Start It Up: Operations - Everything in Its Place

July 15, 2008

Opening Day for your new practice is drawing nearer, and all the little details are starting to bear down on you. Relax: The key to a successful opening - and ongoing profitability - is to know which little details are most important.


About This Series
Have you been pondering striking out on your own, making the leap from employed associate to practice owner? Or are you just starting out in practice, and wondering if it’s worth going even deeper into debt to start your own venture rather than getting “a job”?

Whatever your situation, Physicians Practice is here to help with our comprehensive six-part guide to starting a medical practice. In addition to the pre-opening day planning advice you may have seen in other such guides, we’ll delve deeper into the key milestones you’ll need to meet for success long after you cut the ribbon.

The months leading up to opening day are a great time to put in place the process platform upon which your practice will function for many fruitful years. Admittedly, plenty more protocol-setting will happen on the fly, after you’re up and running. “I felt like I was improvising in front of a packed house,” says internist and pediatrician Chrissie Ott of the first few days in her new practice. “It was a cold bath of ‘you don’t know what you’re doing.’”

But it turns out Ott did know what she was doing. After a mere two months had passed, this Portland, Ore., “micropractice” doc was so happy she felt a little guilty. All that attention she paid to simplifying processes - filling two notebooks with task lists - was more than worthwhile. “It’s a lie that [medical practice] has to be as complicated as we presume that it is,” she says. “I am one person, and I have set up a functional practice that is lovely - and it’s fun to practice!”

Consultant Keith Borglum breaks it down: “There are maybe 10 core issues that you have to get right. [Otherwise,] a lot of times the perfect answer is not available, so you have to make adjustments … Sometimes you have to wait for something to come up.”

First up, financials

Here’s a quick list of financial protocols to “get right”:

  • If an electronic filing option is available, use it. To keep accounts receivable in check and cash flowing, file claims as quickly as possible, ideally within one day of an office visit. In fact, do everything you can online - check eligibility, benefits, and deductible balances, as well as obtain precertifications.

  • Maintain a set of form letters that can be customized for the situation or payer to make appeals easier and quicker to file. Regularly check EDI (electronic data interchange) reports with your clearinghouse to identify and address any claim rejection triggers.

  • Review EOBs at least a couple of times a week. Yes, this can feel like a thankless task, but it’s necessary in order to file appeals and go after any secondary insurance in the most expeditious manner possible. “It never stops surprising me that people will focus so much energy complaining about the horrible rates from the managed-care companies, but then never monitor their EOBs to make sure they’re actually being paid the promised rate,” notes Jerrie K. Weith, director of healthcare services for St. Louis consulting firm Anders Minkler & Diehl LLP.

  • Accept electronic payments. “If you can get your payments to post automatically to your practice management system, all the better,” says Weith. Also, help patients pay you consistently with clear time-of-service and collections policies that you and your staff feel comfortable upholding. Fortunately, patients are becoming more accustomed to forking over cash while at the doctor’s office.

You might consider accepting credit and debit cards to provide every possible avenue for patient payments. However, if ultra-low overhead is a priority for you, then you may not want to go that route. “I take cash and check copays only,” says Ott, “so I don’t have to deal with the additional complication and fees that the credit card companies take off the top.” Ott does offer patient payment plans (on a case-by-case basis), but she advises being careful not to overextend your resources.

  • Closely track your performance. “Use a dashboard report or a key indicator report that tracks your results on days in A/R, net collections percentage, and aging,” recommends Weith. “There are dozens of different indicators you can track.” For example, some aging reports you’ll find illuminating show what’s been in your A/R less than 30 days, more than 90 days, and percentage of bad debt.

Beyond the must-know stats above, follow up on “whatever is most important to your practice,” she says. “You may want to track the number of new patients per month or number of days your charges lag.” Ask yourself what barometers will represent success to you, and keep tabs on those areas from the beginning.

Pay attention to your payers


Payer contracts will directly affect your practice’s A/R for years to come, so they warrant extra-special attention. Any room for dickering - and there isn’t much for small practices - will depend on your market. Weith advises that you really need to figure out whether you can afford to drop a particular payer, as “it’s the only leverage you have in some situations,” she laments.

This can be particularly challenging in regions with high managed-care penetration, Weith points out. “Usually you have to actually tender your resignation before you can get the attention of the payer,” she says. “The payers think that everybody threatens to leave but nobody ever does. It’s kind of sad that it’s that adversarial.”

In other parts of the country - and with in-demand, often hospital-based, specialties - the picture isn’t nearly as bleak, so ask others about their experiences before making assumptions about how far you’ll get.


