Get a low rate

Naturally,  you will want the lowest interest rate you can get. Consider using the prime rate as your basis for making this judgment.  A great loan would be 2 points above prime.  Currently prime is 3.25%, so a loan at 5.25% would be very good.  Most lenders will charge 2-3 points above prime.  You can determine what the prime rate is by going to http://www.bankrate.com/rates/interest-rates/wall-street-prime-rate.aspx

Know your worth

Use your loan wisely

Shop around

Starting a Medical Practice: 9 Steps to Success

Step 1: Financial Proforma

In order to ensure success, you must understand the financials.  It’s important that when you approach the bank for a loan, you know exactly what you’ll need to get you off the ground.  It’s equally important to understand that starting a new practice is financially feasible.

How we can help…

MBA HealthGroup has the ability to create authentic and reliable financial projections to guide your organization or practice in the early stages. Our industry knowledge and relationships allow us to create uniquely authentic pro forma statements that are derived from front-line information such as state-specific third party payor fees, realistic provider schedules, market rate wages and benefits, and facility equipment, supplies and furnishings costs.

MBA HealthGroup will create realistic and accurate projections for revenue, capital requirements and operating cash flows of the practices. The format will provide easily accessed multiple levels of detail as well as a logical rollup of the projections. Key simulation variables and assumptions will be detailed and integrated into the statement. A triple range of “best”, “worst” and “steady state” will be used in the projections.

Step 2: Market Research

In order to be successful, there must be a demand for your services.  Whether you know where you plan to open a medical practice, or you want to go where the business is, a market analysis is key to understanding how many patients you’ll be treating.

How we can help…

Our healthcare consultants can conduct market research of an area as part of your practice set-up. The methods of gathering this information will entail researching national trends, the local market, and competition. Data is gathered from various sources including the health department, discussions with physicians, and if possible, healthcare facilities or hospitals.

Research will be done to gain a true understanding of the market in the identified location. We will identify the current and future trends in healthcare and what makes it unique in the marketplace. We will validate the healthcare needs in the community, by researching both state and county statistics.

Step 3: Credentialing and Enrollment

Long before you open the doors to your practice, you need to research and plan for contracting with insurance carriers.  It is important to complete the credentialing process long before you start seeing patients, or you risk working for free.  Don’t under-estimate the complexity of this process.  While it may seem simple, one mistake can cost you months of insurance payments.

How we can help…

MBA HealthGroup will determine the current credentialing requirements of the practice location and credential the providers using on-line access and standardized forms (such as CAQH) whenever possible in order to maintain an optimal level of speed, efficiency and organization. We will demonstrate the process for applying for and obtaining National Provider Identification (NPI) Number assigned by Centers for Medicare/Medicaid Services (CMS). The credentialing process will operate using a customized web-based project management tool. We will follow up on all corrections and re-submissions with our rapid response protocol that includes a goal of 24 hour turnaround time. MBA HealthGroup will also keep provider data accurate through periodic electronic updates.

Step 4: Workspace and Clinical Workflow Design

The number of total clinicians and staff as well as any plans for growth must be factored into the office design.  In order to create an efficient office workflow, make sure you have a grasp on all the equipment you’ll need inyour practice so you can plan accordingly.  If the office is designed to facilitate easy flow, your patients and staff will benefit.  Think about the timeline of a patient visit and work through the needs of each staff member that sees that patient throughout the course of their visit.

How we can help…

Many architects can design great buildings and workspaces. Our experience in private practice operations gives us a unique advantage; we can work in concert with design and construction professionals and integrate our knowledge of how a medical practice operates most effectively.

MBA HealthGroup can assess the functions of your practice workspace and help configure the layout for the best possible patient, staff and information flow. This can often result in significant time and expense savings in the design process. We can also help determine the appropriate space, so that it is neither too small nor too large for your practice today or in the future.

Not only can we help design your office and workflow, but we will make sure you know everything to order for your office from the magazines in the waiting room to the equipment in your surgical suite.  From phone systems to alarm systems to sound systems, we can help design exactly the office you’ve envisioned.

