Profitability of a University-Based Clinic Using Benchmark Time Lengths for Clinical Encounters

Reductions in reimbursement are applied to all physicians in a region equally. However, physicians do not practice in equivalent situations. For example, there are few fiscal allowances for academic functions associated with teaching and administration. Furthermore, university-based physicians may practice in clinical venues that cannot be as efficient as nonuniversity sites. Unavoidable inefficiencies may include (1) the costs of maintaining one historical record for a large noncontiguous practice; (2) university-required holiday schedules and sick leave, making university personnel less productive; (3) noncompetitive overhead rates assigned to clinic components by university financial offices; (4) university-based accounting systems that are not designed for effective cost control and the timely generation of useful management information; and (5) poorly managed billing services. Until now, declining reimbursements have generally led to sufficient efficiencies in delivery so that revenues and expenses can be in equilibrium.