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Practice Management Q&As


Insurer games; fire drills; overhead.


Practice Management Q&As

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When third-party payers try to play games

Q: An insurer denied payment of a claim, saying we hadn't sent all the required information. Nonetheless, the plan offered to pay me in 10 days if I accepted a 10 percent fee reduction. Otherwise, it warned, it would send the claim to a review board, which could hold up payment for three months. Is this a wise trade-off?

A: No. Your agreement to such an absurd proposal could set a precedent for future fee reductions and other hassles. Find out what information is missing and resubmit the claim. Tell the plan that you will inform the patient and your state's insurance commissioner about this incident if the claim isn't paid promptly.

Should malpractice reports play into hiring decisions?

Q: As part of the credentialing process, can my group ask applicants to send us their National Practitioner Data Bank profiles?

A: Yes. But if a candidate doesn't provide his profile, ask him if you can contact his malpractice insurer and former employers about his claims history.

Evaluating the cost of doing business

Q: I'm concerned that our group's expenses are out of control. What is the typical office overhead for a three-doctor family practice?

A: Most professional associations put that figure at 50 to 60 percent of a practice's gross revenues.

When a partner won't okay a policy manual

Q: Our senior partner refuses to sign off on our new manager's updated office policy manual. He says he never wanted the first one and doesn't believe the revisions are necessary. If an employee sued the practice for wrongful termination due to the senior partner's actions, would the other three partners, who have signed the manual and abide by it, be exempt from liability?

A: If you're not incorporated, you have no protection against a partner's improper actions. So consider incorporating. And ask your practice attorney to lean on the recalcitrant doctor.

Figuring office overhead for hospital time

Q: Our group has decided to divide office overhead based on the number of days each doctor spends in the office. But we can't figure out what to do about hospital rounds. I think that hospital work should be counted the same way as office work, because our hospital practice is entirely office driven and draws on our office's administrative and human resources. But my partners disagree. Who's right?

A: Most practices put hospital overhead at about half of office overhead.

Growth projections for a brand new office

Q: I'll be opening my solo family practice in a few weeks. How long will it take me to reach 20 to 30 appointments a day? When can I expect to be out of the red? What kind of revenue growth should I expect—5, 10, 15 percent a month?

A: It will take six to 12 months to generate enough business and fill your schedule with 20 to 30 patients a day. Your break-even point depends on how much you borrowed just to be able to open the doors and how much you plan to spend on marketing your practice throughout the community. Typically, it takes one to three years to get out of the red.

Once you've hit your stride, you can expect revenues to grow by 5 to 10 percent a month.

Should you give a discount to a patient who had to wait?

Q: When I fall a half-hour or more behind, my receptionist calls patients and asks them if they'd like to arrive later or reschedule. Should I take a small amount off my bill for people who come to the office before she can reach them?

A: No. A reasonable effort to contact them before they arrive is good enough. If someone shows up before your receptionist can catch him, have her explain the delay and offer the same option to reschedule. If the patient would rather wait, make sure you apologize personally.

Office fire drills: rules to follow

Q: Is it true that every time I hire a new employee I must schedule a fire drill?

A: Rules vary by state and municipality, so check with your local fire department. The National Fire Protection Association recommends that you conduct drills regularly—say, every three months—and brief each new hire on emergency procedures and evacuation routes. Post evacuation routes throughout your office and include written instructions in your office policy manual.

When staffers mix business with lunch

Q: Our group has a number of staffers who sometimes catch up on paperwork or return business calls while eating lunch at their desk. Should we be paying them for this time?

A: Yes; they're working. If a state or federal agency investigated you, you would have to pay for missed wages and could face financial penalties.

When a staffer's temper threatens the safety of co-workers

Q: When flustered, one of our front-desk assistants throws things. Last week, she threw a pencil and just missed a co-worker's eye. I've warned her in writing to keep her emotions in check, but she hasn't changed her behavior. Is there any reason I shouldn't fire her?

A: No. If she injures someone, a court might find you liable, since you knew she was potentially dangerous but kept her on staff anyway.

Relocate the business office to gain exam rooms?

Q: Our five-doctor family practice needs more exam rooms. We don't have enough space to carve out another one in our existing office and we don't want to move. Since our business operations are fully computerized, would it make sense to move the billing department off-site? They could communicate with the main office by fax, phone, and modem.

A: It would be better to extend office hours and share consulting rooms than to take on the hardship of moving your billing office to another location. But if you're determined to set up an off-site billing unit, make sure that its rent and other expenses (such as telephone lines and messenger service) won't exceed the revenues generated from extra exam rooms.

Don't forget to include moving expenses in your cost-benefit analysis. Look for office space close to your clinical office. And keep in mind that you'll need to train at least one staffer at your clinical site to handle billing questions from patients.

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 mepractice@medec.com (please include your regular postal address). Sorry, but we're not able to answer readers individually.


Kristie Perry. Practice Management Q&As. Medical Economics 2003;6:120.

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