STARTING YOUR PRACTICE.... WHAT YOU REALLY NEED TO KNOW
By Lisa M. Kerns, CMPE
Whether beginning your practice straight from residency or branching out later on your own be advised that careful strategic planning and the development of a sound business plan are vital for the early success of your practice. It is a proven fact that successful businesses, executives and athletes alike have set objectives for reaching their chosen goals. Thus, a well-defined strategic business plan must be devised as the catalyst for your journey. The business plan will not only serve as an instrument to guide and direct you but is also a required element for the financing of your practice.
Your business plan should encompass all areas of the business such as the mission statement, break-even analysis, market analysis, competitive comparison, industry analysis, budgeting, forecasting, and short and long term planning. Financing of your business is dependent upon a detailed and comprehensive plan. Financial institutions base most of their lending decisions (including lending amount) upon the business plan. Therefore the more detailed and comprehensive the plan the more likely you are to obtain requested funds.
In addition to the business plan, you must obtain the business name, articles of incorporation, an initial annual report of corporation, and an employer or tax identification number. Incorporating a professional association normally requires an attorney to review and initiate the articles of incorporation and annual report. The search to confirm the availability of the chosen business name is also required. The business name search can be conducted through the Secretary of State office in the state of incorporation. Many states provide Internet access for the business name search. This is an easy procedure and can be utilized by anyone. Obtaining a tax identification number is as simple as contacting the IRS by telephone and placing your request. The IRS agent will go through a series of questions about your business and the tax identification number is assigned. After selection of a business name, an attorney, completed articles of incorporation, an initial annual report of corporation, assignment of a tax identification number and a well-devised business plan then it's off to the financial institution for funding.
FINDING THE PERFECT LOCATION
A good location is an excellent marketing tool for your practice. If possible, select an area that is experiencing, and is projected to continue experiencing, a growth boom. Take into consideration proximity to hospitals for convenience of the physician and patient alike.
The chamber of commerce is an excellent source of information regarding business information and growth in the community. Given the time factor involved in searching for the perfect location it would be a wise decision to engage the services of an area real estate agent. Contact three or four real estate agencies and talk to several agents advising them of your request. Select an agent with a proven track record, experience in the specified market, and prompt communication response. The real estate agent can provide normal market rental expense (per square foot fee) information and a variety of possible locations.
Be aware also that many hospitals offer office space at fare market value. Since many hospitals are no longer purchasing physician practices there may be opportunity to find the perfect space with very close proximity to the hospital.
PREPARING A STRONG BASE FOR YOUR BUSINESS
After funding is obtained it is now time to put all your plans into action. Devise a fee schedule that is market friendly. Medicare relative values are many times used to determine procedure values. This can be a good point to begin developing the fees for the practice. Many managed care contracts are based upon the Medicare fee schedule. Know your break-even point for a procedure and establish internal guidelines as to what is or is not acceptable for your practice.
Since revenue is the force that drives any business it is imperative to begin contracting with insurance companies immediately. Credentialing and contract negotiations are not only time consuming but also can take up to as long as six months to obtain so start the ball rolling immediately. Medicare should be one of the first payers to be contacted. Medicare provider applications are now available via the Internet. Once the application is received it normally takes at least 30 days for the provider to be given a Unique Provider Identification Number (UPIN) or for change of information to take place. Other national carriers have credentialing requirements that can be even lengthier. Devise a fee schedule of your 75 - 100 most frequently used codes and submit this to each carrier asking for their reimbursement amounts to accompany the contract. Using a spreadsheet format compare your requested fees to those the carrier allows. Compare contracts to one another and choose contracts that favor you financially. If you have reservations about reimbursement for certain codes discuss this with the carrier representative. Many times a higher level of reimbursement is available.
Prepare your checklist:
- Devise your fee schedule
- Request Medicare Unique Physician Identification Number (UPIN)
- Submit Medicare application
- Contact managed care companies, request applications, contracts and fee schedules
- Begin application and credentialing process of selected insurance companies and managed care plans
- Devise a fee schedule spreadsheet to compare reimbursement from plans
- Set timelines for projects
SELECTING THE RIGHT EQUIPMENT
The equipment with which to collect your revenue is the next crucial piece for profitability. There are literally hundreds of companies or services out there offering medical practice financial software packages. Develop a list of specifics that are important to your practice and utilize this as a tool to weed out and assist in decision-making. Once again the spreadsheet format with specific questions provides the most efficient form of review. You may want to use this method to select telephone equipment, medical equipment and other large ticket items.
The business plan will include the budget developed for the practice. Use the budget to stay on track with projections. Keep this in mind when selecting computer systems, telephone systems, medical equipment and when contracting with insurance carriers. Budgeting and projections go hand in hand.
