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Starting a blog
. Health information is one of the most popular topics people search for online. Starting a physician blog can provide your practice with promotional and marketing benefits that you may have a difficult time finding elsewhere. A blog can be an effective way to drive traffic to your website, establish yourself as an authority or expert in a particular area, and stay on the radar with your patients. However, there are a few things you should think about before you start.
Start by determining what you want to accomplish. Do you want to reach quantitative milestones, like a certain number of followers, or are you looking to increase your website traffic from potential patients? One goal will probably be to augment the health knowledge of your patients. Decide early on what your benchmarks will be and how you will track them.
Next, determine who your potential readers are. Initially, most will probably be local (your existing patient base and their family and friends), but your audience may expand geographically as your blog gains in popularity.
By now, you probably realize that blogging will require a significant commitment, over and above the time needed to write the content. Decide whether you have the time and energy to take this on yourself, or whether help will be needed. Ideally, you should have one person in charge of all your social media efforts, so that everything is consistent and has the same voice. That person can be in-house, or you can outsource to any of the many companies that administer blogs and other media functions. (As always, I have no financial interest in any company or service mentioned in this column.)
The advantage of hiring an outside administrator is that a professionally designed blog will be far more attractive and polished than anything you could build yourself. Furthermore, an experienced designer will employ “search engine optimization” (SEO), meaning that content will be created using key words and phrases that will make it readily visible to search engine users.
You can leave design and SEO to the pros, but don’t delegate the content itself; as captain of the ship you are responsible for all the facts and opinions on your blog. You may not be up to writing everything yourself, but anything you don’t write personally needs to be scrutinized by you personally to make sure that it is factually accurate and reflects your personal view. And remember that, once it’s online, it’s online forever; consider the ramifications of anything you post on any site – yours or others – before hitting the “send” button. “The most damaging item about you,” one consultant told me, “could well be something you post yourself.” Just ask any of several prominent politicians who have famously sabotaged their own careers online.
That said, don’t be shy about creating content. Patients appreciate factual information, but they value your opinions too. Give people content that will be of interest or benefit to them. This can include health-related tips, reminders, suggestions, whatever. If they are interested in it, they will keep reading and may even share it with others. You should also write about subjects – medical and otherwise – that interest you personally. If you have expertise in a particular field, be sure to write about that.
Your practice is a local business, so localize your blog to attract people from your area. Be sure to include local city keywords in your writing. You may also want to post about local events in which your practice is involved.
Try to avoid political diatribes. While most physicians have strong political opinions, and some are not shy about expressing them, there are many venues that are more appropriate for those discussions than medical blogs. Also avoid outright sales pitches. It’s fine to describe procedures that you offer, but aggressive solicitation will only turn readers off.
Keep any medical advice in general terms; don’t use any specific examples that might make a patient identifiable and generate a HIPAA violation.
If you are having trouble growing your readership, use your practice’s Facebook page to push blog updates into patients’ feeds. Additionally, track Twitter hashtags that are relevant to your practice, and use them to find existing online communities with an interest in your blog’s topics.
Dr. Eastern practices dermatology and dermatologic surgery in Belleville, N.J. He is the author of numerous articles and textbook chapters, and is a longtime monthly columnist for Dermatology News. Write to him at dermnews@mdedge.com.
*This article was updated 10/17/2022.
. Health information is one of the most popular topics people search for online. Starting a physician blog can provide your practice with promotional and marketing benefits that you may have a difficult time finding elsewhere. A blog can be an effective way to drive traffic to your website, establish yourself as an authority or expert in a particular area, and stay on the radar with your patients. However, there are a few things you should think about before you start.
Start by determining what you want to accomplish. Do you want to reach quantitative milestones, like a certain number of followers, or are you looking to increase your website traffic from potential patients? One goal will probably be to augment the health knowledge of your patients. Decide early on what your benchmarks will be and how you will track them.
Next, determine who your potential readers are. Initially, most will probably be local (your existing patient base and their family and friends), but your audience may expand geographically as your blog gains in popularity.
By now, you probably realize that blogging will require a significant commitment, over and above the time needed to write the content. Decide whether you have the time and energy to take this on yourself, or whether help will be needed. Ideally, you should have one person in charge of all your social media efforts, so that everything is consistent and has the same voice. That person can be in-house, or you can outsource to any of the many companies that administer blogs and other media functions. (As always, I have no financial interest in any company or service mentioned in this column.)
The advantage of hiring an outside administrator is that a professionally designed blog will be far more attractive and polished than anything you could build yourself. Furthermore, an experienced designer will employ “search engine optimization” (SEO), meaning that content will be created using key words and phrases that will make it readily visible to search engine users.
You can leave design and SEO to the pros, but don’t delegate the content itself; as captain of the ship you are responsible for all the facts and opinions on your blog. You may not be up to writing everything yourself, but anything you don’t write personally needs to be scrutinized by you personally to make sure that it is factually accurate and reflects your personal view. And remember that, once it’s online, it’s online forever; consider the ramifications of anything you post on any site – yours or others – before hitting the “send” button. “The most damaging item about you,” one consultant told me, “could well be something you post yourself.” Just ask any of several prominent politicians who have famously sabotaged their own careers online.
That said, don’t be shy about creating content. Patients appreciate factual information, but they value your opinions too. Give people content that will be of interest or benefit to them. This can include health-related tips, reminders, suggestions, whatever. If they are interested in it, they will keep reading and may even share it with others. You should also write about subjects – medical and otherwise – that interest you personally. If you have expertise in a particular field, be sure to write about that.
Your practice is a local business, so localize your blog to attract people from your area. Be sure to include local city keywords in your writing. You may also want to post about local events in which your practice is involved.
Try to avoid political diatribes. While most physicians have strong political opinions, and some are not shy about expressing them, there are many venues that are more appropriate for those discussions than medical blogs. Also avoid outright sales pitches. It’s fine to describe procedures that you offer, but aggressive solicitation will only turn readers off.
Keep any medical advice in general terms; don’t use any specific examples that might make a patient identifiable and generate a HIPAA violation.
If you are having trouble growing your readership, use your practice’s Facebook page to push blog updates into patients’ feeds. Additionally, track Twitter hashtags that are relevant to your practice, and use them to find existing online communities with an interest in your blog’s topics.
Dr. Eastern practices dermatology and dermatologic surgery in Belleville, N.J. He is the author of numerous articles and textbook chapters, and is a longtime monthly columnist for Dermatology News. Write to him at dermnews@mdedge.com.
*This article was updated 10/17/2022.
. Health information is one of the most popular topics people search for online. Starting a physician blog can provide your practice with promotional and marketing benefits that you may have a difficult time finding elsewhere. A blog can be an effective way to drive traffic to your website, establish yourself as an authority or expert in a particular area, and stay on the radar with your patients. However, there are a few things you should think about before you start.
Start by determining what you want to accomplish. Do you want to reach quantitative milestones, like a certain number of followers, or are you looking to increase your website traffic from potential patients? One goal will probably be to augment the health knowledge of your patients. Decide early on what your benchmarks will be and how you will track them.
Next, determine who your potential readers are. Initially, most will probably be local (your existing patient base and their family and friends), but your audience may expand geographically as your blog gains in popularity.
By now, you probably realize that blogging will require a significant commitment, over and above the time needed to write the content. Decide whether you have the time and energy to take this on yourself, or whether help will be needed. Ideally, you should have one person in charge of all your social media efforts, so that everything is consistent and has the same voice. That person can be in-house, or you can outsource to any of the many companies that administer blogs and other media functions. (As always, I have no financial interest in any company or service mentioned in this column.)
The advantage of hiring an outside administrator is that a professionally designed blog will be far more attractive and polished than anything you could build yourself. Furthermore, an experienced designer will employ “search engine optimization” (SEO), meaning that content will be created using key words and phrases that will make it readily visible to search engine users.
You can leave design and SEO to the pros, but don’t delegate the content itself; as captain of the ship you are responsible for all the facts and opinions on your blog. You may not be up to writing everything yourself, but anything you don’t write personally needs to be scrutinized by you personally to make sure that it is factually accurate and reflects your personal view. And remember that, once it’s online, it’s online forever; consider the ramifications of anything you post on any site – yours or others – before hitting the “send” button. “The most damaging item about you,” one consultant told me, “could well be something you post yourself.” Just ask any of several prominent politicians who have famously sabotaged their own careers online.
That said, don’t be shy about creating content. Patients appreciate factual information, but they value your opinions too. Give people content that will be of interest or benefit to them. This can include health-related tips, reminders, suggestions, whatever. If they are interested in it, they will keep reading and may even share it with others. You should also write about subjects – medical and otherwise – that interest you personally. If you have expertise in a particular field, be sure to write about that.
Your practice is a local business, so localize your blog to attract people from your area. Be sure to include local city keywords in your writing. You may also want to post about local events in which your practice is involved.
Try to avoid political diatribes. While most physicians have strong political opinions, and some are not shy about expressing them, there are many venues that are more appropriate for those discussions than medical blogs. Also avoid outright sales pitches. It’s fine to describe procedures that you offer, but aggressive solicitation will only turn readers off.
Keep any medical advice in general terms; don’t use any specific examples that might make a patient identifiable and generate a HIPAA violation.
If you are having trouble growing your readership, use your practice’s Facebook page to push blog updates into patients’ feeds. Additionally, track Twitter hashtags that are relevant to your practice, and use them to find existing online communities with an interest in your blog’s topics.
Dr. Eastern practices dermatology and dermatologic surgery in Belleville, N.J. He is the author of numerous articles and textbook chapters, and is a longtime monthly columnist for Dermatology News. Write to him at dermnews@mdedge.com.
*This article was updated 10/17/2022.
