Take time to run your business
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Dear W:
I was very sorry you and your family were not at that conference last month, but was also glad to hear how well things have been going for you. Your new girlfriend, B, sounds wonderful. I guess you didn't need my advice to "Take Time to Relax!" Not to sound like your mom, but be sure not to get too distracted by love to do your studies well. Satisfaction in your work/school progress is intertwined with happiness in your personal life and both affect each other -- for better or worse. I think we all face a lifelong challenge of trying to find the right balance between work and play. This wasn't really what I wanted to talk with you about this month, because you know this concept already and you and B will just have to tinker to find the right balance for yourselves.What I do want to discuss this time is the need to watch your finances. Both personally and professionally as a physician, you will need to "Take Time to Run Your Business."
Running a business has not traditionally been a physician's area of focus, or even interest. In fact, many of us are a little embarrassed by the need to do so, possibly because we feel that medicine is a calling, a profession that in some ways is similar to the clergy and that doesn't belong in the marketplace. We know, though, that even the clergy have to bring home a paycheck and pay their staff, insurance, and electric bills. Medicine is no different. Physicians have also not been trained in business and financial management, so many of us are intimidated by the idea of running a business. Many physicians have therefore become corporate employees by selling their practices to hospitals or management companies, and this may or may not work out well. The relief from management responsibility is usually accompanied by some degree of loss of autonomy. I know some physicians who are very happy with this arrangement, others who have left to try to run their own practices again, and a couple who have bought their practices back from the hospital.
The percentage of physicians in selfowned practices and the percentage of employed physicians vary in rural and urban areas across the country. It is perhaps more obvious why private practitioners need business skills, but even employed physicians need to understand and participate in business to prevent more clinics from failing. In fact, the recent concerns about physicians turning away Medicare patients relate to this. If Medicare payments are not enough to at least cover the physician's expenses, no one will be able to care for more than a few Medicare patients. This will unavoidably become worse as our populace ages and lives longer. Also, insurance companies link their payments to Medicare rates, using a (usually pitiful) multiplier. Practices and hospitals can now easily falter and go bankrupt, so business management is more crucial than ever before.
Business management isn't really that hard to understand; it just takes your attention and some tenacity. For you to get a paycheck, what comes in must be greater than what goes out. (It's the opposite of the principle of weight loss!) Making a profit (paycheck) was previously much easier for medical practices, but now we are in an era of falling collections and rising overhead expenses. W, your mother's parents owned a grocery store in the Southwest and mine owned a ceiling subcontracting business in the Southeast. It helps to grow up listening to supper-table talk about collections, quality of product, and expenses, but everyone knows that is basically how a business works.
The managing partner of your practice must understand business and be committed to spending at least 10 to 15 percent of his or her time on practice management (and be compensated for this). Even more importantly,you must have a smart practice administrator who has strong business acumen and with whom the physicians agree about management of collections, quality of product, and expenses. Like it or not, the "product" is the care you provide to patients. Let's assume your product is excellent, you are a very competent physician who maintains good relationships with your colleagues, you have a kind heart and "bedside manner," and you pursue all problems with consistent diligence. Providing a terrific medical "product" like that used to be sufficient for a medical practice to succeed, but you now have to also watch the collections and expenses.There is a rather alarming-looking ad often seen in the USAirways magazine, Attache, that says: "You don't get what you deserve; you get what you negotiate." That is unfortunately true even in medicine now, so you and your administrator must negotiate well with the managed care organizations (MCOs) for suitable contracts that arrange for payment for that good product. Have confidence that your product is something that they need! Also, negotiate well with your "vendors": your landlord, computer and copy machine companies, office supply store, accountant, lawyer, and cleaning service. Recycle and reuse supplies when possible, then reuse again. (Oh dear, I am my mother's daughter after all!) Consider charging patients small fees for non-covered services like telephone management, completion of forms and letters, etc. (You cannot do this if the service is "covered but denied," but you can if the service is not covered under the patient's policy.) More and more practices are doing this, and more and more patients understand why. The American Medical Association has several helpful books about practice/business management, including Managed Care Contracting: Successful Negotiation Strategies and Smart Practices: Success in a Changing Environment. (Go to www.ama-assn.org.)
W, I want you to know that managing a business is challenging but not really harder than balancing your checkbook. I still use one of those, but you may not remember them; it was a 20th century thing! The principles of good business have not changed since your grandparents opened their store years ago. As a physician today, you must maintain the quality of your "product" but also attend to the collections and expenses of your practice. You must "Take Time to Run Your Business!"
W , I know you and B must be eagerly anticipating your summer break, and I look forward to meeting her soon. Have a great vacation!