Step 5: Electronic Health Record and Revenue Cycle Management

When deciding how to conduct billing operations, you really have two options.  You can create your own billing staff to facilitate all billing functions, or you can outsource your billing and revenue cycle management to a billing service.  The important thing to consider is how you’ll be moving forward with an electronic health record (EHR).  If you’re looking at doing all your own billing, you’ll start with software selection for Practice Management and EHR, and because billing is always challenging, so it’s key to have a knowledgeable billing person to keep your revenue on track.

How we can help…

Whether you’re looking to perform all billing functions in-house, or outsource your billing, we have services that fit your needs.  We can design billing procedures and protocol for your practice as well as help you find the perfect billing employee. We can help you find the right billing software, work with your staff to implement billing protocol, and set your fees. We can also help you find an electronic health record that fits your clinical needs.  Our extensive knowledge of over 400 EHR vendors allows us to easily narrow down the possibilities for you.

MBA HealthGroup’s complete billing and revenue cycle management and EHR system is also a possibility for your practice.  If you aren’t interested in dealing with the complexities of billing within your office, we can take all of those responsibilities and guarantee that you get paid quickly without any of the hassle.  With our web-based system, you have access to a complete scheduling system, as well as the practice management functions required within your practice.  You’ll have access to an almost unlimited number of reports to see where your money is at all times.  And the best part is that there aren’t any servers required on your side.  Since it is 100% web-based, you only need a high-speed internet connection and a computer.

Step 6: A Practice Website

Patients these days shop around for their health care.  Finding a web designer that specializes in medical web sites is key because they will understand what patients look for on the web.  With a good website, patients can request appointments, pay their balance, or maybe just find out the hours of operation.  Also, as electronic health records become more commonplace, integrating your website into your EHR allows patients to fill out their history forms before they even leave their home.

How we can help…

We’ll work with you to create a website that works for you…literally.  All from your website, your patients will be able to request medication renewals, pay their bill, pre-register and so much more.  It’s a simple process that we take care of for you to make your practice a 21st century practice from the day you open your doors.

All part of the website design:

• Your own domain, e.g. www.drjones.com
• Location information including services, hours and map links to Google
• Your choice of over 600 graphical designs from our interactive design center
• The ability to build unlimited pages in the following categories: Services, News & Events, Links, Insurances, Frequently Asked Questions, Job Postings, Patient Education

Step 7: Human Resources

Hiring the right people is critical to starting a successful practice.  Write down what you’re looking for in an employee, and look for that perfect billing person, nurse, or front desk person.  They should share your perspective on patient care as well as your overall vision for the practice.

How we can help…

We will help you identify your staffing needs for your new practice, and also help wiith the hiring and training of your staff. Whether you need to hire front desk or billing staff, or even a nurse or practice manager, we can manage the entire hiring process. Our healthcare consultants can even put together job descriptions, salary structures, and benefits packages.

Another Human Resource service that MBA can provide is HIPAA & OSHA compliance for your new practice, which will ensure that your new practice is in compliance.

Step 8: Marketing

Marketing is crucial for new practices to attract new patients.  Determining the most effective medium for advertisements, planning an open house, and networking with local physicians are all important components of a successful startup practice.

How we can help…

Our team will start by looking at your services, and the demand for those services locally.  We can help you brand your practice with a logo, business cards, brochures, and any other materials you need to get started.  We can analyze and prepare print advertisements, web advertisements, and even setup an open house to get your name out in the community.

Step 9: Talk to one of our consultants for free.  Call 1.800.300.8782 or contact us here

You can tell us about what you’d like to do, and we can tell you when you need to start planning, how much you should budget, and what your next steps should be.

How often are you encouraged to start a business in one of the worst economic downturns in the history of the United States?  While healthcare hasn’t been hit as hard by this economic downturn as other industries (travel, auto, etc.), we’re certainly not immune to the economic fluxuations in healthcare.  When patients have high deductible health savings accounts (HSA) or copays, they may choose to just wait out that fever they’ve had until it goes away rather than going in to see their doctor.  So while there are some reasons for not starting a practice when the economy is in turmoil, I believe there are more benefits than most people know.

1. Interest rates are at historic lows.  It may not be as easy to get startup financing from a bank as it was a few years ago, but if you do, you’ll be paying less interest.  If you’re looking for capital from the SBA (Small Business Association), you’ll find that their loan fees have been reduced dramatically due to their access to stimulus funding.