EHR: A progress report
I wrote my first column on electronic health records in the mid-1990s. At the time, it seemed like an idea whose time had come. After all, in an era when just about every essential process in medicine had already been computerized, we physicians continued to process clinical data – our key asset – with pen and paper. Most of us were reluctant to make the switch, and for good reason:
Then, the government stepped in. Shortly after his inauguration in 2000, President George W. Bush outlined a plan to ensure that most Americans had electronic health records within 10 years. “By computerizing health records,” the president said, “we can avoid dangerous medical mistakes, reduce costs, and improve care.” The goal was to eliminate missing charts, duplication of lab testing, ineffective documentation, and inordinate amounts of time spent on paperwork, not to mention illegible handwriting, poor coordination of care between physicians, and many other problems. Studies were quoted, suggesting that EHR shortened inpatient stays, decreased risk of adverse drug interactions, improved the consistency and content of records, and improved continuity of care and follow-up.
The EHR Incentive Program (later renamed the Promoting Interoperability Program) was introduced to encourage physicians and hospitals “to adopt, implement, upgrade, and demonstrate meaningful use of certified electronic health record technology.”
Nearly a quarter-century later, implementation is well behind schedule. According to a 2019 federal study, while nearly all hospitals (96%) have adopted a certified EHR, only 72% of office-based physicians have done so.
There are multiple reasons for this. For one thing, EHR is still by and large slower than pen and paper, because direct data entry is still primarily done by keyboard. Voice recognition, hand-held and wireless devices have been developed, but most work only on specialized tasks. Even the best systems take more clinician time per encounter than the manual processes they replace.
Physicians have been slow to warm to a system that slows them down and forces them to change the way they think and work. In addition, paper systems never crash; the prospect of a server malfunction or Internet failure bringing an entire clinic to a grinding halt is not particularly inviting.
The special needs of dermatology – high patient volumes, multiple diagnoses and prescriptions per patient, the wide variety of procedures we perform, and digital image storage – present further hurdles.
Nevertheless, the march toward electronic record keeping continues, and I continue to receive many questions about choosing a good EHR system. As always, I cannot recommend any specific products since every office has unique needs and requirements.
The key phrase to keep in mind is caveat emptor. Several regulatory bodies exist to test vendor claims and certify system behaviors, but different agencies use different criteria that may or may not be relevant to your requirements. Vaporware is still as common as real software; beware the “feature in the next release” that might never appear, particularly if you need it right now.
Avoid the temptation to buy a flashy new system and then try to adapt it to your office; figure out your needs first, then find a system that meets them.
Unfortunately, there is no easy way around doing the work of comparing one system with another. The most important information a vendor can give you is the names and addresses of two or more offices where you can go watch their system in action. Site visits are time-consuming, but they are only way to pick the best EHR the first time around.
Don’t be the first office using a new system. Let the vendor work out the bugs somewhere else.
Above all, if you have disorganized paper records, don’t count on EHR to automatically solve your problems. Well-designed paper systems usually lend themselves to effective automation, but automating a poorly designed system just increases the chaos. If your paper system is in disarray, solve that problem before considering EHR.
With all of its problems and hurdles, EHRs will inevitably be a part of most of our lives. And for those who take the time to do it right, it will ultimately be an improvement.
Think of information technologies as power tools: They can help you to do things better, but they can also amplify your errors. So choose carefully.
Dr. Eastern practices dermatology and dermatologic surgery in Belleville, N.J. He is the author of numerous articles and textbook chapters, and is a longtime monthly columnist for Dermatology News. Write to him at dermnews@mdedge.com.
I wrote my first column on electronic health records in the mid-1990s. At the time, it seemed like an idea whose time had come. After all, in an era when just about every essential process in medicine had already been computerized, we physicians continued to process clinical data – our key asset – with pen and paper. Most of us were reluctant to make the switch, and for good reason:
Then, the government stepped in. Shortly after his inauguration in 2000, President George W. Bush outlined a plan to ensure that most Americans had electronic health records within 10 years. “By computerizing health records,” the president said, “we can avoid dangerous medical mistakes, reduce costs, and improve care.” The goal was to eliminate missing charts, duplication of lab testing, ineffective documentation, and inordinate amounts of time spent on paperwork, not to mention illegible handwriting, poor coordination of care between physicians, and many other problems. Studies were quoted, suggesting that EHR shortened inpatient stays, decreased risk of adverse drug interactions, improved the consistency and content of records, and improved continuity of care and follow-up.
The EHR Incentive Program (later renamed the Promoting Interoperability Program) was introduced to encourage physicians and hospitals “to adopt, implement, upgrade, and demonstrate meaningful use of certified electronic health record technology.”
Nearly a quarter-century later, implementation is well behind schedule. According to a 2019 federal study, while nearly all hospitals (96%) have adopted a certified EHR, only 72% of office-based physicians have done so.
There are multiple reasons for this. For one thing, EHR is still by and large slower than pen and paper, because direct data entry is still primarily done by keyboard. Voice recognition, hand-held and wireless devices have been developed, but most work only on specialized tasks. Even the best systems take more clinician time per encounter than the manual processes they replace.
Physicians have been slow to warm to a system that slows them down and forces them to change the way they think and work. In addition, paper systems never crash; the prospect of a server malfunction or Internet failure bringing an entire clinic to a grinding halt is not particularly inviting.
The special needs of dermatology – high patient volumes, multiple diagnoses and prescriptions per patient, the wide variety of procedures we perform, and digital image storage – present further hurdles.
Nevertheless, the march toward electronic record keeping continues, and I continue to receive many questions about choosing a good EHR system. As always, I cannot recommend any specific products since every office has unique needs and requirements.
The key phrase to keep in mind is caveat emptor. Several regulatory bodies exist to test vendor claims and certify system behaviors, but different agencies use different criteria that may or may not be relevant to your requirements. Vaporware is still as common as real software; beware the “feature in the next release” that might never appear, particularly if you need it right now.
Avoid the temptation to buy a flashy new system and then try to adapt it to your office; figure out your needs first, then find a system that meets them.
Unfortunately, there is no easy way around doing the work of comparing one system with another. The most important information a vendor can give you is the names and addresses of two or more offices where you can go watch their system in action. Site visits are time-consuming, but they are only way to pick the best EHR the first time around.
Don’t be the first office using a new system. Let the vendor work out the bugs somewhere else.
Above all, if you have disorganized paper records, don’t count on EHR to automatically solve your problems. Well-designed paper systems usually lend themselves to effective automation, but automating a poorly designed system just increases the chaos. If your paper system is in disarray, solve that problem before considering EHR.
With all of its problems and hurdles, EHRs will inevitably be a part of most of our lives. And for those who take the time to do it right, it will ultimately be an improvement.
Think of information technologies as power tools: They can help you to do things better, but they can also amplify your errors. So choose carefully.
Dr. Eastern practices dermatology and dermatologic surgery in Belleville, N.J. He is the author of numerous articles and textbook chapters, and is a longtime monthly columnist for Dermatology News. Write to him at dermnews@mdedge.com.
I wrote my first column on electronic health records in the mid-1990s. At the time, it seemed like an idea whose time had come. After all, in an era when just about every essential process in medicine had already been computerized, we physicians continued to process clinical data – our key asset – with pen and paper. Most of us were reluctant to make the switch, and for good reason:
Then, the government stepped in. Shortly after his inauguration in 2000, President George W. Bush outlined a plan to ensure that most Americans had electronic health records within 10 years. “By computerizing health records,” the president said, “we can avoid dangerous medical mistakes, reduce costs, and improve care.” The goal was to eliminate missing charts, duplication of lab testing, ineffective documentation, and inordinate amounts of time spent on paperwork, not to mention illegible handwriting, poor coordination of care between physicians, and many other problems. Studies were quoted, suggesting that EHR shortened inpatient stays, decreased risk of adverse drug interactions, improved the consistency and content of records, and improved continuity of care and follow-up.
The EHR Incentive Program (later renamed the Promoting Interoperability Program) was introduced to encourage physicians and hospitals “to adopt, implement, upgrade, and demonstrate meaningful use of certified electronic health record technology.”
Nearly a quarter-century later, implementation is well behind schedule. According to a 2019 federal study, while nearly all hospitals (96%) have adopted a certified EHR, only 72% of office-based physicians have done so.
There are multiple reasons for this. For one thing, EHR is still by and large slower than pen and paper, because direct data entry is still primarily done by keyboard. Voice recognition, hand-held and wireless devices have been developed, but most work only on specialized tasks. Even the best systems take more clinician time per encounter than the manual processes they replace.
Physicians have been slow to warm to a system that slows them down and forces them to change the way they think and work. In addition, paper systems never crash; the prospect of a server malfunction or Internet failure bringing an entire clinic to a grinding halt is not particularly inviting.
The special needs of dermatology – high patient volumes, multiple diagnoses and prescriptions per patient, the wide variety of procedures we perform, and digital image storage – present further hurdles.
Nevertheless, the march toward electronic record keeping continues, and I continue to receive many questions about choosing a good EHR system. As always, I cannot recommend any specific products since every office has unique needs and requirements.
The key phrase to keep in mind is caveat emptor. Several regulatory bodies exist to test vendor claims and certify system behaviors, but different agencies use different criteria that may or may not be relevant to your requirements. Vaporware is still as common as real software; beware the “feature in the next release” that might never appear, particularly if you need it right now.
Avoid the temptation to buy a flashy new system and then try to adapt it to your office; figure out your needs first, then find a system that meets them.
Unfortunately, there is no easy way around doing the work of comparing one system with another. The most important information a vendor can give you is the names and addresses of two or more offices where you can go watch their system in action. Site visits are time-consuming, but they are only way to pick the best EHR the first time around.
Don’t be the first office using a new system. Let the vendor work out the bugs somewhere else.
Above all, if you have disorganized paper records, don’t count on EHR to automatically solve your problems. Well-designed paper systems usually lend themselves to effective automation, but automating a poorly designed system just increases the chaos. If your paper system is in disarray, solve that problem before considering EHR.
With all of its problems and hurdles, EHRs will inevitably be a part of most of our lives. And for those who take the time to do it right, it will ultimately be an improvement.