The multitude of medical software packages available can leave even the most experienced scratching their head. Using your spreadsheet "wish list" of abilities for the medical software system begin your selection process. In order to find the right software vendor for your practice try these resources as a starting point:
Telephone equipment selection can also be tricky. Using the same selection criteria format contact the local telephone service for a system quote. Other resources you may want to try include:
- Medical Group Management Association - website offers a variety of information at www.mgmg.com/veh/communications.cfm
- Chamber of commerce - request a list of vendors for telephone and communication services
CONSIDER ALTERNATIVE REVENUE SOURCES
Investigate services and procedures considered for the practice. Develop a pro forma to determine the rate of return on investments. Consider sub-contracting services. Advanced level medical personnel may be too costly but contracting for just the needed services may be a viable option for your new venture. Contact insurance carriers to determine the amount of reimbursement or to determine if the procedure is a covered service.
It can be challenging to develop a lucrative and prospering practice if functioning as a solo practitioner or in a small group. Consider alternative avenues such as an in-house laboratory, in-house diagnostic laboratory, outpatient procedure center or even development of an ambulatory surgery center. Many procedures performed in the office provide significant reimbursement. If immediate resources are not available such as the equipment or the technical employee then consider outsourcing the service. Have the outsource company provide the service in your office. The patient has convenience and the practice has the opportunity to improve revenue through charging the professional component of the procedure rendered. Alternative services to consider:
- Ultrasound services
- EKG services
- Laboratory services
- Gastro-diagnostic procedures
- X-Ray procedures
Prior to performing any of these possible services confirm with the insurance carriers:
- Is the service reimbursable according to the contract
- What is the reimbursement rate
- Is pre-certification required, if so, time required to complete
PLAN AHEAD AND KNOW THE RULES
Every practice is required to comply with CMS (Centers for Medicare and Medicaid Services). Such requirements include HIPAA (privacy and security) compliance and proper documentation and charting for services provided. Good documentation provides an informative medical history for the patient but also protects the physician with regard to Medicare requirements as well as provides an easy mechanism with which to appeal possible insurance denials. Prior to seeing the first patient the practice should decide and devise documentation formats, determine automated, dictated or manual charting and charting methodologies. Either dictated or automated charting is preferable to most carriers.
Education for the physician and supporting staff is recommended before patient treatment begins. Medicare has specific guidelines for many services, particularly consultations and certain procedures. Knowledge is power as well as the key to proper and improved reimbursement. Much information is provide on the Internet by Medicare but educational conferences or an in-service provided by a coding professional (specialty specific) is also recommended. After improving coding knowledge develop a master charge list for the practice which allows not only the listing of services but also the ability to correlate the procedure specifically to the diagnosis. Precise correlation of procedural and diagnosis coding has a direct impact on reimbursement.
BUILDING THE PERFECT TEAM
First contacts provide lasting impressions. Hiring the right person for the job cannot be stressed enough. How do you want your patients to be treated, what kind of presentation is expected of staff, what level of decision making is expected for each position? These questions and more should be well thought out prior to hiring any personnel. The worst business decision in the world is placing a warm body in an open slot. You may provide your patient with the best care available but if they perceive that they have not been treated well then it all may be to no avail. Not only should you hire the right personnel but continued education and positive reinforcement should be provided to keep the practice on the right track.
Think of your practice as a sports team and winning being your goal. Only the objective is providing the patient with the best medical care available. Your consumer, the patient, many times perceives quality medical care with how they are treated by the receptionist, nurse, technician and the doctor. Every employee plays a critical role in how you and your practice are seen by that patient.
Devise your game plan. Determine your practice mission statement and invest in experienced quality staff. Develop a set of questions used for all applicants to determine their mindset and philosophies. Makes sure that their philosophies coincide with the vision of the practice. Remember to compliment your staff for a job well done. A word of praise goes a long way!
DEVELOP KEY RELATIONSHIPS
Use the marketing plan detailed within the business plan to begin establishment of critical relationships in both the medical and business community. Familiarize yourself with the hospital staff and follow up with potential referring providers in the community. While building your practice you may have some spare time between patients so use your down time wisely. Schedule meetings or provide lunch for referral sources, meet with pharmaceutical representative and stock supplies for your new patients and meet with community leaders to learn about the needs of the community. Offer brief and informative seminars to the community. Capitalize on any possible speaking opportunities; this is free advertising for your business! Also remember that practice brochures are another good marketing tool. Use this media to inform and entice potential patients.
YOUR JOURNEY TO SUCCESS
Beginning a medical practice is a very comprehensive and time-consuming project. However if performed properly it can be rewarding and financially profitable in record time. As you can see this process is rather lengthy and requires much attention. Most physicians prefer to contract with a consultant or consulting firm to provide some or all services for them. If you choose someone to assist you make sure to communicate your request clearly, choose someone with practice development experience and have regular meetings to insure your project is on track. Do your homework, understand your needs, devise your plan and begin your journey to success!
Lisa M. Kerns, CMPE is president of Reimbursement Solutions, LLC in upstate South Carolina, providing healthcare consulting and management services to clients nationwide. More than 18 years of hands-on health care management experience and proven techniques allow Reimbursement Solutions, LLC to help clients successfully develop their businesses and reach their goals. Contact Ms. Kerns at lisamkerns@aol.com or 864-414-4200.
