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Practice Management Q&As


Tail coverage when an employer goes broke; Take patients who come early? Steadying your revenue stream; When it's safe to toss personnel files; When job references won't talk; If an insurer misdirects a check


Practice Management Q&As

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Choose article section...Tail coverage when an employer goes broke Take patients who come early? Steadying your revenue stream When it's safe to toss personnel files When job references won't talk If an insurer misdirects a check Could a compliment come back to haunt you? When a staffer won't sign her evaluation Notifying patients when you move Pass along complaints about a colleague? Who pays to clean uniforms? When a bankrupt patient tries to stiff you

Tail coverage when an employer goes broke

Q: The practice I've been working for has just filed for bankruptcy. As part of my employment agreement, the group had been paying my malpractice premiums. Should I wait for the courts to settle the issue of who will pay for my tail coverage?

A: No. If the tail hasn't been purchased, pay the premium yourself before your coverage lapses. Once bankruptcy has been declared, your employer can't be forced to pay, even if it agreed to do so.

Take patients who come early?

Q: Recently, a patient with a 2:00 appointment signed in at 1:15. The person scheduled for the 1:30 slot arrived at 1:25, but I'd already taken the early sign-in. Because the early patient's visit ran long, I caught an earful from the 1:30 patient. Did I do the right thing?

A: No. You should see patients in the order of their appointments. After all, that's why you make the appointments. The only exception (besides emergencies) is when a patient cancels and opens a spot. Instruct your receptionist to tell future early birds, "We'll try to work you in, but it isn't likely. Are you sure you don't want to run an errand and come back at the right time?"

Steadying your revenue stream

Q: Last month, a cash-flow crisis forced my partner and me to postpone paying ourselves. This month, we're back in the black. What should we do to even out our cash flow?

A: First, make sure your staff isn't holding onto claims and bills in order to submit them in large batches. They should be sending out insurance claims and bills right away.

Next, try to keep 50 percent of one month's expenses (including doctors' salaries) in a cash reserve at all times. This money shouldn't be used for major annual expenses, such as malpractice premiums or contributions to a retirement plan. Set up a separate reserve fund—preferably in a money-market account—for these large, infrequent cash drains.

When it's safe to toss personnel files

Q: How long should we keep the personnel files of dismissed employees? Does the same limit apply to staffers who've resigned?

A: Retain all files for five to seven years, regardless of why the employee left. You need these files long enough to defend against a claim of wrongful discharge. Also, the files will come in handy if you're asked for a reference.

When job references won't talk

Q: We've had trouble checking a job applicant's references. Her former employer will confirm only that she worked there, but won't tell us anything about her job performance. Is there some other way to get this information?

A: Probably not. This employer may be worried about being sued for saying something that might deny a person a job.

So you or someone on your staff should try to talk to people who know the potential hire in some other way. Ask applicants to provide at least one reference from someone other than a former employer.

If an insurer misdirects a check

Q: Occasionally, an insurer mistakenly sends a payment due me to a colleague with a similar name. When I call about a missing check, the carrier will acknowledge the mistake. But it refuses to pay me until the other physician returns the misdirected payment. Sometimes it takes up to seven months to get paid. What should I do?

A: First, call the insurer's claims manager to make sure your office isn't to blame. You may find that you aren't completing your forms correctly. Sometimes all it takes to cause a problem is a mistyped provider ID number.

If your office isn't at fault, tell the insurer that you refuse to be penalized for its error and that you expect all clean claims to be paid within the time frame specified by your state's reimbursement laws. Nearly all states have prompt-pay laws, which require insurers to honor clean claims within a certain number of days after you submit them (laws vary from 15 to 60 days).

If the carrier doesn't shape up, alert your state insurance commissioner, state lawmakers, and state medical society. Send copies of your correspondence to the insurer. Most states with prompt-pay laws will fine companies that don't comply.

Could a compliment come back to haunt you?

Q: I overheard a partner say to our new practice administrator, "I can see you being here a long, long time." Does a statement like that cripple our chances of defending a wrongful-discharge suit if we ever had to fire the administrator?

A: Probably not by itself, but it wouldn't help your defense. A jury might decide that your partner implied that the position was permanent. Warn your partner not to make any remark that might imply permanent employment. But positive feedback to staffers is important. Just be aware of the distinction between praise and promises.

When a staffer won't sign her evaluation

Q: Our attorney has advised us to ask employees to sign their performance evaluations. Our newest nurse got a pretty good first review, but refused to sign it. Will this cause problems for us later?

A: No, but it may for her, if her performance slips. Note her refusal on the evaluation form, date it, and sign it yourself.

Notifying patients when you move

Q: In a few months, I'll be moving my practice across town. I'm keeping my phone number. I'll send change-of-address notices to all active patients and publish an announcement in the local paper. How long after the move should my staff continue reminding patients that we have a new address?

A: Until the next telephone directory, with your new address, comes out. Even after that, your receptionist should remind any patients you haven't seen since before the move. Include a map of your new office location with your notices and newspaper announcement. You might also include the map in your Yellow Pages ad.

Pass along complaints about a colleague?

Q: My aunt informed me that she's unhappy with a doctor she sees. His office is unkempt, the reception staff is rude, the wait is too long, and the business office bills her instead of her HMO. I don't refer patients to this practice, but I'm acquainted with its senior partner. Should I tell him what I've heard?

A: Yes. He may be unaware of these problems, in which case he'll appreciate your bringing them to his attention. Help your aunt transfer to another doctor if things don't shape up.

Who pays to clean uniforms?

Q: We want to outfit our employees with uniforms embroidered with the practice logo. Should the practice be responsible for cleaning them?

A: If the clothes need only machine washing and drying, ask employees to take them home and do it themselves. If dry cleaning or other special care—including ironing—is necessary, the practice should cover the cost.

When a bankrupt patient tries to stiff you

Q: A patient who owes me $450 has filed for bankruptcy. He claims that since he didn't list me as a creditor he doesn't have to pay me anything. Is this true?

A: No. Actually, if he didn't list you as a creditor, then his debt to you wasn't discharged by his declaration of bankruptcy. But since he's bankrupt, there's no point in trying to collect, so write off the account.


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 Q&As.

Medical Economics

Dec. 19, 2003;80:79.

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