Think of information technologies as power tools: They can help you to do things better, but they can also amplify your errors. So choose carefully.
Dr. Eastern practices dermatology and dermatologic surgery in Belleville, N.J. He is the author of numerous articles and textbook chapters, and is a longtime monthly columnist for Dermatology News. Write to him at dermnews@mdedge.com.
No-shows
Of all the headaches inherent in a private medical practice, few are more frustrating than patients who make appointments and then fail to keep them.
– almost double the average for all medical offices.
The problem has become so pervasive that many physicians are now charging a fee for missed appointments. I have never been a fan of such fees for a variety of reasons, starting with the anger and bad will that they engender; but also, in my experience, they seldom accomplish their intended goal of changing the behavior.
That’s because fees imply some sort of conscious decision made by a patient to miss an appointment, but studies show that this is rarely the case. Some patients cite transportation issues or childcare obligations. One Canadian study found that nearly a quarter of patients who missed an appointment felt too sick to keep it. Another reason is lack of insurance coverage. Studies have shown that the no-show rate is far higher when the patient is paying out-of-pocket for the visit.
Patients who don’t show up for appointments tend to be younger and poorer, and live farther away from the office than those who attend consistently. Some patients may be unaware that they need to cancel, while others report that they don’t feel obliged to keep appointments because they feel disrespected by the system. One person posted on a medical forum, “Everyone’s time is valuable. When the doctor makes me wait, there are consequences too. Why are there two standards in the situation?”
The most common reason for missed appointments, however, according to multiple studies, is that patients simply forget that they have one. One reason for that is a lag between appointment and visit. Many dermatologists are booked well in advance; by the time the appointment arrives, some patients’ complaints will have resolved spontaneously, while other patients will have found another office willing to see them sooner.
Another big reason is the absence of a strong physician-patient relationship. Perhaps the patient sees a different doctor or physician assistant at each visit and doesn’t feel a particular bond with any of them. Some patients may perceive a lack of concern on the part of the physician. And others may suffer from poor communication; for example, patients frequently become frustrated that a chronic condition has not resolved, when it has not been clearly explained to them that such problems cannot be expected to resolve rapidly or completely.
Whatever the reasons, no-shows are an economic and medicolegal liability. It is worth the considerable effort it often takes to minimize them.
Research suggests that no-show rates can be reduced by providing more same-day or next-day appointments. One large-scale analysis of national data found that same-day appointments accounted for just 2% of no-shows, while appointments booked 15 days or more in advance accounted for nearly a third of them. Canadian studies have likewise found the risk of no-shows increases the further in advance clinics book patients.
Deal with simple forgetfulness by calling your patients the day before to remind them of their appointments. Reasonably priced phone software is available from a variety of vendors to automate this process. Or hire a teenager to do it after school each day.
Whenever possible, use cellphone numbers for reminder calls. Patients often aren’t home during the day, and many don’t listen to their messages when they come in. And patients who have moved will often have a new home phone number, but their cellphone number will be the same.
Decrease the wait for new appointments. Keep some slots open each week for new patients, who will often “shop around” for a faster appointment while they’re waiting for an appointment they already have elsewhere.
But above all, seek to maximize the strength of your physician-patient relationships. Try not to shuttle patients between different physicians or PAs, and make it clear that you are genuinely concerned about their health. Impress upon them the crucial role they play in their own care, which includes keeping all their appointments.
In our office, significant no-shows (for example, a patient with a melanoma who misses a follow-up visit) receive a phone call and a certified letter, and their records go into a special file for close follow-up by the nursing staff.
If you choose to go the missed-appointment-fee route, be sure to post notices in your office and on your website clearly delineating your policy. Emphasize that it is not a service fee, and cannot be billed to insurance.
All missed appointments should be documented in the patient’s record; it’s important clinical and medicolegal information. And habitual no-shows should be dismissed from your practice. You cannot afford them.
Dr. Eastern practices dermatology and dermatologic surgery in Belleville, N.J. He is the author of numerous articles and textbook chapters, and is a longtime monthly columnist for Dermatology News. Write to him at dermnews@mdedge.com.
Of all the headaches inherent in a private medical practice, few are more frustrating than patients who make appointments and then fail to keep them.
– almost double the average for all medical offices.
The problem has become so pervasive that many physicians are now charging a fee for missed appointments. I have never been a fan of such fees for a variety of reasons, starting with the anger and bad will that they engender; but also, in my experience, they seldom accomplish their intended goal of changing the behavior.
That’s because fees imply some sort of conscious decision made by a patient to miss an appointment, but studies show that this is rarely the case. Some patients cite transportation issues or childcare obligations. One Canadian study found that nearly a quarter of patients who missed an appointment felt too sick to keep it. Another reason is lack of insurance coverage. Studies have shown that the no-show rate is far higher when the patient is paying out-of-pocket for the visit.
Patients who don’t show up for appointments tend to be younger and poorer, and live farther away from the office than those who attend consistently. Some patients may be unaware that they need to cancel, while others report that they don’t feel obliged to keep appointments because they feel disrespected by the system. One person posted on a medical forum, “Everyone’s time is valuable. When the doctor makes me wait, there are consequences too. Why are there two standards in the situation?”
The most common reason for missed appointments, however, according to multiple studies, is that patients simply forget that they have one. One reason for that is a lag between appointment and visit. Many dermatologists are booked well in advance; by the time the appointment arrives, some patients’ complaints will have resolved spontaneously, while other patients will have found another office willing to see them sooner.
Another big reason is the absence of a strong physician-patient relationship. Perhaps the patient sees a different doctor or physician assistant at each visit and doesn’t feel a particular bond with any of them. Some patients may perceive a lack of concern on the part of the physician. And others may suffer from poor communication; for example, patients frequently become frustrated that a chronic condition has not resolved, when it has not been clearly explained to them that such problems cannot be expected to resolve rapidly or completely.
Whatever the reasons, no-shows are an economic and medicolegal liability. It is worth the considerable effort it often takes to minimize them.
Research suggests that no-show rates can be reduced by providing more same-day or next-day appointments. One large-scale analysis of national data found that same-day appointments accounted for just 2% of no-shows, while appointments booked 15 days or more in advance accounted for nearly a third of them. Canadian studies have likewise found the risk of no-shows increases the further in advance clinics book patients.
Deal with simple forgetfulness by calling your patients the day before to remind them of their appointments. Reasonably priced phone software is available from a variety of vendors to automate this process. Or hire a teenager to do it after school each day.
Whenever possible, use cellphone numbers for reminder calls. Patients often aren’t home during the day, and many don’t listen to their messages when they come in. And patients who have moved will often have a new home phone number, but their cellphone number will be the same.
Decrease the wait for new appointments. Keep some slots open each week for new patients, who will often “shop around” for a faster appointment while they’re waiting for an appointment they already have elsewhere.
But above all, seek to maximize the strength of your physician-patient relationships. Try not to shuttle patients between different physicians or PAs, and make it clear that you are genuinely concerned about their health. Impress upon them the crucial role they play in their own care, which includes keeping all their appointments.
In our office, significant no-shows (for example, a patient with a melanoma who misses a follow-up visit) receive a phone call and a certified letter, and their records go into a special file for close follow-up by the nursing staff.
If you choose to go the missed-appointment-fee route, be sure to post notices in your office and on your website clearly delineating your policy. Emphasize that it is not a service fee, and cannot be billed to insurance.
All missed appointments should be documented in the patient’s record; it’s important clinical and medicolegal information. And habitual no-shows should be dismissed from your practice. You cannot afford them.
Dr. Eastern practices dermatology and dermatologic surgery in Belleville, N.J. He is the author of numerous articles and textbook chapters, and is a longtime monthly columnist for Dermatology News. Write to him at dermnews@mdedge.com.
Of all the headaches inherent in a private medical practice, few are more frustrating than patients who make appointments and then fail to keep them.
– almost double the average for all medical offices.
The problem has become so pervasive that many physicians are now charging a fee for missed appointments. I have never been a fan of such fees for a variety of reasons, starting with the anger and bad will that they engender; but also, in my experience, they seldom accomplish their intended goal of changing the behavior.
That’s because fees imply some sort of conscious decision made by a patient to miss an appointment, but studies show that this is rarely the case. Some patients cite transportation issues or childcare obligations. One Canadian study found that nearly a quarter of patients who missed an appointment felt too sick to keep it. Another reason is lack of insurance coverage. Studies have shown that the no-show rate is far higher when the patient is paying out-of-pocket for the visit.
Patients who don’t show up for appointments tend to be younger and poorer, and live farther away from the office than those who attend consistently. Some patients may be unaware that they need to cancel, while others report that they don’t feel obliged to keep appointments because they feel disrespected by the system. One person posted on a medical forum, “Everyone’s time is valuable. When the doctor makes me wait, there are consequences too. Why are there two standards in the situation?”
The most common reason for missed appointments, however, according to multiple studies, is that patients simply forget that they have one. One reason for that is a lag between appointment and visit. Many dermatologists are booked well in advance; by the time the appointment arrives, some patients’ complaints will have resolved spontaneously, while other patients will have found another office willing to see them sooner.
Another big reason is the absence of a strong physician-patient relationship. Perhaps the patient sees a different doctor or physician assistant at each visit and doesn’t feel a particular bond with any of them. Some patients may perceive a lack of concern on the part of the physician. And others may suffer from poor communication; for example, patients frequently become frustrated that a chronic condition has not resolved, when it has not been clearly explained to them that such problems cannot be expected to resolve rapidly or completely.
Whatever the reasons, no-shows are an economic and medicolegal liability. It is worth the considerable effort it often takes to minimize them.
Research suggests that no-show rates can be reduced by providing more same-day or next-day appointments. One large-scale analysis of national data found that same-day appointments accounted for just 2% of no-shows, while appointments booked 15 days or more in advance accounted for nearly a third of them. Canadian studies have likewise found the risk of no-shows increases the further in advance clinics book patients.