Fondly,
Carolyn
I was very sorry you and your family were not at that conference last month, but was also glad to hear how well things have been going for you. Your new girlfriend, B, sounds wonderful. I guess you didn't need my advice to "Take Time to Relax!" Not to sound like your mom, but be sure not to get too distracted by love to do your studies well. Satisfaction in your work/school progress is intertwined with happiness in your personal life and both affect each other -- for better or worse. I think we all face a lifelong challenge of trying to find the right balance between work and play. This wasn't really what I wanted to talk with you about this month, because you know this concept already and you and B will just have to tinker to find the right balance for yourselves.What I do want to discuss this time is the need to watch your finances. Both personally and professionally as a physician, you will need to "Take Time to Run Your Business."
Running a business has not traditionally been a physician's area of focus, or even interest. In fact, many of us are a little embarrassed by the need to do so, possibly because we feel that medicine is a calling, a profession that in some ways is similar to the clergy and that doesn't belong in the marketplace. We know, though, that even the clergy have to bring home a paycheck and pay their staff, insurance, and electric bills. Medicine is no different. Physicians have also not been trained in business and financial management, so many of us are intimidated by the idea of running a business. Many physicians have therefore become corporate employees by selling their practices to hospitals or management companies, and this may or may not work out well. The relief from management responsibility is usually accompanied by some degree of loss of autonomy. I know some physicians who are very happy with this arrangement, others who have left to try to run their own practices again, and a couple who have bought their practices back from the hospital.
The percentage of physicians in selfowned practices and the percentage of employed physicians vary in rural and urban areas across the country. It is perhaps more obvious why private practitioners need business skills, but even employed physicians need to understand and participate in business to prevent more clinics from failing. In fact, the recent concerns about physicians turning away Medicare patients relate to this. If Medicare payments are not enough to at least cover the physician's expenses, no one will be able to care for more than a few Medicare patients. This will unavoidably become worse as our populace ages and lives longer. Also, insurance companies link their payments to Medicare rates, using a (usually pitiful) multiplier. Practices and hospitals can now easily falter and go bankrupt, so business management is more crucial than ever before.
Business management isn't really that hard to understand; it just takes your attention and some tenacity. For you to get a paycheck, what comes in must be greater than what goes out. (It's the opposite of the principle of weight loss!) Making a profit (paycheck) was previously much easier for medical practices, but now we are in an era of falling collections and rising overhead expenses. W, your mother's parents owned a grocery store in the Southwest and mine owned a ceiling subcontracting business in the Southeast. It helps to grow up listening to supper-table talk about collections, quality of product, and expenses, but everyone knows that is basically how a business works.
The managing partner of your practice must understand business and be committed to spending at least 10 to 15 percent of his or her time on practice management (and be compensated for this). Even more importantly,you must have a smart practice administrator who has strong business acumen and with whom the physicians agree about management of collections, quality of product, and expenses. Like it or not, the "product" is the care you provide to patients. Let's assume your product is excellent, you are a very competent physician who maintains good relationships with your colleagues, you have a kind heart and "bedside manner," and you pursue all problems with consistent diligence. Providing a terrific medical "product" like that used to be sufficient for a medical practice to succeed, but you now have to also watch the collections and expenses.There is a rather alarming-looking ad often seen in the USAirways magazine, Attache, that says: "You don't get what you deserve; you get what you negotiate." That is unfortunately true even in medicine now, so you and your administrator must negotiate well with the managed care organizations (MCOs) for suitable contracts that arrange for payment for that good product. Have confidence that your product is something that they need! Also, negotiate well with your "vendors": your landlord, computer and copy machine companies, office supply store, accountant, lawyer, and cleaning service. Recycle and reuse supplies when possible, then reuse again. (Oh dear, I am my mother's daughter after all!) Consider charging patients small fees for non-covered services like telephone management, completion of forms and letters, etc. (You cannot do this if the service is "covered but denied," but you can if the service is not covered under the patient's policy.) More and more practices are doing this, and more and more patients understand why. The American Medical Association has several helpful books about practice/business management, including Managed Care Contracting: Successful Negotiation Strategies and Smart Practices: Success in a Changing Environment. (Go to www.ama-assn.org.)
W, I want you to know that managing a business is challenging but not really harder than balancing your checkbook. I still use one of those, but you may not remember them; it was a 20th century thing! The principles of good business have not changed since your grandparents opened their store years ago. As a physician today, you must maintain the quality of your "product" but also attend to the collections and expenses of your practice. You must "Take Time to Run Your Business!"
W , I know you and B must be eagerly anticipating your summer break, and I look forward to meeting her soon. Have a great vacation!
Fondly,
Carolyn
