching more new patients with targeted digital marketing, improving claims processing and collections, and optimizing the supply chain for value-based care. Most of these solutions are designed to help physician practices streamline workflow, reduce administrative burden, and improve patient care.

Practice management objectives in information technology (IT) are to:

  • Develop a technology plan, policy, and budget that support the needs and goals of the medical group practice
  • Illustrate a technology disaster management plan in accordance with HIPAA that safeguards office and patient records, establishes a data backup and recovery plan, determines key personnel and responsibilities, and identifies a process of validation and testing
  • Manage information integrity, including release and storage of information, security, and confidentiality according to HIPAA

Managing IT in a physician office entails assessing the need for and selecting medical practice software and other solutions that securely integrate clinicals and financials, offer comprehensive reporting features, include broad vendor support, promote adherence to compliance regulations, and streamline revenue cycle functions. It also consists of planning and conducting employee training on technologies used in the practice and ensuring staff members know how to optimize the capabilities.

One of the primary technologies used in physician practices is an electronic health record (EHR) system. A well-designed EHR should be customizable for your practice’s specific needs and automate time-consuming administrative tasks, allowing you to focus more attention on patient engagement and experiences. It also must provide secure, real-time access to patient health information at any time and from any location.

References on Technology-focused Practice Management

  • Free e-book on cloud-based EHRs covers data security advantages associated with cloud computing, how to control costs via a cloud-based information technology platform, and more
  • Successful adoption strategies to promote higher quality, lower cost and increased patient and clinician satisfaction.
  • Free guide on how to successfully implement EHR software

5. Compliance and Risk Management

Following the numerous guidelines of HIPAA, MACRA, OSHA, the Stark Law, CMS, and the HHS Office of Inspector General, and others is part of the responsibilities of a practice manager. They’re also tasked with establishing and monitoring quality standards, ensuring highest levels of data encryption, mitigating all possible emergency situations, and addressing potential legal issues all while ensuring compliance with state and federal regulations.

Practice managers and the physician(s) for whom they work can avoid significant personal and entity liability by:

  • Using corporations to provide limited liability for acts of employees and for employee causes of action against employers, where individual owners are not directly involved
  • Employing a competent manager, providing him or her with the necessary employment law materials and continuing education, consulting with experts, and relying upon the manager to make all major employment-related decisions and to recommend all actions to be taken by the corporation
  • Periodically submitting office procedures for review by certified public accountants to root out any instances of embezzlement and employee dishonesty and to ensure use of proper billing and collection methods
  • Encouraging periodic updating of employee manuals and good interaction between the manager and employment law specialists
  • Encouraging the manager to resolve problems before they occur

Risk management also is essential to sustain a financially-secure physician practice. The skills of a practice manager in mitigating risk include continually assessing potential medical practice risks to prevent malpractice suits, loss control issues, and government claims of abuse; communicating consistently to medical practice staff via most appropriate media the commitment to minimize risk and maximize compliance to ensure high-quality patient care; investigating all claims against the practice and its physicians and staff to ensure patients and staff are treated correctly; and negotiating contracts (including capitation agreements) with payors, contractors, vendors, and other outside resources to eliminate risks for the practice.

References on Risk Management

  • HIPAA Security Risk Assessment Tool to help healthcare providers conduct a security risk assessment as required by the HIPAA Security Rule and the Centers for Medicare and Medicaid Service (CMS) Electronic Health Record (EHR) Incentive Program
  • Tips for making your small practice HIPAA-compliant
  • Risk management tips for medical practices

6. Operations Management

In addition to managing the daily operations of a physician practice, developing and administering policies and procedures to establish office standards and ensuring quality customer services encompass only part of a practice manager’s role. Operations management objectives also encompass implementation of an effective business plan; process improvement; purchasing and asset management; identification of outsourced business services and external expertise; communications, marketing, and community relations; and creation of physician conduct and performance expectations.

Key business and clinical operations skills a practice manager should utilize are:

  • Using project management techniques to plot and improve the practice’s business and clinical operations
  • Visualizing and stating desired operational outcomes, checking progress through quality indicators, aligning with mission
  • Involving physicians in strategic/operational planning, facilities design, and clinical pathway mapping to meet their needs and benefit the entire organization
  • Using financial budgeting/accounting/forecasting models to obtain relevant benchmarking information for process improvement
  • Using satisfaction survey techniques to identify expectations of physicians, payors, patients
  • Designing space/facilities to maximize physician/staff space and time

References on Operations Management

  • Five Steps for Elevating Medical Practice Operations
  • Four strategies that unlock healthcare performance management constraints
  • Medical Practice Operations: What Kills Efficiency


New Call-to-action

Topics: EHR Software, Provider/Physician, Consultant

    Why RevenueXL

    Streamline Your Small Practice With Customized Solutions

    EHR Software, Practice Management, Telemedicine, Patient Engagement, Credentialing, Medical Billing Services, Denial Management, Coding Compliance and Audit

    All-in-One EHR Software - Tired of Your EHR Software?

    Related Posts

    Benefits of Telehealth and Telemedicine

    Big Impact of Technology on Healthcare Industry Symbolized by Telemedicine Rapid advances in technology have created more convenience and efficiency...

    Read More

    Advantages of EHR (Electronic Health Records) Software

    Who Benefits From Implementation of Electronic Health Records? What are these Benefits? The word is out -- ambulatory practices continue to reap EHR...

    Read More

    MIPS | What is MIPS ? | RevenueXL

    What is MIPS? Medicare reform—specifically the Merit-Based Incentive Payment System (MIPS) and Alternative Payment Models (APM)—is the number one...

    Read More

    Ready to Transform Your Practice?

    PrognoCIS EHR Software - Award-Winning Patient Records Learn how it works