Deal with simple forgetfulness by calling your patients the day before to remind them of their appointments. Reasonably priced phone software is available from a variety of vendors to automate this process. Or hire a teenager to do it after school each day.
Whenever possible, use cellphone numbers for reminder calls. Patients often aren’t home during the day, and many don’t listen to their messages when they come in. And patients who have moved will often have a new home phone number, but their cellphone number will be the same.
Decrease the wait for new appointments. Keep some slots open each week for new patients, who will often “shop around” for a faster appointment while they’re waiting for an appointment they already have elsewhere.
But above all, seek to maximize the strength of your physician-patient relationships. Try not to shuttle patients between different physicians or PAs, and make it clear that you are genuinely concerned about their health. Impress upon them the crucial role they play in their own care, which includes keeping all their appointments.
In our office, significant no-shows (for example, a patient with a melanoma who misses a follow-up visit) receive a phone call and a certified letter, and their records go into a special file for close follow-up by the nursing staff.
If you choose to go the missed-appointment-fee route, be sure to post notices in your office and on your website clearly delineating your policy. Emphasize that it is not a service fee, and cannot be billed to insurance.
All missed appointments should be documented in the patient’s record; it’s important clinical and medicolegal information. And habitual no-shows should be dismissed from your practice. You cannot afford them.
Dr. Eastern practices dermatology and dermatologic surgery in Belleville, N.J. He is the author of numerous articles and textbook chapters, and is a longtime monthly columnist for Dermatology News. Write to him at dermnews@mdedge.com.
Medical assistants
When I began in private practice several eons ago, I employed only registered nurses (RNs) and licensed practical nurses (LPNs) in my office – as did, I think, most other physicians.
That is still the preferred way to go from an efficiency perspective, as well as the ability to delegate such tasks as blood collection and administering intramuscular injections. Unfortunately,
Given this reality, it makes sense to understand how the use of medical assistants has changed private medical practice, and how the most effective MAs manage their roles and maximize their efficiency in the office.
A recent article by two physicians at the University of Michigan, Ann Arbor, is one of the few published papers to address this issue. It presents the results of a cross-sectional study examining the MA’s experience and key factors that enhance or reduce efficiencies.
The authors sent an email survey to 86 MAs working in six clinics within the department of family medicine at the University of Michigan Medical Center, and received responses from 75 of them, including 61 who completed the entire survey. They then singled out 18 individuals deemed “most efficient” by their peers and conducted face-to-face interviews with them.
The surveys and interviews looked at how MAs identified personal strategies for efficiency, dealt with barriers to implementing those strategies, and navigated interoffice relationships, as well as how all of this affected overall job satisfaction.
All 61 respondents who completed the full survey agreed that the MA role was “very important to keep the clinic functioning” and nearly all said that working in health care was “a calling” for them. About half agreed that their work was very stressful, and about the same percentage reported that there was inadequate MA staffing at their clinic. Others complained of limited pay and promotion opportunities.
The surveyed MAs described important work values that increased their efficiency. These included good communication, strong teamwork, and workload sharing, as well as individual strategies such as multitasking, limiting patient conversations, and completing tasks in a consistent way to improve accuracy.
Other strategies identified as contributing to an efficient operation included preclinic huddles, reviews of patient records before the patient’s arrival, and completing routine office duties before the start of office hours.
Respondents were then asked to identify barriers to clinic efficiency, and most of them involved physicians who barked orders at them, did not complete paperwork or sign orders in a timely manner, and agreed to see late-arriving patients. Some MAs suggested that physicians refrain from “talking down” to them, and teach rather than criticize. They also faulted decisions affecting patient flow made by other staffers without soliciting the MAs’ input.
Despite these barriers, the authors found that most of the surveyed MAs agreed that their work was valued by doctors. “Proper training of managers to provide ... support and ensure equitable workloads may be one strategy to ensure that staff members feel the workplace is fair and collegial,” they said.
“Many described the working relationships with physicians as critical to their satisfaction at work and indicated that strong partnerships motivated them to do their best to make the physician’s day easier,” they added.
At the same time, the authors noted that most survey subjects reported that their jobs were “stressful,” and believed that their stress went underrecognized by physicians. They argued that “it’s important for physicians to be cognizant of these patterns and clinic culture, as reducing a hierarchy-based environment will be appreciated by MAs.”
Since this study involved only MAs in a family practice setting, further studies will be needed to determine whether these results translate to specialty offices – and whether the unique issues inherent in various specialty environments elicit different efficiency contributors and barriers.
Overall, though, “staff job satisfaction is linked to improved quality of care, so treating staff well contributes to high-value care for patients,” the authors wrote. “Disseminating practices that staff members themselves have identified as effective, and being attentive to how staff members are treated, may increase individual efficiency while improving staff retention and satisfaction.”
Dr. Eastern practices dermatology and dermatologic surgery in Belleville, N.J. He is the author of numerous articles and textbook chapters, and is a longtime monthly columnist for Dermatology News. Write to him at dermnews@mdedge.com.
When I began in private practice several eons ago, I employed only registered nurses (RNs) and licensed practical nurses (LPNs) in my office – as did, I think, most other physicians.
That is still the preferred way to go from an efficiency perspective, as well as the ability to delegate such tasks as blood collection and administering intramuscular injections. Unfortunately,
Given this reality, it makes sense to understand how the use of medical assistants has changed private medical practice, and how the most effective MAs manage their roles and maximize their efficiency in the office.
A recent article by two physicians at the University of Michigan, Ann Arbor, is one of the few published papers to address this issue. It presents the results of a cross-sectional study examining the MA’s experience and key factors that enhance or reduce efficiencies.
The authors sent an email survey to 86 MAs working in six clinics within the department of family medicine at the University of Michigan Medical Center, and received responses from 75 of them, including 61 who completed the entire survey. They then singled out 18 individuals deemed “most efficient” by their peers and conducted face-to-face interviews with them.
The surveys and interviews looked at how MAs identified personal strategies for efficiency, dealt with barriers to implementing those strategies, and navigated interoffice relationships, as well as how all of this affected overall job satisfaction.
All 61 respondents who completed the full survey agreed that the MA role was “very important to keep the clinic functioning” and nearly all said that working in health care was “a calling” for them. About half agreed that their work was very stressful, and about the same percentage reported that there was inadequate MA staffing at their clinic. Others complained of limited pay and promotion opportunities.
The surveyed MAs described important work values that increased their efficiency. These included good communication, strong teamwork, and workload sharing, as well as individual strategies such as multitasking, limiting patient conversations, and completing tasks in a consistent way to improve accuracy.
Other strategies identified as contributing to an efficient operation included preclinic huddles, reviews of patient records before the patient’s arrival, and completing routine office duties before the start of office hours.
Respondents were then asked to identify barriers to clinic efficiency, and most of them involved physicians who barked orders at them, did not complete paperwork or sign orders in a timely manner, and agreed to see late-arriving patients. Some MAs suggested that physicians refrain from “talking down” to them, and teach rather than criticize. They also faulted decisions affecting patient flow made by other staffers without soliciting the MAs’ input.
Despite these barriers, the authors found that most of the surveyed MAs agreed that their work was valued by doctors. “Proper training of managers to provide ... support and ensure equitable workloads may be one strategy to ensure that staff members feel the workplace is fair and collegial,” they said.
“Many described the working relationships with physicians as critical to their satisfaction at work and indicated that strong partnerships motivated them to do their best to make the physician’s day easier,” they added.
At the same time, the authors noted that most survey subjects reported that their jobs were “stressful,” and believed that their stress went underrecognized by physicians. They argued that “it’s important for physicians to be cognizant of these patterns and clinic culture, as reducing a hierarchy-based environment will be appreciated by MAs.”
Since this study involved only MAs in a family practice setting, further studies will be needed to determine whether these results translate to specialty offices – and whether the unique issues inherent in various specialty environments elicit different efficiency contributors and barriers.
Overall, though, “staff job satisfaction is linked to improved quality of care, so treating staff well contributes to high-value care for patients,” the authors wrote. “Disseminating practices that staff members themselves have identified as effective, and being attentive to how staff members are treated, may increase individual efficiency while improving staff retention and satisfaction.”
Dr. Eastern practices dermatology and dermatologic surgery in Belleville, N.J. He is the author of numerous articles and textbook chapters, and is a longtime monthly columnist for Dermatology News. Write to him at dermnews@mdedge.com.
When I began in private practice several eons ago, I employed only registered nurses (RNs) and licensed practical nurses (LPNs) in my office – as did, I think, most other physicians.
That is still the preferred way to go from an efficiency perspective, as well as the ability to delegate such tasks as blood collection and administering intramuscular injections. Unfortunately,
Given this reality, it makes sense to understand how the use of medical assistants has changed private medical practice, and how the most effective MAs manage their roles and maximize their efficiency in the office.
A recent article by two physicians at the University of Michigan, Ann Arbor, is one of the few published papers to address this issue. It presents the results of a cross-sectional study examining the MA’s experience and key factors that enhance or reduce efficiencies.
The authors sent an email survey to 86 MAs working in six clinics within the department of family medicine at the University of Michigan Medical Center, and received responses from 75 of them, including 61 who completed the entire survey. They then singled out 18 individuals deemed “most efficient” by their peers and conducted face-to-face interviews with them.
The surveys and interviews looked at how MAs identified personal strategies for efficiency, dealt with barriers to implementing those strategies, and navigated interoffice relationships, as well as how all of this affected overall job satisfaction.
All 61 respondents who completed the full survey agreed that the MA role was “very important to keep the clinic functioning” and nearly all said that working in health care was “a calling” for them. About half agreed that their work was very stressful, and about the same percentage reported that there was inadequate MA staffing at their clinic. Others complained of limited pay and promotion opportunities.
The surveyed MAs described important work values that increased their efficiency. These included good communication, strong teamwork, and workload sharing, as well as individual strategies such as multitasking, limiting patient conversations, and completing tasks in a consistent way to improve accuracy.