2.Real estate is inexpensive and easy to find. Not only have the costs of leasing space dropped, but if you were looking to buy that dream office across the street a year ago and it wasn’t an option, there’s a good chance the owner would consider it now. There is an abundance of office space on the market.

3. Good help isn’t as hard to find. There is a silver lining to a high unemployment rate.  The employment market is competitive.  You can find good people at a reasonable salary everywhere you look.  The key to a successful business (that includes medical practices) is to employ only the best people.  Hold out for the most qualified candidate at the most reasonable wage.

4. Hospitals may foot the bill. It used to be common for hospitals to offer an income guarantee for physicians to start a medical practice in the hospital’s community.  While that still happens, it’s more likely now that rather than income guarantees, that the hospital will pay for you to start a practice including all of your setup costs and consulting fees should you choose to hire a consulting firm.

If you didn’t read my post “Starting a Medical Practices: Top 5 Mistakes Physicians Make“, that will be a good starting point for getting the ball rolling.

Top 5 Mistakes made when Starting a Medical Practice

To be in private practice or to be hospital employed? For some physicians, it’s a no-brainer, there’s no way they’re going to work for a hospital. They want the independence that business owners get to design their own patient schedules, employ the staff they want, and go on vacation when they choose. Starting a medical practice can be the most rewarding venture, but it can also be painful if not done correctly. I asked some of our consultants what mistakes are the most common when a physician takes the plunge into private practice, and this is what they’ve seen:

5. Not setting a realistic time line to launch your new practice.

Whether a physician is finishing up their residency, or deciding to leave a hospital or group practice, they rarely ever give themselves enough time to start a practice the right way. Many times it’s a “I need to get up and running ASAP, maybe next month if I can”. Unfortunately it isn’t that easy. When starting a practice you have to take into account time to get credentialed for your new practice, time to find a staff, time to implement systems, time to find real estate. Be flexible with deadlines and unexpected delays.

4. Not knowing the financials.

There aren’t many physicians that have a boatload of cash to spend after their residency, so most end up getting business loans from a bank. We don’t necessarily recommend writing a business plan for every practice, but we always make sure the financial plan and proforma is adequately constructed. Make sure you have conservative 3 year projections and a line of credit that will cover you for the first 3 months even if you don’t generate any revenue. Remember, insurance carriers don’t always pay you instantly, sometimes it takes months. It also never hurts to have best and worse case scenarios in your proforma just so you know what you’ll need to do if you don’t get as many patients from the start as you expected. To calculate revenue, determine your expected payor mix and use the carrier websites to see if they post what they pay for specific office visits and procedures. Leave no stone unturned, estimate the cost of EVERYTHING down to the magazines in the waiting room.

3. Hiring the wrong people!

Recruiting and hiring is a skill. Get help to ensure you bring in highly motivated staff that are as invested as you are. If you’re going to be in a fast paced practice, hire staff that can keep up with you. Hiring the wrong people can be extremely expensive considering how much you will invest in them to learn your IT systems, equipment, and workflow processes.

2. Choosing the wrong EHR/PM for your practice.

If you aren’t familiar with health information technology, good luck acclimating to the ever-changing and complicated environment. There are over 300 EHR/PM vendors out there and 95% of them are NOT right for you. You can also expect a good number of those vendors to be acquired, go out of business, or not be able to support you in a way that works for you. Right now the safe bet is to start on http://www.cchit.org/, which is the only EHR certification board out there, and look at which vendors are certified. While there are some incredible EHRs out there that haven’t been certified, the HITECH stimulus package is promising incentives for only “certified” products. Always choose the EHR first, and then make your Practice Management system decision.

1. Not asking for help from someone who knows business.

Let’s face it, medical school is just not geared around teaching physicians how to start a medical practice. The majority of physicians also don’t have the time to sit down and read books on how to start a practice in the hopes that it will actually guide them to success. This is a process with a million variables that requires expertise. At the very least, talk to family and friends that know business. In an ideal situation, you’d bring in an expert to help you with starting your own practice (read: 9 steps to Successfully Starting a Medical Practice). In the long run, the upfront investment in the expertise will not only save you time and money but it will generate more money than you could have without consulting with an expert.

If you’re considering starting a practice of your own, contact us for a free consultation.

Related:

9 Steps to Successfully Starting a Medical Practice