Writing prompt: Taking into account all cost for the practice per year (salaries, rent, supplies, etc); number of patients seen per year;
calculate the cost per patient just to keep the Practice even..
How to Start Your Own Medical Practice, One Doctor Tells Her Story
During medical school T.C., M.D.(name abbreviated to protect privacy), never imagined herself in her own practice, “they don’t teach the
business side of things in medical school, I never wanted to be involved with that aspect of medicine,” she says.
Now several years later and after negative experiences as an employee in other people’s practices, she is enjoying life as a solo practice
family physician in Tampa, Florida.
After she completed residency she took a job at a multi-specialty group, it turned out to be a less than desirable situation. Others were
making decisions about her day, “it was all about numbers and as a physician I was disregarded as a person”, says Dr. C.
After taking another job with a flat salary and inflexible hours she decided to turn in her resignation. With four months notice to work
she had time to get funding and figure out how to start her own practice. Dr. C bought a publication from the AAFP on how to start a
practice, this was invaluable and told her everything she needed to know.
Finding Financing and a Location
“The hardest part was finding the location, that was not a quick process” she says. Once a suitable office was found next was securing
set-up financing. Young, with no assets and medical students loans, Dr. C first tried her local banks, then a commercial bank, but she was
declined. Finally, after seeing an ad in a medical journal she called a lending company. In 48 hours she had been given approval for her
loan. Within a week she was given a check to cover her starting costs, and later funds to cover tangibles, such as computers, exam tables,
office supplies and so on. In addition, Dr. C was able to negotiate terms similar to a bank. Lawyers helped her get incorporated and
obtain a business lease.
Finding Computers, Software, Supplies and Equipment
With a loan in place and suitable office found, she needed to find a computer system for her practice. “The computers were another
challenge”, Dr. C says, “just getting them set-up so everything worked took longer than we expected”. Using the Internet and copies of the
“Physicians and Computers” journal she researched different software vendors and selected a system that allows her to run a totally
paperless office. With a computer in every room, including exam rooms, the system works extremely well. Her medical assistant types in the
notes, vitals and reason for the patient visit, and then in the exam room she pulls up the file and is able to add Dr. C’s notes. The
software also allows her to run searches or reports on patients taking a particular drug, or find out when they are due for their next
mammogram. The EKG connects directly with the computer, reads it for her and allows her to edit the reading, and then print or fax it. Dr.
C says that running a paperless office allows her to spend more time with her patients. Using an article describing the things you need
for each room she equipped her practice and added her own personal touches fairly easily. Luckily, the previous tenant left some key
equipment such as examining tables, and the rest she ordered from medical supply companies.
Getting Patients and Insurance
Although she did not have a non-compete clause in her contract with her previous employer she did have a non-solicitation clause, so she
was not able to ask her patients to move with her. But once word was out many loyal patients gladly followed her to her new practice. Even
though she moved practices she kept her credentials with several major insurance companies. Normally the credentialing process with the
health insurance companies can take up to two months. “The hardest part with the insurance companies was getting a fee schedule”, she said
“we called in June, called again and again, then called everyday and finally in September they arrived”. Using the resources of her
regional Family Practice association she was also able to find malpractice insurance at reasonable rates.
Hiring Staff
Hiring staff was also easier than Dr. C first thought, her medical assistant and front desk receptionist from a former employer decided to
join her. Another key person she hired was a good accountant to help with many of the financial issues. Working well as a team she is able
to set the tone of how the office is run and she has much less stress on the job than her previous practice positions. She also made an
arrangement with a colleague for emergency and out-of-town coverage.
Balancing Family and Practice
Dr. C had her son during residency and returning to work after maternity leave she saw her son for only 20 minutes a day. Pregnant with
her second child she looks forward to balancing her family and thriving practice under her terms. Even though she says setting up her own
practice was more work and stress than she imagined she is very happy about it. Dr. C opened her practice doors in September 2000.
Survey: Medical practice managers struggling with operating costs
June 30, 2010 | Chelsey Ledue, Contributing Editor
ENGLEWOOD, CO – Medical practice managers cite “dealing with rising operating costs” as their biggest daily challenge in 2010, according
to a new Medical Group Management Association survey.
For a third year, medical practice professionals sounded off about their biggest daily challenges, as well as their struggles to safeguard
their practices’ financial solvency despite a failing economy, in the MGMA’s 2010 “Medical Practice Today: What Members Have to Say”
survey.
According to the research, the top three challenges of running a group practice are:
1. Dealing with rising operating costs;
2. Managing finances with the uncertainty of Medicare reimbursement rates; and
3. Selecting and implementing a new electronic health record system
“It is not surprising that ‘maintaining finances with the uncertainty of Medicare reimbursement rates’ jumped to the No. 2 spot this year
due to the continued Congressional irresponsibility in not permanently addressing the flawed sustainable growth rate (SGR) formula,” said
William F. Jessee, MD, president and CEO of the MGMA.
Medicare reimbursement rate uncertainty had ranked fifth in both 2008 and 2009.
An organizational governance issue MGMA introduced to the list this year, “managing teamwork and group dynamics among physicians,” debuted
at No. 8. “Implementing a patient-centered medical home model of care” made the biggest leap from last year’s list (from No. 22 to No.
12).
“Practices are clearly balancing the very serious issue of keeping their practices afloat amid unprecedented financial uncertainty with
the more delicate practice management issues such as managing group dynamics and overseeing their organizations’ strategic direction,”
Jessee said. “It’s a testament to the profession of medical practice management that they must find a way to survive and move forward
despite the dynamic and challenging environment in which they practice.”
The MGMA found that when compared with independent medical practices, hospitals and health system respondents were more likely to find
“challenging” these issues:
• Modifying physician compensation methodology;
• Recruiting physicians
• Dealing with rising operating costs; and
• Implementing a patient-centered medical home model of care
However, hospitals and health system respondents were less likely than independent medical practices to be challenged by “maintaining
physician compensation levels” and “negotiating contracts with payers.”
For a second year, the MGMA also asked study participants how the recession is affecting their medical groups and how they are responding.
Respondents indicated that improved billing collections and/or denial management process was at the top of the list.
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This model is based on a 30 patient daily average with a practicing Physician and Physician Assistant in one office that has already been
established.
Continuing cost of Practice:
1. Office rent and utilities/supplies/equipment on a yearly basis: $2,400 internet
+ $1,200 phone
+ $2,400 electric
+ $ 49,500 rent
Total $55,500
2.Insurance on a yearly basis: $ 60,000 Malpractice (Physician Assistant, Physician)
$ 6,000 Health
$9,000 Disablity
$15,000 property
Total $90,000
3. Pay-roll $200,000 Physician pay
$100,000 Physician Assistant
$30,000 Medical Assistant
$ 24,000 Billing/coding
$18,000 front desk
$ 8,000 property tax
Total $380,000
yearly total $545,500
So to break even we would have to charge an average of $30 per patient to break even on a conservative budget.