Other strategies identified as contributing to an efficient operation included preclinic huddles, reviews of patient records before the patient’s arrival, and completing routine office duties before the start of office hours.
Respondents were then asked to identify barriers to clinic efficiency, and most of them involved physicians who barked orders at them, did not complete paperwork or sign orders in a timely manner, and agreed to see late-arriving patients. Some MAs suggested that physicians refrain from “talking down” to them, and teach rather than criticize. They also faulted decisions affecting patient flow made by other staffers without soliciting the MAs’ input.
Despite these barriers, the authors found that most of the surveyed MAs agreed that their work was valued by doctors. “Proper training of managers to provide ... support and ensure equitable workloads may be one strategy to ensure that staff members feel the workplace is fair and collegial,” they said.
“Many described the working relationships with physicians as critical to their satisfaction at work and indicated that strong partnerships motivated them to do their best to make the physician’s day easier,” they added.
At the same time, the authors noted that most survey subjects reported that their jobs were “stressful,” and believed that their stress went underrecognized by physicians. They argued that “it’s important for physicians to be cognizant of these patterns and clinic culture, as reducing a hierarchy-based environment will be appreciated by MAs.”
Since this study involved only MAs in a family practice setting, further studies will be needed to determine whether these results translate to specialty offices – and whether the unique issues inherent in various specialty environments elicit different efficiency contributors and barriers.
Overall, though, “staff job satisfaction is linked to improved quality of care, so treating staff well contributes to high-value care for patients,” the authors wrote. “Disseminating practices that staff members themselves have identified as effective, and being attentive to how staff members are treated, may increase individual efficiency while improving staff retention and satisfaction.”
Dr. Eastern practices dermatology and dermatologic surgery in Belleville, N.J. He is the author of numerous articles and textbook chapters, and is a longtime monthly columnist for Dermatology News. Write to him at dermnews@mdedge.com.
Employment and buyout agreements
. The most common question was, “Do I really need to go to the trouble and expense of negotiating them?” If you have more than one physician in your group, you absolutely do need written contracts for a variety of reasons, but mostly to avoid conflicts later on. The proverbial “handshake agreement” is worthless in a major business dispute; everyone loses in such situations except the lawyers and accountants.
Mergers and buy-ins were covered at some length in my two previous columns. If the arrangement is to be one of employer and employees rather than a merger of equal partners, you will need an employment agreement to cover duties, requirements, expectations, and benefits. They define how each practitioner/employee will be paid, along with paid time off, health insurance, expense allowances, and malpractice coverage, among other basics. The more that is spelled out in the employment agreement, the fewer disagreements you are likely to have down the road.
Many employment contracts include a “termination without cause” clause, which benefits both the practice and the practitioners. It allows a practice to terminate a new associate if it feels a mistake has been made, even if he or she has done nothing wrong. On the other hand, the newcomer has the option to terminate if a better offer arises, their spouse hates the area, or for any other reason.
Buyouts should be addressed in advance as well. Several recent correspondents told me they didn’t see the necessity of writing a buyout agreement, because they plan to eventually sell their practice, rendering any buyout conditions moot. But what happens if an associate dies, becomes permanently disabled, or abruptly decides to leave the practice? If you haven’t prepared for such eventualities, you could find yourself receiving a demand from your ex-partner (or surviving spouse) for immediate payment of that partner’s portion of the practice’s value. And your valuation of the practice is likely to be severely at odds with the other party’s. Meanwhile, remaining partners must cover all the practice’s expenses and deal with an increased patient load.
A buyout agreement avoids these problems by planning for such eventualities in advance. You must agree on how a buyout amount will be valued. As I’ve said in previous columns, I strongly advise using a formula, not a fixed amount. If a buyout is based on 15- or 20-year-old reimbursements, the buyout will have no relationship to what the partners are currently being paid. Likewise, any buyout calculated at “appraised value” is a problem, because the buyout amount remains a mystery until an appraisal is performed. If the appraised value ends up being too high, the remaining owners may refuse to pay it. Have an actuary create a formula, so that a buyout figure can be calculated at any time. This area, especially, is where you need experienced, competent legal advice.
To avoid surprises, any buyout should require ample notice (6-12 months is common) to allow time to rearrange finances and recruit a new provider. Vesting schedules, similar to those used in retirement plans, are also popular. If a partner leaves before a prescribed time period has elapsed – say, 20 years – the buyout is proportionally reduced.
Buyouts can also be useful when dealing with noncompete agreements, which are notoriously difficult (and expensive) to enforce. One solution is a buyout penalty; a departing partner can compete with his or her former practice, but at the cost of a substantially reduced buyout. This permits competition, but discourages it, and compensates the targeted practice.
Buyouts are also a potential solution to some buy-in issues. A new associate entering an established practice may not be able to contribute assets equal to existing partners’ stakes and may lack the cash necessary to make up the difference. One alternative is to agree that any inequalities will be compensated at the other end in buyout value. Those partners contributing more assets will receive larger buyouts than those contributing less.
As I’ve said many times, these are not negotiations to undertake on your own. Enlist the aid of a consultant or attorney (or both) with ample medical practice experience.
Dr. Eastern practices dermatology and dermatologic surgery in Belleville, N.J. He is the author of numerous articles and textbook chapters, and is a longtime monthly columnist for Dermatology News. Write to him at dermnews@mdedge.com.
. The most common question was, “Do I really need to go to the trouble and expense of negotiating them?” If you have more than one physician in your group, you absolutely do need written contracts for a variety of reasons, but mostly to avoid conflicts later on. The proverbial “handshake agreement” is worthless in a major business dispute; everyone loses in such situations except the lawyers and accountants.
Mergers and buy-ins were covered at some length in my two previous columns. If the arrangement is to be one of employer and employees rather than a merger of equal partners, you will need an employment agreement to cover duties, requirements, expectations, and benefits. They define how each practitioner/employee will be paid, along with paid time off, health insurance, expense allowances, and malpractice coverage, among other basics. The more that is spelled out in the employment agreement, the fewer disagreements you are likely to have down the road.
Many employment contracts include a “termination without cause” clause, which benefits both the practice and the practitioners. It allows a practice to terminate a new associate if it feels a mistake has been made, even if he or she has done nothing wrong. On the other hand, the newcomer has the option to terminate if a better offer arises, their spouse hates the area, or for any other reason.
Buyouts should be addressed in advance as well. Several recent correspondents told me they didn’t see the necessity of writing a buyout agreement, because they plan to eventually sell their practice, rendering any buyout conditions moot. But what happens if an associate dies, becomes permanently disabled, or abruptly decides to leave the practice? If you haven’t prepared for such eventualities, you could find yourself receiving a demand from your ex-partner (or surviving spouse) for immediate payment of that partner’s portion of the practice’s value. And your valuation of the practice is likely to be severely at odds with the other party’s. Meanwhile, remaining partners must cover all the practice’s expenses and deal with an increased patient load.
A buyout agreement avoids these problems by planning for such eventualities in advance. You must agree on how a buyout amount will be valued. As I’ve said in previous columns, I strongly advise using a formula, not a fixed amount. If a buyout is based on 15- or 20-year-old reimbursements, the buyout will have no relationship to what the partners are currently being paid. Likewise, any buyout calculated at “appraised value” is a problem, because the buyout amount remains a mystery until an appraisal is performed. If the appraised value ends up being too high, the remaining owners may refuse to pay it. Have an actuary create a formula, so that a buyout figure can be calculated at any time. This area, especially, is where you need experienced, competent legal advice.
To avoid surprises, any buyout should require ample notice (6-12 months is common) to allow time to rearrange finances and recruit a new provider. Vesting schedules, similar to those used in retirement plans, are also popular. If a partner leaves before a prescribed time period has elapsed – say, 20 years – the buyout is proportionally reduced.
Buyouts can also be useful when dealing with noncompete agreements, which are notoriously difficult (and expensive) to enforce. One solution is a buyout penalty; a departing partner can compete with his or her former practice, but at the cost of a substantially reduced buyout. This permits competition, but discourages it, and compensates the targeted practice.
Buyouts are also a potential solution to some buy-in issues. A new associate entering an established practice may not be able to contribute assets equal to existing partners’ stakes and may lack the cash necessary to make up the difference. One alternative is to agree that any inequalities will be compensated at the other end in buyout value. Those partners contributing more assets will receive larger buyouts than those contributing less.
As I’ve said many times, these are not negotiations to undertake on your own. Enlist the aid of a consultant or attorney (or both) with ample medical practice experience.
Dr. Eastern practices dermatology and dermatologic surgery in Belleville, N.J. He is the author of numerous articles and textbook chapters, and is a longtime monthly columnist for Dermatology News. Write to him at dermnews@mdedge.com.
. The most common question was, “Do I really need to go to the trouble and expense of negotiating them?” If you have more than one physician in your group, you absolutely do need written contracts for a variety of reasons, but mostly to avoid conflicts later on. The proverbial “handshake agreement” is worthless in a major business dispute; everyone loses in such situations except the lawyers and accountants.
Mergers and buy-ins were covered at some length in my two previous columns. If the arrangement is to be one of employer and employees rather than a merger of equal partners, you will need an employment agreement to cover duties, requirements, expectations, and benefits. They define how each practitioner/employee will be paid, along with paid time off, health insurance, expense allowances, and malpractice coverage, among other basics. The more that is spelled out in the employment agreement, the fewer disagreements you are likely to have down the road.
Many employment contracts include a “termination without cause” clause, which benefits both the practice and the practitioners. It allows a practice to terminate a new associate if it feels a mistake has been made, even if he or she has done nothing wrong. On the other hand, the newcomer has the option to terminate if a better offer arises, their spouse hates the area, or for any other reason.
