Practice ownership should come with benefits, according to one expert.
"The basis of value in a medical practice is dividends," says Borglum, of Professional Management and Marketing, Santa Rosa, California. "That's the money that the doctor makes for being an owner rather than just an employee. Otherwise, there's no reason to be an owner."
In this context, dividends are income a physician makes from ownership in excess of the fair market value of his or her labor.
Most medical practices have little or no value in this sense, however, says Borglum, an editorial consultant to Medical Economics, because they weren't created and aren't maintained for that reason. Most physicians are not drawn to the field of medicine to earn dividends; rather, they become physicians to serve patients while earning a "decent" income, he says.
Numerous factors may affect future dividends, he says, including potential changes in reimbursement by government and commercial insurance plans; healthcare reform mandates and Medicaid eligibility rule changes, which are expected to greatly increase the number of patients seeking treatment and the demand for primary care; the aging primary care physician population and the declining number of new physicians entering this area of medicine; the trend toward physician-hospital organization employment versus practice ownership; tax rate changes; and general economic conditions.
WAYS TO ENHANCE DIVIDENDS
Fortunately, you can take steps to protect or enhance the value of your practice and, hence, your dividends, Borglum says. Major ways to accomplish this task are by improving reimbursement levels through better coding, devising ways to make the practice more efficient, and adding ancillary services.
Providing more ancillary services within the practice means that your practice can keep more profits because you will be referring fewer of your patients elsewhere for such services. Among ancillary services to consider offering directly as part of the practice, he says, are ultrasound; echocardiograms; cholesterol testing; pulse oximetry, spirometry, and pulmonary function testing; hand and foot bone densitometry; ambulatory blood pressure monitoring (to rule out "white coat hypertension"); audiology and hearing-aid sales; prescription dispensing; bariatrics; cryotherapy; Holter monitoring; sleep apnea testing; testing for sexually transmitted diseases, thyroid conditions, prostate issues, depression, arthritis, asthma, pregnancy, and fecal occult blood; and sclerotherapy and other aesthetic or elective procedures.
Another way to protect value in a practice, Borglum says, is to examine the potential dividends that could be earned from employing an additional physician versus hiring a nurse practitioner or physician assistant, factoring in your practice needs, their salaries, and their productivity-the income they are able to generate for the practice. If the physician and the midlevel provider are equally productive, it may make sense for the practice to hire a midlevel provider rather than a physician, depending on the expertise needed for the services you expect this person to provide, he says.