In today’s roiling healthcare market, simply being a skilled practitioner is not enough. A skilled physician with even a modicum of business training will fare much better in the current environment.
A successful practice takes more than quality medical care. With reimbursements decreasing, physicians are facing pay cuts of up to 24%, according to Forbes magazine. Most residents continue to launch their careers without business training — often feeling unconfident in their ability to financially support themselves and their families.
After speaking about the business side of endocrinology at an event for fellows, Elliot G. Levy, MD, FACP, FACE, was approached by numerous young physicians who felt unprepared. He decided to compile the business knowledge gained from more than 30 years of experience and publish it as a book, Private Practice: What You Don’t Learn as a Resident, published by the Endocrine Society.
“They may have discovered that their practices have not been able to provide them with either the professional satisfaction or the income that they expected,” he wrote. In his book, Levy aims to offer timeless tenants of advice that allow providers to thrive, rather than struggle, in their practice.
In private practice, physicians should think of their office as their “home away from home.” As part of a group, a provider may not have full say over the ambiance and operations of the clinic but should seize the opportunity to make certain improvements whenever possible.
The most important factor for an office is its location, according to Levy. It needs to be easily accessible to the population it is intended to serve. For example, if a physician knows that his or her patients frequent a certain hospital for testing or other medical needs, it would be judicious to establish the practice close to that hospital.
Other advantages to pursue include nearby pharmacies, parking options, and public transit. The right spot may seem expensive in some cases but is likely worth the investment.
One must also decide whether to rent or buy. With rental space, no equity is provided, but the practice will have more flexibility in terms of moving if necessary. By purchasing an office, a physician or group may one day profit if the value appreciates but runs the risk of depreciation as well.
“Be a little brave in planning for the future, especially if you can see how rapidly your practice is growing and how you might need to hire other doctors in the future,” Levy advises.
Staffing comes as the next big challenge. How many employees does a practice need?
While numbers will vary under differing circumstances, Levy says to use a general rule of thumb: two – three employees per doctor
He categorizes staff into two groups. The first group handles administrative tasks that do not generate income but are essential to the practice, such as scheduling appointments, communicating with insurance companies, and processing payments. The second group generates income by performing medical tasks such as testing blood samples.
Employees are one of the three major expenses of private practice — in line with rent and insurance — but it makes good sense to have an administrative assistant, who is likely paid about $25 an hour, taking care of office tasks so that the physicians, who perhaps bill $350 an hour, have more time to see patients and generate income.
Most doctors have a murky idea of how billing works at best, according to Levy. “The days of traditional fee-forservice medicine are gone,” he wrote. “All of us, at least now, work for insurance companies, HMOs, Medicare, or Medicaid.”
Because of this, negotiating the best payment schedule possible is crucial at the initial contract stage. Practices that accept the beginning offer by an insurance company with no argument may miss out on potential revenue.
The implementation of electronic health records (EHR), or electronic medical records (EMR), have made it easier to track and submit claims. However, the issues of determining which current procedural technology (CPT) code to use and how much to charge still remain.
Levy recommends attending periodic coding seminars to ensure that the correct CPT codes are selected. But despite such training, assigning costs can be even more confusing than finding the proper CPT.
Recent government data on hospital procedure charges demonstrate this point. In Washington, DC, for example, two hospitals within a couple miles of each other charge wildly different prices for common CPT codes. At George Washington University Hospital, a lower joint replacement costs about $69,000, while the same procedure at Sibley Memorial Hospital costs about $30,000.
Physicians can reference resources such as FairHealthConsumer.org and Medicare statistics to find a baseline of pricing and reimbursements for a wide variety of procedures. This can help determine if they are being compensated fairly for their work.
In medicine, building a strong patient base does not necessarily require paid advertising, but other facets of marketing can have a major influence on success. Firstly, Levy encourages providers to enforce a clear dress code for both their office staffand themselves.
Some practitioners may prefer surgical scrubs while others wear business attire under their lab coat, but, either way, “patients want their doctor to ‘look like a doctor.’” Flashy jewelry or watches can be off-putting, as can rumpled jeans and a t-shirt. The same goes for staff, as patients will also judge a practice by its employees.
Levy recommends updating office and exam room décor as well. Some framed posters on the walls and nice brochures about the practice can make a significant difference. Those that wish to go the extra mile can offer surveys for patients to fill out, which allows the collection of feedback for future application.
Every practice should have a working website and well-designed business cards. The cards become crucial at conferences and for patient referrals. A user-friendly website will allow patients to learn more about the practice when searching for a physician online.
There are still a relatively small number of educational resources for providers that wish to improve the business side of their practice. However, the recent surge in MD/MBA programs indicates that demand for this type of training has become a priority. In the near future, the healthcare industry may very well come to favor these business-savvy physicians.
- Private Practice: What You Don’t Learn as a Resident (The Endocrine Society)
- Small Practice in America: A Series of Videos by the Center for Practice Innovation (American College of Physicians)
- Physician’s Money Digest
- Physician Compensation Models: the Basics, the Pros, and the Cons (New England Journal of Medicine)