Buyouts should be addressed in advance as well. Several recent correspondents told me they didn’t see the necessity of writing a buyout agreement, because they plan to eventually sell their practice, rendering any buyout conditions moot. But what happens if an associate dies, becomes permanently disabled, or abruptly decides to leave the practice? If you haven’t prepared for such eventualities, you could find yourself receiving a demand from your ex-partner (or surviving spouse) for immediate payment of that partner’s portion of the practice’s value. And your valuation of the practice is likely to be severely at odds with the other party’s. Meanwhile, remaining partners must cover all the practice’s expenses and deal with an increased patient load.
A buyout agreement avoids these problems by planning for such eventualities in advance. You must agree on how a buyout amount will be valued. As I’ve said in previous columns, I strongly advise using a formula, not a fixed amount. If a buyout is based on 15- or 20-year-old reimbursements, the buyout will have no relationship to what the partners are currently being paid. Likewise, any buyout calculated at “appraised value” is a problem, because the buyout amount remains a mystery until an appraisal is performed. If the appraised value ends up being too high, the remaining owners may refuse to pay it. Have an actuary create a formula, so that a buyout figure can be calculated at any time. This area, especially, is where you need experienced, competent legal advice.
To avoid surprises, any buyout should require ample notice (6-12 months is common) to allow time to rearrange finances and recruit a new provider. Vesting schedules, similar to those used in retirement plans, are also popular. If a partner leaves before a prescribed time period has elapsed – say, 20 years – the buyout is proportionally reduced.
Buyouts can also be useful when dealing with noncompete agreements, which are notoriously difficult (and expensive) to enforce. One solution is a buyout penalty; a departing partner can compete with his or her former practice, but at the cost of a substantially reduced buyout. This permits competition, but discourages it, and compensates the targeted practice.
Buyouts are also a potential solution to some buy-in issues. A new associate entering an established practice may not be able to contribute assets equal to existing partners’ stakes and may lack the cash necessary to make up the difference. One alternative is to agree that any inequalities will be compensated at the other end in buyout value. Those partners contributing more assets will receive larger buyouts than those contributing less.
As I’ve said many times, these are not negotiations to undertake on your own. Enlist the aid of a consultant or attorney (or both) with ample medical practice experience.
Dr. Eastern practices dermatology and dermatologic surgery in Belleville, N.J. He is the author of numerous articles and textbook chapters, and is a longtime monthly columnist for Dermatology News. Write to him at dermnews@mdedge.com.
More practice merger options
The continuing than larger ones. While there are some smaller offices offering unique services that may be able to remain small, most small general practices will be forced to at least consider a larger alternative. Recently, I discussed one option – merging individual practices into a larger one – but others are available.
One alternate strategy is to form a cooperative group. If you look around your area of practice, you will likely find other small practices in similar situations that might be willing to collaborate with you for the purpose of pooling your billing and purchasing resources. This allows each participant to maintain independence, yet share office overhead expenses and employee salaries for mutual benefit. If that arrangement works, and remains satisfactory for all participants, you can consider expanding your sharing of expenditures, such as collective purchasing of supplies and equipment, and centralizing appointment scheduling. Such an arrangement might be particularly attractive to physicians in later stages of their careers who need to alleviate financial burdens but don’t wish to close up shop just yet.
After more time has passed, if everyone remains happy with the arrangement, an outright merger can be considered, allowing the group to negotiate higher insurance remunerations and even lower overhead costs. Obviously, projects of this size and scope require careful planning and implementation, and should not be undertaken without the help of competent legal counsel and an experienced business consultant.
Another option is to join an independent practice association (IPA), if one is operating in your area. IPAs are physician-directed legal entities, formed to provide the same advantages enjoyed by large group practices while allowing individual members to remain independent. IPAs have greater purchasing power, allowing members to cut costs on medical and office supplies. They can also negotiate more favorable contracts with insurance companies and other payers.
Before joining such an organization, examine its legal status carefully. Some IPAs have been charged with antitrust violations because their member practices are, in reality, competitors. Make certain that any IPA you consider joining abides by antitrust and price fixing laws. Look carefully at its financial solvency as well, as IPAs have also been known to fail, leaving former members to pick up the tab.
An alternative to the IPA is the accountable care organization (ACO), a relatively new entity created as part of the Affordable Care Act. Like an IPA, an ACO’s basic purpose is to limit unnecessary spending; but ACOs are typically limited to Medicare and Medicaid recipients, and involve a larger network of doctors and hospitals sharing financial and medical responsibility for patient care. Criteria for limits on spending are established by the Centers for Medicare & Medicaid Services (CMS).
ACOs offer financial incentives to cooperate, and to save money by avoiding unnecessary tests and procedures. A key component is the sharing of information. Providers who save money while also meeting quality targets are theoretically entitled to a portion of the savings. According to federal data, ACOs saved Medicare $4.1 billion in 2020). As of January 2022, 483 ACOs were participating in the Medicare Shared Savings Program. A similar entity designed for private-sector patients is the clinically integrated network (CIN), created by the Federal Trade Commission to serve the commercial or self-insured market, while ACOs treat Medicare and Medicaid patients. Like ACOs, the idea is to work together to improve care and reduce costs by sharing records and tracking data.
When joining any group, read the agreement carefully for any clauses that might infringe on your clinical judgment. In particular, be sure that there are no restrictions on patient treatment or physician referral options for your patients. You should also negotiate an escape clause, allowing you to opt out if you become unhappy with the arrangement.
Clearly, the price of remaining autonomous is significant, and many private practitioners are unwilling to pay it. In 2019, the American Medical Association reported that for the first time, there were fewer physician owners (45.9%) than employees (47.4%).
But as I have written many times, those of us who remain committed to independence will find ways to preserve it. In medicine, as in life, those most responsive to change will survive and flourish.
Dr. Eastern practices dermatology and dermatologic surgery in Belleville, N.J. He is the author of numerous articles and textbook chapters, and is a longtime monthly columnist for Dermatology News. Write to him at dermnews@mdedge.com.
The continuing than larger ones. While there are some smaller offices offering unique services that may be able to remain small, most small general practices will be forced to at least consider a larger alternative. Recently, I discussed one option – merging individual practices into a larger one – but others are available.
One alternate strategy is to form a cooperative group. If you look around your area of practice, you will likely find other small practices in similar situations that might be willing to collaborate with you for the purpose of pooling your billing and purchasing resources. This allows each participant to maintain independence, yet share office overhead expenses and employee salaries for mutual benefit. If that arrangement works, and remains satisfactory for all participants, you can consider expanding your sharing of expenditures, such as collective purchasing of supplies and equipment, and centralizing appointment scheduling. Such an arrangement might be particularly attractive to physicians in later stages of their careers who need to alleviate financial burdens but don’t wish to close up shop just yet.
After more time has passed, if everyone remains happy with the arrangement, an outright merger can be considered, allowing the group to negotiate higher insurance remunerations and even lower overhead costs. Obviously, projects of this size and scope require careful planning and implementation, and should not be undertaken without the help of competent legal counsel and an experienced business consultant.
Another option is to join an independent practice association (IPA), if one is operating in your area. IPAs are physician-directed legal entities, formed to provide the same advantages enjoyed by large group practices while allowing individual members to remain independent. IPAs have greater purchasing power, allowing members to cut costs on medical and office supplies. They can also negotiate more favorable contracts with insurance companies and other payers.
Before joining such an organization, examine its legal status carefully. Some IPAs have been charged with antitrust violations because their member practices are, in reality, competitors. Make certain that any IPA you consider joining abides by antitrust and price fixing laws. Look carefully at its financial solvency as well, as IPAs have also been known to fail, leaving former members to pick up the tab.
An alternative to the IPA is the accountable care organization (ACO), a relatively new entity created as part of the Affordable Care Act. Like an IPA, an ACO’s basic purpose is to limit unnecessary spending; but ACOs are typically limited to Medicare and Medicaid recipients, and involve a larger network of doctors and hospitals sharing financial and medical responsibility for patient care. Criteria for limits on spending are established by the Centers for Medicare & Medicaid Services (CMS).
ACOs offer financial incentives to cooperate, and to save money by avoiding unnecessary tests and procedures. A key component is the sharing of information. Providers who save money while also meeting quality targets are theoretically entitled to a portion of the savings. According to federal data, ACOs saved Medicare $4.1 billion in 2020). As of January 2022, 483 ACOs were participating in the Medicare Shared Savings Program. A similar entity designed for private-sector patients is the clinically integrated network (CIN), created by the Federal Trade Commission to serve the commercial or self-insured market, while ACOs treat Medicare and Medicaid patients. Like ACOs, the idea is to work together to improve care and reduce costs by sharing records and tracking data.
When joining any group, read the agreement carefully for any clauses that might infringe on your clinical judgment. In particular, be sure that there are no restrictions on patient treatment or physician referral options for your patients. You should also negotiate an escape clause, allowing you to opt out if you become unhappy with the arrangement.
Clearly, the price of remaining autonomous is significant, and many private practitioners are unwilling to pay it. In 2019, the American Medical Association reported that for the first time, there were fewer physician owners (45.9%) than employees (47.4%).
But as I have written many times, those of us who remain committed to independence will find ways to preserve it. In medicine, as in life, those most responsive to change will survive and flourish.
Dr. Eastern practices dermatology and dermatologic surgery in Belleville, N.J. He is the author of numerous articles and textbook chapters, and is a longtime monthly columnist for Dermatology News. Write to him at dermnews@mdedge.com.
The continuing than larger ones. While there are some smaller offices offering unique services that may be able to remain small, most small general practices will be forced to at least consider a larger alternative. Recently, I discussed one option – merging individual practices into a larger one – but others are available.
One alternate strategy is to form a cooperative group. If you look around your area of practice, you will likely find other small practices in similar situations that might be willing to collaborate with you for the purpose of pooling your billing and purchasing resources. This allows each participant to maintain independence, yet share office overhead expenses and employee salaries for mutual benefit. If that arrangement works, and remains satisfactory for all participants, you can consider expanding your sharing of expenditures, such as collective purchasing of supplies and equipment, and centralizing appointment scheduling. Such an arrangement might be particularly attractive to physicians in later stages of their careers who need to alleviate financial burdens but don’t wish to close up shop just yet.
