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Practice Management


When your practice can't afford badly needed redecorating, Will unexpected bonuses boost employee morale? Red flags draw auditors' attention to your billing practices, Selecting appropriate places to advertise, Does it make sense to add that new service? How to bill Medicare for patients who participate in research trials, Getting financing for your new practice venture


Practice Management

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Choose article section... When your practice can't afford badly needed redecorating Will unexpected bonuses boost employee morale? Red flags that draw auditors' attention to your billing practices Does it make sense to add that new service? How to bill Medicare for patients who participate in research trials Getting financing for your new practice venture Selecting appropriate places to advertise

When your practice can't afford badly needed redecorating

Q My waiting room needs redecorating. The carpet has noticeably worn traffic paths, and some of the chairs are frayed. But I don't have much money in my budget for a complete overhaul. Should I take out a loan to pay for a one-shot project, or should I set aside a little money every year and tackle one thing at a time?

A Go for a one-shot project. The waiting room is the most important area of your practice, because it makes a first and lasting impression on patients.

First, determine how much the redecorating will cost. Then calculate how much that sum will cut into your operating budget. If you can take an income hit, finance the upgrade from current profits. Otherwise, take out a loan. By tackling the job all at once, you'll inconvenience patients only one time, and the investment will pay off in the long term with patient satisfaction.

Will unexpected bonuses boost employee morale?

Q I've heard so many people advise against productivity bonuses for staff that I won't even consider giving them. But what about giving each employee an unscheduled "bonus" check of, say, $100 for doing a good job during our busy flu season?

A Paying staff an unexpected bonus for a job well done may go a long way toward boosting morale. However, it also may have drawbacks: Your employees might start to expect such rewards every year. Besides, what will you do if you and your staff disagree on the quality of their performance, or if the practice can't afford to issue bonuses in the future?

In general, the best way to maintain happy and loyal employees is to pay them prevailing wages and offer them a fair benefits package.

Red flags that draw auditors' attention to your billing practices

Q Now that Uncle Sam has issued voluntary compliance guidelines for small practices, I'm keen to discover if there are any potential problems with our billing practices. What do federal auditors generally look for in uncovering fraudulent practices?

A Most physicians know that intentional fraud can quickly plunge them into Medicare hot water, but other coding patterns can raise a red flag, too. Some are innocent errors; others may be perfectly legitimate. Some examples:

• An unusually large number of patients receiving the same service.

• The repeated use of a single procedure code.

• One member of a group who consistently bills for the most involved cases.

• Claims that substitute terminology—such as "maybe," "perhaps," "probable," and "rule out"—for symptom and diagnosis codes.

• Inadequate documentation.

• Billing for a consultation instead of an office visit.

• Improper use of modifiers.

Unhappy patients and disgruntled staff are added threats. Under the law, Medicare carriers must look into all beneficiary complaints, and staffers who report providers can reap huge rewards—15 to 30 percent of the amount the government recovers.

Does it make sense to add that new service?

Q An NP in our pediatric practice is a lactation consultant, and I'd like to offer that service to breast-feeding mothers. But first I'd have to convince my partners that this would boost our bottom line. How would I project the cost-effectiveness of offering such a service, and what code should we use in billing for it?

A Although a lactation service would be a great way to distinguish your practice from others, our consultants say, it's not likely to be profitable. The cost of providing such service—space, time, brochures, educational material—would exceed what you could bill. Instead, chalk up that small loss to a marketing expense and help your NP develop her own caseload in addition to counseling lactating mothers. Having her own patient base will help offset her salary.

When you bill for the lactation service, most experts suggest using 99211, a brief office visit.

How to bill Medicare for patients who participate in research trials

Q My practice participates in clinical studies that include Medicare patients. Typically, we combine the drug research and the patient's usual care in the same exam. If we bill the study's sponsor for the component of the exam that involves the research, may we also bill HCFA for the parts of the exam that fall outside of the research?

A Yes. Starting in 2000, Medicare was authorized to reimburse physicians for routine patient care, as well as costs due to medical complications associated with participation in clinical trials. However, Medicare won't pay for the research-related drugs or services, or for items and services provided solely for data collection. Nor will it pay for any items or services provided to a practice by the trial sponsor.

Getting financing for your new practice venture

Q I'm board-certified in emergency medicine and have worked in the ER of an inner-city hospital for the last two years. I've seen a great need in this community for an urgent care center for patients who don't have true emergencies. I'm hoping to open one myself. But I have little to offer in the way of collateral. In fact, I have a negative net worth thanks to my huge education debts. What will I need to persuade a bank to advance the start-up costs?

A You'll need a solid business plan detailing all startup costs, including a provision for your living expenses until you're able to draw an adequate salary. Don't forget to provide for "soft" costs like advertising and marketing, as well as for "hard" costs like equipment, rent, and salaries. Most important, the business plan must document the existence and scope of your target market.

For help determining your potential patient load, contact the nearest hospital and talk with the CEO or CFO. Explain your plan and find out if the hospital will run reports on ER diagnosis codes for the last 18 months. And it wouldn't hurt to ask if the hospital would be willing to co-venture with you. Of course, that would mean sharing your revenue. But the hospital has deep pockets and could open doors to financing.

Also contact the Small Business Administration. At the very least, that agency can provide detailed advice about preparing a business plan—and might even have a loan program that fits your needs.

Selecting appropriate places to advertise

QA "Welcome Wagon" marketing firm has asked my practice to buy a page in its book. The package goes to new people in town and includes discount coupons from businesses like oil-change operations, restaurants, and the local drugstore. Would this be a good place to advertise our practice?

A It depends on your overall marketing budget. If you can afford to buy a page, place an ad that describes your practice, including office hours, location, services, and what insurance you accept. Don't offer any discounts. That would cheapen your image.

Edited by Kristie Perry,
Contributing Writer


Do you have a practice management question that may be stumping other doctors, too? Write: PMQA Editor, Medical Economics magazine, 5 Paragon Drive, Montvale, NJ 07645-1742, or send an e-mail to (please include your regular postal address). Sorry, but we're not able to answer readers individually.


Kristie Perry. Practice Management. Medical Economics 2001;11:135.

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