ORLANDO, FL-Heading into the real world of practice after completing residency is a daunting task, fraught with perils. Will you get into a practice you like? Will there be sufficient support staff? How can you ensure that your finances will be managed accurately and honestly?
Explore This IssueJune 2008
These are some of the areas described by Kim Pollock, RN, MBA, a practice management consultant at Karen Zupko & Associates Inc., who spoke at the recent annual Combined Otolaryngology Spring Meeting in a session organized by the American Rhinologic Society (ARS).
The session was a novel venture for the ARS because this is the first time we’ve organized an administrative session, said moderator Seth Brown, MD. This sort of nonclinical session should give physicians good practical information they can use to help them in their practice.
According to Ms. Pollock, the key practice management steps new otolaryngologists need to take before entering a practice can be reduced to five key points:
- Get it in writing.
- Code your own services.
- Understand rights and responsibilities.
- Measure your success.
- Keep your eye on the ball.
Of course, there are details involved with each of these points.
Get It in Writing
When it comes to getting it in writing, Ms. Pollock was alluding to the need for a good, detailed contract. Make sure you have a written contract with the group that spells out everything-from benefits, to compensation, to where you’re going to practice, how many satellite offices, what hospitals you’re going to have privileges in. I mean every detail, she said.
Along with this, it is important to understand the practice culture. Some practices are more structured and political than others. For instance, some have physician and staff service standards in writing, a physician governance structure, and even have disciplinary action for physicians who don’t behave appropriately. In others, physicians seem to do their own thing.
Try to really understand the practice culture, and interview people outside of that practice-at the hospital, referring physicians, she said. She also suggested doing operational due diligence. Find out what kind of support staff are available, will there be a nurse, and how are appointments made.
It is also worth hiring a lawyer to review the contract that is offered. However, it should be an attorney that you hire, not the attorney for the practice that you’re joining, she said.
Code Your Own Services
Physicians should code their own services. Ms. Pollock encouraged participants to attend coding courses offered by the AAO-HNS and other societies. The top four categories of codes that otolaryngologists should learn are evaluation and management services (office visits or hospital services-i.e., nonsurgical services), office procedures (nasal endoscopy, sinus debridements, etc.), surgical services, and modifiers.
It is better for physicians to do the coding themselves because they are the ones who know exactly what the procedure was. Coders don’t, Ms. Pollock noted.
It’s much more difficult to teach a coder how to be doctor, and understand what you did in the operating room….Besides, coding is how you get paid. You want to be in control of that-nobody else, she said. Furthermore, it’s the doctor’s name at the bottom of the insurance form asserting accuracy of the claim, so there is a legal responsibility to be on top of this.
Rights and Responsibilities
It is also important to understand the rights and responsibilities of practice members. One responsibility of physicians is to be on time with patients, as well as in the operating room. Another responsibility is to submit charges in a timely manner so services can be billed.
Some practices develop a document outlining rights and responsibilities. This serves as the governing behavior rules for you, your partners, the employees, and how we treat patients. The rights and responsibilities will address clinical issues, administration issues, behavior issues, Ms. Pollock said.
Measure Your Success
Another key point is to measure your success. Here, it is important for doctors to be on top of the business end of their practice. She pointed out that many doctors leave the business of their practice to someone else-the office manager, or the practice administrator-adding that this is just a bad idea.
Ms. Pollock has had experience working with physicians who have had the unfortunate experience of embezzlement occurring in their practice. A couple of months ago, I had a neurosurgeon call me in a tizzy because he found out that his office manager was forging checks from the practice and paying herself money, paying her credit card bills, from the practice checkbook, she said.
There was another case in which a practice’s office manager forged checks from both the practice and a doctor’s personal checking account. The gig was up-not after the manager had some cosmetic surgery done and showed up with a new Lexus SUV-but after she started showing up to the office wearing pricey jewelry. She had embezzled $165,000, and eventually ended up in jail.
These sorts of things happen because doctors got into the habit of letting someone such as an office manager take care of all the finances, and didn’t pay attention to the details. You do not want anybody but you or a partner in your practice to have check-signing privileges, she said.
In addition, doctors need to keep track of their case volume, know their physician referrals, and monitor financial health. This is all part of running a business smoothly.
To monitor financial health, there are a few benchmarks doctors should use to measure their financial success. One is the gross collection rate. This is the percentage of charge dollars that have been collected-basically, it is collections divided by total charges.
For instance, if Medicare pays 20 cents for every dollar charged, then there is a 20% collection rate from Medicare, she said. This used to be the key way to measure our success, but now it is only part of the picture.
The more important thing to know is the net collection rate. As you’re talking to people and when you’re interviewing, don’t ask them what their gross collection rate is-I want you to ask them what their net collection rate is, Ms. Pollock said.
Essentially, the net collection rate is the percentage of collectable dollars that have been collected. Contracts are mostly on par with Medicare. We know we’re going to give discounts to those payers, so our denominator is going to be reduced by the amount of dollars that we know we’re not going to collect. These are also called uncollectable adjustments, she said.
Along with money collected, doctors need to have an idea of how much money is owed to the practice (accounts receivable), as well as how much of the revenue is spent for operating overhead (excluding physician salaries)-which is called the overhead expense ratio.
Keep Your Eye on the Ball
Finally, doctors need to keep an eye on the ball. Review the financial reports the administrator brings in. It shouldn’t be a big stack of papers, but rather a snapshot summary that includes all the key financial indicators. It should include data such as charges, and the financial benchmarks such as net collections rate, accounts receivable for more than 90 days, and more.
Be aware of the internal controls established in the practice and how they are monitored, including cash handling and check writing policies. More details with tips for otolaryngologists can be found at Ms. Pollock’s firm’s Web site, www.karenzupko.com .
©2008 The Triological Society