After more time has passed, if everyone remains happy with the arrangement, an outright merger can be considered, allowing the group to negotiate higher insurance remunerations and even lower overhead costs. Obviously, projects of this size and scope require careful planning and implementation, and should not be undertaken without the help of competent legal counsel and an experienced business consultant.
Another option is to join an independent practice association (IPA), if one is operating in your area. IPAs are physician-directed legal entities, formed to provide the same advantages enjoyed by large group practices while allowing individual members to remain independent. IPAs have greater purchasing power, allowing members to cut costs on medical and office supplies. They can also negotiate more favorable contracts with insurance companies and other payers.
Before joining such an organization, examine its legal status carefully. Some IPAs have been charged with antitrust violations because their member practices are, in reality, competitors. Make certain that any IPA you consider joining abides by antitrust and price fixing laws. Look carefully at its financial solvency as well, as IPAs have also been known to fail, leaving former members to pick up the tab.
An alternative to the IPA is the accountable care organization (ACO), a relatively new entity created as part of the Affordable Care Act. Like an IPA, an ACO’s basic purpose is to limit unnecessary spending; but ACOs are typically limited to Medicare and Medicaid recipients, and involve a larger network of doctors and hospitals sharing financial and medical responsibility for patient care. Criteria for limits on spending are established by the Centers for Medicare & Medicaid Services (CMS).
ACOs offer financial incentives to cooperate, and to save money by avoiding unnecessary tests and procedures. A key component is the sharing of information. Providers who save money while also meeting quality targets are theoretically entitled to a portion of the savings. According to federal data, ACOs saved Medicare $4.1 billion in 2020). As of January 2022, 483 ACOs were participating in the Medicare Shared Savings Program. A similar entity designed for private-sector patients is the clinically integrated network (CIN), created by the Federal Trade Commission to serve the commercial or self-insured market, while ACOs treat Medicare and Medicaid patients. Like ACOs, the idea is to work together to improve care and reduce costs by sharing records and tracking data.
When joining any group, read the agreement carefully for any clauses that might infringe on your clinical judgment. In particular, be sure that there are no restrictions on patient treatment or physician referral options for your patients. You should also negotiate an escape clause, allowing you to opt out if you become unhappy with the arrangement.
Clearly, the price of remaining autonomous is significant, and many private practitioners are unwilling to pay it. In 2019, the American Medical Association reported that for the first time, there were fewer physician owners (45.9%) than employees (47.4%).
But as I have written many times, those of us who remain committed to independence will find ways to preserve it. In medicine, as in life, those most responsive to change will survive and flourish.
Dr. Eastern practices dermatology and dermatologic surgery in Belleville, N.J. He is the author of numerous articles and textbook chapters, and is a longtime monthly columnist for Dermatology News. Write to him at dermnews@mdedge.com.
Merging small practices
Difficult economic times and the unpredictable consequences of health care reform are making an increasing number of solo practitioners and small private groups very nervous. Yet, many balk at the prospect of selling to private equity companies.
Merging offers many benefits: Better overall management, centralized and efficient billing and collection, group purchasing discounts, and reduced overhead, among others; but careful planning, and a written agreement, are essential. If you are considering such an option, here are some things to think about.
You should begin with an evaluation and comparison of the separate groups’ respective finances. This should include a history of production, collections, overhead, and liabilities. Basically, you want to locate and identify all assets and liabilities that will be combined into the new group. One area of immediate importance is Medicare participation. Which members now currently participate and which do not? Since the new group will need to have a single position, all of the physicians must agree on that issue.
Who will be in charge? Not every physician is a qualified manager. The manager should be the physician who is willing to spend the time it takes to sign checks, interact with the administrator, and ensure that other matters such as filing tax returns and approving minor purchases arc carried out properly.
What is the compensation formula? Compensation arrangements should be based on each physician’s current financial data and the goals of the practice. Will everyone be paid only for what they do individually, or will revenue be shared equally? I favor a combination, so productivity is rewarded but your income doesn’t drop to zero when you take time off.
Which practices have a retirement plan and which do not? Will you keep your retirement plans separate, or combine them? If the latter, you will have to agree on the terms of the new plan, which can be the same or different from any of the existing plans. You’ll probably need some legal guidance to insure that assets from existing plans can be transferred into a new plan without tax issues. You may also have to address the problem of physicians who currently do not have a plan who, for whatever reason, may not want to be forced into making retirement plan contributions.
The often-problematic issue of employees and their salaries needs to be addressed, to decide which employees will be needed in the new group, and to determine a salary structure. Each practice’s policies related to vacation, sick leave, and other such issues should be reviewed, and an overall policy for the new group developed.
Other common sticking points are issues related to facilities. If the practices intend to consolidate into one location, the physicians must decide which of the specific assets of each practice will be contributed to the new entity. Ideally, each party brings an equal amount of assets to the table, but in the real world that is hardly ever the case. Physicians whose assets are to be used generally want to be compensated, and those who have to dispose of or store assets are in a quandary. The solution to this predicament will vary depending on the circumstances of each merger. One alternative is to agree that any inequalities will be compensated at the other end, in the form of buyout value; that is, physicians contributing more assets will receive larger buyouts when they leave or retire than those contributing less.
Buyouts should be addressed in advance as well. You must decide when a buyout would occur – usually in the event of retirement, death, disability, or withdrawal (voluntary or involuntary) – how the buyout amount will be calculated, and how it will be paid. Then, you must agree on how a buyout amount will be valued. Remember that any buyout calculated at “appraised value” is a problem, because the buyout amount remains a mystery until an appraisal is performed. If the appraised value ends up being too high, the remaining owners may refuse to pay it. I suggest having an actuary create a formula, so that the buyout figure can be calculated at any time. This area, especially, is where you need experienced, competent legal advice.
Noncompete provisions are always a difficult issue, mostly because they are so hard (and expensive) to enforce. An increasingly popular alternative is, once again, to deal with it at the other end, with a buyout penalty. An unhappy partner can leave, and compete, but at the cost of a substantially reduced buyout. This permits competition, but discourages it; and it compensates the remaining partners.
These are only some of the pivotal business and legal issues that must be settled in advance. A little planning and negotiation can prevent a lot of grief, regret, and legal expenses in the future. I’ll discuss some other, more complicated merger options in my next column.
Dr. Eastern practices dermatology and dermatologic surgery in Belleville, N.J. He is the author of numerous articles and textbook chapters, and is a longtime monthly columnist for Dermatology News. Write to him at dermnews@mdedge.com.
Difficult economic times and the unpredictable consequences of health care reform are making an increasing number of solo practitioners and small private groups very nervous. Yet, many balk at the prospect of selling to private equity companies.
Merging offers many benefits: Better overall management, centralized and efficient billing and collection, group purchasing discounts, and reduced overhead, among others; but careful planning, and a written agreement, are essential. If you are considering such an option, here are some things to think about.
You should begin with an evaluation and comparison of the separate groups’ respective finances. This should include a history of production, collections, overhead, and liabilities. Basically, you want to locate and identify all assets and liabilities that will be combined into the new group. One area of immediate importance is Medicare participation. Which members now currently participate and which do not? Since the new group will need to have a single position, all of the physicians must agree on that issue.
Who will be in charge? Not every physician is a qualified manager. The manager should be the physician who is willing to spend the time it takes to sign checks, interact with the administrator, and ensure that other matters such as filing tax returns and approving minor purchases arc carried out properly.
What is the compensation formula? Compensation arrangements should be based on each physician’s current financial data and the goals of the practice. Will everyone be paid only for what they do individually, or will revenue be shared equally? I favor a combination, so productivity is rewarded but your income doesn’t drop to zero when you take time off.
Which practices have a retirement plan and which do not? Will you keep your retirement plans separate, or combine them? If the latter, you will have to agree on the terms of the new plan, which can be the same or different from any of the existing plans. You’ll probably need some legal guidance to insure that assets from existing plans can be transferred into a new plan without tax issues. You may also have to address the problem of physicians who currently do not have a plan who, for whatever reason, may not want to be forced into making retirement plan contributions.
The often-problematic issue of employees and their salaries needs to be addressed, to decide which employees will be needed in the new group, and to determine a salary structure. Each practice’s policies related to vacation, sick leave, and other such issues should be reviewed, and an overall policy for the new group developed.
Other common sticking points are issues related to facilities. If the practices intend to consolidate into one location, the physicians must decide which of the specific assets of each practice will be contributed to the new entity. Ideally, each party brings an equal amount of assets to the table, but in the real world that is hardly ever the case. Physicians whose assets are to be used generally want to be compensated, and those who have to dispose of or store assets are in a quandary. The solution to this predicament will vary depending on the circumstances of each merger. One alternative is to agree that any inequalities will be compensated at the other end, in the form of buyout value; that is, physicians contributing more assets will receive larger buyouts when they leave or retire than those contributing less.
Buyouts should be addressed in advance as well. You must decide when a buyout would occur – usually in the event of retirement, death, disability, or withdrawal (voluntary or involuntary) – how the buyout amount will be calculated, and how it will be paid. Then, you must agree on how a buyout amount will be valued. Remember that any buyout calculated at “appraised value” is a problem, because the buyout amount remains a mystery until an appraisal is performed. If the appraised value ends up being too high, the remaining owners may refuse to pay it. I suggest having an actuary create a formula, so that the buyout figure can be calculated at any time. This area, especially, is where you need experienced, competent legal advice.
Noncompete provisions are always a difficult issue, mostly because they are so hard (and expensive) to enforce. An increasingly popular alternative is, once again, to deal with it at the other end, with a buyout penalty. An unhappy partner can leave, and compete, but at the cost of a substantially reduced buyout. This permits competition, but discourages it; and it compensates the remaining partners.
These are only some of the pivotal business and legal issues that must be settled in advance. A little planning and negotiation can prevent a lot of grief, regret, and legal expenses in the future. I’ll discuss some other, more complicated merger options in my next column.
