We hear a lot of discussion about physicians not being able to maintain their independent medical practices because of greatly increased administrative burdens, higher expenses and especially the current trend of lower reimbursements. That same discussion points out that physicians leaving residency will not open new practices, opting instead to join hospital systems.
These discussions, while certainly true to a point, are not entirely what many of the CPAs working with physicians are seeing. It is very much underestimated how physicians value their autonomy and independence, and there is no doubt that it is so much more difficult to maintain or open a new medical practice. So what advice can we give to those independent physicians who want to remain their own boss?
Christopher Davis, CPA
Physicians read nationally published articles that emphasize joining ACOs, IPAs, PHOs and other associations in an effort to band together to enhance business strategies, negotiate better reimbursement rates with insurers and reduce costs through larger purchasing power. While it is not entirely appropriate to include all the benefits and issues of these types of associations in a single discussion, it is appropriate to note a few points about issues that should be reviewed carefully before joining.
1. The degree of financial and contractual commitments. What fees are required to be in the association? What set of criteria/measures must be met as if the physician were an employee?
2. Does the particular association lean heavily toward PCPs or does it favor specialists?
3. What are the financial bonuses/rewards possible for the physician in light of the large amount of quality reporting measures that must be provided?
The direct pay model that is commonly referred to as concierge or personalized medicine has some merit and has worked for some PCPs. Setting the correct fee structure, retaining and recruiting patients, a loyal patient base, and solid reputation in the community are key. Transition can take three to six months and contractual obligations must be addressed. Still the initial results seem to indicate an overall satisfaction by many of the PCPs who have transitioned to a direct pay model.
For most of our independent physician practices, the bottom line is to work smarter, develop ancillary income streams, spend wisely and work with a medical consultant to achieve all of this. Along these lines, here are a few of the more current comments and suggestions being made across the country:
- Some of the more successful practices have 15% to 20% of their revenue coming from ancillary services.
- Schedule patients so that appointments for easily treatable problems occur between already scheduled appointments, as those “fast track” appointments will take only a few minutes.
- The front desk person can make a lifelong patient or a one-time patient. Evaluate that position carefully and train that person well. Cut waiting room time. See if patients can download and complete intake forms. Along this same course, pursue online scheduling to add an extra level of accessibility for both current and new patients.
- Pay careful attention to what patients are saying about you on review sites.
With regard to the practice’s financial metrics, consider the following:
1. Fine tune fiscal operations by monitoring your practice’s monthly financial statements, including a review of the current collections and the balance in accounts receivable, to determine if there are any balances older than 30 days that require attention.
2. Re-evaluate recurring costs to determine if other actions need to be taken. Take time to review the current compensation package for the practice’s staff to ensure the proper incentives are in place for key staff and all-star performers.
3. Evaluate your current structure for income tax purposes with your CPA. Recent changes made to the tax law merit a review of how your practice and other business activities have been set up with the idea being to ensure these are working for you and not against you.
It is certain that the medical industry will continue to rapidly change and evolve. Only time will tell how these new associations will impact our independent physicians. Having the right people in key positions and making business decisions that add value can help in the fight to stay independent.
Christopher Davis, CPA, is a Senior Manager with Sol Schwartz & Associates PC and has been practicing public accounting since 2008. Davis practices in various areas of public accounting including tax compliance and consulting for individual, corporate, S corporation and partnership taxation. He is a member of the firm’s healthcare niche that specializes in identifying and implementing solutions to achieve the goals of the physician clientele we serve. You can contact Davis via email at firstname.lastname@example.org or 210-384-8000, ext. 118.