Ott undertook contracting on her own, noting that the process wasn’t excessively painful (although it might have stung more had she felt negotiations were worth pursuing). “You have to be tenacious and determined and have a modicum of savviness with contracts, but not more than that,” she says. “It didn’t take me long to figure out that one insurer’s contract was a lot more stringent and offensive than all the others, and it didn’t take me long to figure out that I didn’t want to do business with them.” Further strategic thought about where she wants her practice to be positioned in the future led Ott not to accept Medicare, either.

Handling your own contracting isn’t a bad idea, provided you’ve got the time. “You’re not going into practice,” says Weith. “You’re going into business and your business is a medical practice. You need to know how that business works. You need to know enough so that you can smell a rat someday.” This is tricky business, to be sure. Consider looking for a consultant who’s willing to offer coaching services to get you started.

Even if you strike out on scoring a fee increase, you may be able to pick up some other concessions, such as contract language changes that could reduce your practice’s administrative burden over the long haul. “Remember, that contract was written with the best interest of the person who wrote it in mind,” counsels Weith. “It really is each person’s responsibility to look at that contract and make sure they understand each section, and pick out anything that’s unacceptable to them and try to get it changed.” If nothing else, the exercise will help you understand what those contracts really mean to your practice.

Key areas to examine:

  • Timely filing - You’ll want at least 90 days.

  • Equal appeals periods - If the payer says it has 12 months to recoup an overpayment, you should have 12 months to appeal an underpayment. At a minimum, try for six months.

  • Termination - After the initial contractual period (usually two years), you should be able to terminate your contract with the payer with a given number of days notice, regardless of where that date falls in relation to your “anniversary date.”

Weith cautions physicians to beware of “silent PPO” language. This means that a managed-care company can rent its network to other payers, obliging you to accept those other payers’ rates. Trigger phrases pointing to this include “leased entities” or anything about leasing the network.

Monitor protocols - and yourself

Too many new-to-practice physicians fail to grant communication with their own employees the importance it merits. For at least the first three months, says Borglum, “You should be having at a minimum a one-hour meeting with the team every week, come hell or high water.

“Have a running list of everything people want to see improved,” suggests Borglum. “For example, not having a pass-through collections system or a recall system, or the scheduling’s bad - you’ll catch these things early if you have a process.” On the other hand, if you don’t have a channel for that communication, you’ll have little hope of knowing there’s even a problem.

Some common difficulties can’t be helped by even the best staff in the world, though, and will require a hard look in the mirror. A prime example: getting behind on your charting. What physician really loves the documentation process? But it has to be done for the sake of reduced liability and maximized reimbursement.

Now’s the time to get the charting process down pat - when your schedule isn’t yet jam-packed. Whether you use the “fourth exam room” concept (type “time on your side” into the Search Articles box at PhysiciansPractice.com to learn more), or structure patient appointments to allow you to complete a note during the visit, the process itself doesn’t matter all that much - just have one, and stick to it.

A little help from friends

Borglum recounts a recent call for help he received from a physician who was complaining about being a month behind in charting - and therefore a month behind in billing. When asked how the problem arose, the physician admitted to simply talking too much. “That may be personally pleasing and satisfying to her,” Borglum says, “but she can’t get the work done.”

A consultant really can’t fix an issue like this for you; only you can make the decision to curtail your gabbiness. Still, gather a support network around you. This will help enormously as you start sorting through both self-assessments and those that need to occur at the practice level. “I’m acquainted with several physicians in the area who act as my personal community,” says Ott. “I might say, ‘Can I compare my privacy policy statement to yours?’ And people have been overwhelmingly generous.”

No matter how well-prepared you are, however, be mentally ready for plenty of unexpected twists. “To be happy in a new practice venture,” says Ott, “there has to be a certain lack of risk avoidance and a little bit of comfort with uncertainty. Maybe more than a little - it’s a leap of faith. People ask me what I’ll do if a certain situation comes up, and I just smile and say, ‘I guess I’ll figure that out when it happens.’ My mantra is ‘all is well.’ I tell myself that every time something new comes up.”

One final word of encouragement from Ott, who says folks are surprised when she tells them things in her practice are flowing so well: “It’s as if I told people I was picking up my automobile and carrying it to work - they think [starting a practice is] Herculean! But it really wasn’t - it was fun and it was a challenge.”

Laurie Hyland Robertson is a senior editor with Physicians Practice. She has been in the medical publishing field for more than 10 years, working editorially on both clinical and business-oriented healthcare topics. She can be reached at LCHRobertson@physicianspractice.com.

This article originally appeared in the July/August 2008 issue of Physicians Practice.