Take-home advice from a stand-up consultant

By Geoffrey T. Anders, JD, CPA

I usually field questions from doctors in my office or theirs, but when Medical Economics asked me to field questions at the magazine's booth at the ACP-ASIM's annual meeting in Philadelphia, I was happy to provide curbside consults.

These brief sessions confirmed my belief that doctors are again focusing on basic business issues. They want to handle problems themselves rather than depend on some white knight—be it a hospital, HMO, or physician practice management company—to save the day for them.

Here are some of the questions I got in Philadelphia. Maybe the one you would have asked is among them.

Should I go group or solo?

A New York internist was about to sign a contract to join a group and was concerned about whether it would be better to have a health care attorney or a consultant review it. My counsel: The legal aspects of the contract may not be as critical as economic ones. He needs to look closely at the interplay of starting salary, incentive arrangements, and the time it takes to become a partner.

An Ohio physician was leaning toward solo practice. I told him about the steps he'd need to take: devising a financial forecast both for planning and to obtain loans; credentialing; deciding which plans to participate with; selecting equipment and staff; and choosing a computer system that can be expanded to accommodate electronic medical records and hand-held charge capture systems. We also talked about space requirements. I suggested at least three exam rooms, and perhaps a procedure/testing room. And I urged him not to underestimate the need for storage and business areas.

But I also suggested that the would-be soloist think about alternatives. True, solo practice is great if you crave independence and can arrange coverage. But it's generally not as financially rewarding as group practice. And soloists have no one to share clinical or business problems with. If something needs to be done, they have to do it themselves.

Another option—hospital or HMO employment—generally provides a higher starting salary and an easier, more structured lifestyle. But there's no ownership opportunity.

With a group, you not only own a share of the practice, but there's an automatic buyer for your share if something happens to you. Plus, groups can more easily afford advanced technology (which may augment income), and better management. Groups do carry the potential of conflict, though, so doctors need to make professional collegiality a part of their decision.

Will my associates play games?

A resident who was entertaining a couple job offers asked what he should expect as the new guy on the block. Sadly, I was forced to tell him that doctors often engage in silly passive/aggressive behavior when they bring a new doctor into the practice. Overworked solos hire an associate; then when she arrives, they hoard patients and turn up their own productivity. In groups where income division is productivity-driven, the other doctors also hoard patients, and the new associate is left to her own devices.

So it's critical, I told her, to make sure you know where your patients will come from before you join a practice—from a retiring physician, for instance, the practice's expansion into a new market, new skills you bring to the group, or from the allocation of new patients. If possible, try to get a concrete plan, spelled out in writing, so that everyone knows what's expected and you don't wind up being told, "Oh, no, you must have misunderstood."

What's the liability risk?

Two Pennsylvania internists who shared expenses wanted to know about compensation issues. But I pointed out a bigger problem: that neither practice was incorporated or set up as a limited liability partnership. That could expose each doctor to potential liability from the negligence of the other. So I strongly urged them to change the structure of their arrangement.

Can I afford to drop a plan?

A California internist told me that a managed care plan she contracted with paid only 80 percent of Medicare rates, while the rest of the market was paying 110 percent. But this plan represented a third of her patients. Could she afford to drop it?

I recommended that she try to learn the financial status of this company by asking her local medical society or state officials. If the company is in bad shape, she should get out. But if the plan is making money, it can afford a raise, and she should try to get one.

So rather than drop out completely, the doctor should alert the plan that she will no longer accept new patients, if that's allowed under the contract. The next step is to examine her patient roster for executives and benefit officers who might go to bat for her with the insurance company. The insurer might agree to raise reimbursements, out of fear that these executives' companies could decide to stop offering the plan to its employees.

If that fails, I suggested establishing a cut-off date several months down the road. Then, the internist should prepare a letter to patients explaining why she had to drop participation, and listing the other health plans she contracts with. Before mailing the letter, she should send a copy to the insurer. If that tactic doesn't get the point across, she should go ahead and send the letter to patients. She should also consider taking out an ad in the local newspaper explaining her actions.

Every physician should review all payers once a year to replace stingy ones with better paying plans.

Does advertising really work?

An Illinois internist was impressed by how a local hospital-owned practice had used advertising to expand. She wanted to do the same.

I discouraged her. While the hospital can afford ad agencies and a big budget, this doctor couldn't. Instead, I suggested that she contact the medical editors at her local newspapers and radio and TV stations and volunteer to be a resource on medical stories.

I then suggested that she mine her patient base for executives, benefit officers, and people who have connections with assisted living or retirement communities. I advised her to ask them to help set up public speaking opportunities. She should also offer to lecture at area support groups, such as those run by the diabetes or heart associations.

Next, she should contact physicians she refers to and ask for their help in referring patients who don't have a primary care physician. Similarly, she should contact allied health professionals and ask for their referrals.

The author is president of The Health Care Group in Plymouth Meeting, PA, and is an editorial consultant to this magazine.

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Geoffrey Anders. Take-home advice from a stand-up consultant.

Medical Economics

2002;12:50.