Physicians starting a new practice; what needs to be done?

I get a lot of calls from physicians about to enter their own private practice and unsure of all the items that need to be attended to. Here's an article I wrote with a shortlist of the major items, while not comprehensive it at least gives a good starting point.

Establishing a new practice is a lot of work and many details must be dealt with in order for things to go as smoothly as possible – even then, you must allow for “hiccups” in the process. As you begin this endeavor, identify those resources and individuals who can help steer you through all the pitfalls involved in a practice start-up. Key professionals to include are your attorney, accountant, banker and a practice management consultant. You may also need to hire an administrative assistant as early as possible to help you with the blizzard of paperwork involved in setting up a practice - unless you are working with a top notch practice management company, in which case they will typically take care of much of the paperwork on your behalf.

The main things to focus on are:

• Finding a location

• Determining what kind of a legal entity you want your practice to be

• Developing a banking relationship

• Determining which managed care panels are a priority

• Collecting your paperwork in order to begin the credentialing process

• Developing and implementing your billing/collection mechanism

I've found you can just as easily use on-line resources such as nolo.com or legalzoom.com to set up your corporation, however, many physicians prefer using professionals to assist. If you prefer, your attorney and accountant can help complete all the required legal and tax-related paperwork necessary to set up your business, including obtaining an employer identification number (EIN) as its a bad idea to have everything tied to your SSN.

Establishing a line of credit with your banker is a good idea, even if you believe you have enough start-up capital; remember it can be 60 – 90 days, and often longer, after the initial patient visit before insurance checks or electronic payments start coming in, assuming you begin submitting claims right from the start.

As early as possible you must determine which managed care panels you want to apply for and begin the application process, begin with Medicare and continue with the rest. On average, it takes three to four months to go through the credentialing process. It doesn’t matter if you are already credentialed with these plans as you still have to go through the entire process again using your new employer identification number. It’s also a good idea to confirm your admitting privileges at any area hospitals to ensure that they will continue once you start your own practice, especially as you may need this information for credentialing with provider plans.

Once these steps have been dealt with, you have to decide what equipment and furniture you need, you’ll also have to obtain a telephone long distance carrier, pager, cell phone service and or answering service. If you intend accepting credit card payments, you will have to find the appropriate vendors.

The next order of business is to determine how you will bill insurance companies and patients. Your options are to either use your own staff or to use an outside billing service. In-house billing would require purchasing, or leasing, a computer system and practice management software as well as hiring experienced, competent billing and collection staff who also understand CPT coding. Using an outside billing company can cut down some of the in-house headaches of the billing/collection process, especially if it all new to you.

Your decision here is critical to the financial well being of your practice and should be based on several considerations, including the availability of cash to purchase or lease the necessary hardware and software, staff expertise and office space etc. Regardless of your decision, your primary goal is to have a system in place when you see your first patient.

Next, establish accounting and payroll systems, your accountant can help here. You will also need to purchase appropriate professional and office insurance, set up a medical records system, obtain office and medical supplies, develop an office manual and establish OSHA standards.

Staffing is next on the list, first identify the functions that must be accomplished in your practice and develop written job descriptions. Next, determine the qualifications and experience of the people who would be performing the jobs. There is a wealth of information regarding staffing ratios and salary ranges etc available on the internet and via local and national organizations.

Now that you have completed all these steps you have to publicize the opening of your new practice. At a minimum, letters and announcements should be sent to your colleagues, referral sources, patients, family and friends. Other activities should include advertising the practice’s opening in local and internet media as well as developing a web site. These are just some initial ways to get word out about your practice, marketing is an on-going activity and will be dependant on your budget.

Starting a new practice is an exciting albeit cumbersome task. You should allow yourself at least six to nine months to make sure everything gets attended to. The professionals you select to work with you have the resources available to help remove many of the headaches from the process. Good luck!