Dr. Eastern practices dermatology and dermatologic surgery in Belleville, N.J. He is the author of numerous articles and textbook chapters, and is a longtime monthly columnist for Dermatology News. Write to him at dermnews@mdedge.com.
Difficult economic times and the unpredictable consequences of health care reform are making an increasing number of solo practitioners and small private groups very nervous. Yet, many balk at the prospect of selling to private equity companies.
Merging offers many benefits: Better overall management, centralized and efficient billing and collection, group purchasing discounts, and reduced overhead, among others; but careful planning, and a written agreement, are essential. If you are considering such an option, here are some things to think about.
You should begin with an evaluation and comparison of the separate groups’ respective finances. This should include a history of production, collections, overhead, and liabilities. Basically, you want to locate and identify all assets and liabilities that will be combined into the new group. One area of immediate importance is Medicare participation. Which members now currently participate and which do not? Since the new group will need to have a single position, all of the physicians must agree on that issue.
Who will be in charge? Not every physician is a qualified manager. The manager should be the physician who is willing to spend the time it takes to sign checks, interact with the administrator, and ensure that other matters such as filing tax returns and approving minor purchases arc carried out properly.
What is the compensation formula? Compensation arrangements should be based on each physician’s current financial data and the goals of the practice. Will everyone be paid only for what they do individually, or will revenue be shared equally? I favor a combination, so productivity is rewarded but your income doesn’t drop to zero when you take time off.
Which practices have a retirement plan and which do not? Will you keep your retirement plans separate, or combine them? If the latter, you will have to agree on the terms of the new plan, which can be the same or different from any of the existing plans. You’ll probably need some legal guidance to insure that assets from existing plans can be transferred into a new plan without tax issues. You may also have to address the problem of physicians who currently do not have a plan who, for whatever reason, may not want to be forced into making retirement plan contributions.
The often-problematic issue of employees and their salaries needs to be addressed, to decide which employees will be needed in the new group, and to determine a salary structure. Each practice’s policies related to vacation, sick leave, and other such issues should be reviewed, and an overall policy for the new group developed.
Other common sticking points are issues related to facilities. If the practices intend to consolidate into one location, the physicians must decide which of the specific assets of each practice will be contributed to the new entity. Ideally, each party brings an equal amount of assets to the table, but in the real world that is hardly ever the case. Physicians whose assets are to be used generally want to be compensated, and those who have to dispose of or store assets are in a quandary. The solution to this predicament will vary depending on the circumstances of each merger. One alternative is to agree that any inequalities will be compensated at the other end, in the form of buyout value; that is, physicians contributing more assets will receive larger buyouts when they leave or retire than those contributing less.
Buyouts should be addressed in advance as well. You must decide when a buyout would occur – usually in the event of retirement, death, disability, or withdrawal (voluntary or involuntary) – how the buyout amount will be calculated, and how it will be paid. Then, you must agree on how a buyout amount will be valued. Remember that any buyout calculated at “appraised value” is a problem, because the buyout amount remains a mystery until an appraisal is performed. If the appraised value ends up being too high, the remaining owners may refuse to pay it. I suggest having an actuary create a formula, so that the buyout figure can be calculated at any time. This area, especially, is where you need experienced, competent legal advice.
Noncompete provisions are always a difficult issue, mostly because they are so hard (and expensive) to enforce. An increasingly popular alternative is, once again, to deal with it at the other end, with a buyout penalty. An unhappy partner can leave, and compete, but at the cost of a substantially reduced buyout. This permits competition, but discourages it; and it compensates the remaining partners.
These are only some of the pivotal business and legal issues that must be settled in advance. A little planning and negotiation can prevent a lot of grief, regret, and legal expenses in the future. I’ll discuss some other, more complicated merger options in my next column.
Dr. Eastern practices dermatology and dermatologic surgery in Belleville, N.J. He is the author of numerous articles and textbook chapters, and is a longtime monthly columnist for Dermatology News. Write to him at dermnews@mdedge.com.
Selling your practice
My previous column on practice valuation prompted a number of questions on the mechanics of selling a private practice. As usual, I cannot hope to cover this complex topic comprehensively in only 750 words, but here are the basics.
A generation ago, the sale of a medical practice was much like the sale of any other business: A retiring physician would sell his or her practice to a young doctor and the practice would continue on as before. Occasionally, that still happens, but changes in the business of medicine – most significantly the growth of managed care – have had a big impact on the way medical practices are bought and sold.
For one thing, there are far fewer solo practitioners these days, and polls indicate that most young physicians intend to continue that trend. .
For another, because the rules governing such sales have become so numbingly complex, the services of expert (and expensive) third parties are essential.
While these issues may complicate matters, there is still a market for the sale of medical practices. However, you must do everything possible to ensure you identify the best possible buyer and structure the best deal.
The first hurdle is the accurate valuation of your practice, which was covered in some detail in my last column. Briefly, for the protection of both parties, it is important that the appraisal be done by an experienced and neutral financial consultant, that all techniques used in the valuation be divulged and explained, and that documentation be supplied to support the conclusions reached.
Keep in mind that the valuation will not necessarily equal the purchase price; other factors may need to be considered before a final price can be agreed upon. Keep in mind, too, that there may be legal constraints on the purchase price. For example, if the buyer is a nonprofit corporation such as a hospital or HMO, by law it cannot pay in excess of fair market value for the practice – which may rule out any valuation of “good will.” In some states, the purchase of private practices by hospitals is prohibited altogether – so you might need to consider a long-term lease rather than a sale.
Once a value has been agreed upon, you must consider how the transaction will be structured. The most popular structures include purchase of assets, purchase of corporate stock, and merger.
Many buyers prefer to purchase assets, because it allows them to pick and choose only those items that have value to them. This can leave you with a bunch of “odd lot” assets to dispose of. But depending on the circumstances, an asset sale may still be to your advantage.
Sellers typically prefer to sell stock, because it allows them to sell their entire practice, which is often worth more than the sum of its parts, and often provides tax advantages.
The third option, merger, continues to grow in popularity and is a column subject in itself, and I will address it separately next month.
Tax issues must always be considered. Most private practices are corporations, and the sale of corporate stock will result in a long-term capital gain that will be taxed – currently at 15%-20%. As the saying goes, it’s not what you earn, it’s what you keep. So it may benefit you to accept a slightly lower price if the sale can be structured to provide significantly lower tax treatment. However, any gain that does not qualify as a long-term capital gain will be taxed as regular income – currently in the 32%-37% percent range – plus a Social Security tax of about 15%.
Payment in installments is a popular way to defer taxes, since they are incurred on each installment as it is paid; but such payments may be mistaken by the IRS for payments for referrals, which is illegal. And there is always the problem of making certain all payments are eventually made.
You may wish to continue working at the practice as an employee for an agreed-upon period of time, and this is often to the buyer’s advantage as well. Transitioning to new ownership in stages often maximizes the value of the business by improving patient retention, and allows patients to become accustomed to the transition. However, care must be taken, with the aid of good legal advice, to structure such an arrangement in a way that minimizes concerns of fraud and abuse.
Dr. Eastern practices dermatology and dermatologic surgery in Belleville, N.J. He is the author of numerous articles and textbook chapters, and is a longtime monthly columnist for Dermatology News. Write to him at dermnews@mdedge.com.
My previous column on practice valuation prompted a number of questions on the mechanics of selling a private practice. As usual, I cannot hope to cover this complex topic comprehensively in only 750 words, but here are the basics.
A generation ago, the sale of a medical practice was much like the sale of any other business: A retiring physician would sell his or her practice to a young doctor and the practice would continue on as before. Occasionally, that still happens, but changes in the business of medicine – most significantly the growth of managed care – have had a big impact on the way medical practices are bought and sold.
For one thing, there are far fewer solo practitioners these days, and polls indicate that most young physicians intend to continue that trend. .
For another, because the rules governing such sales have become so numbingly complex, the services of expert (and expensive) third parties are essential.
While these issues may complicate matters, there is still a market for the sale of medical practices. However, you must do everything possible to ensure you identify the best possible buyer and structure the best deal.
The first hurdle is the accurate valuation of your practice, which was covered in some detail in my last column. Briefly, for the protection of both parties, it is important that the appraisal be done by an experienced and neutral financial consultant, that all techniques used in the valuation be divulged and explained, and that documentation be supplied to support the conclusions reached.
Keep in mind that the valuation will not necessarily equal the purchase price; other factors may need to be considered before a final price can be agreed upon. Keep in mind, too, that there may be legal constraints on the purchase price. For example, if the buyer is a nonprofit corporation such as a hospital or HMO, by law it cannot pay in excess of fair market value for the practice – which may rule out any valuation of “good will.” In some states, the purchase of private practices by hospitals is prohibited altogether – so you might need to consider a long-term lease rather than a sale.
Once a value has been agreed upon, you must consider how the transaction will be structured. The most popular structures include purchase of assets, purchase of corporate stock, and merger.
Many buyers prefer to purchase assets, because it allows them to pick and choose only those items that have value to them. This can leave you with a bunch of “odd lot” assets to dispose of. But depending on the circumstances, an asset sale may still be to your advantage.
Sellers typically prefer to sell stock, because it allows them to sell their entire practice, which is often worth more than the sum of its parts, and often provides tax advantages.
The third option, merger, continues to grow in popularity and is a column subject in itself, and I will address it separately next month.
Tax issues must always be considered. Most private practices are corporations, and the sale of corporate stock will result in a long-term capital gain that will be taxed – currently at 15%-20%. As the saying goes, it’s not what you earn, it’s what you keep. So it may benefit you to accept a slightly lower price if the sale can be structured to provide significantly lower tax treatment. However, any gain that does not qualify as a long-term capital gain will be taxed as regular income – currently in the 32%-37% percent range – plus a Social Security tax of about 15%.
Payment in installments is a popular way to defer taxes, since they are incurred on each installment as it is paid; but such payments may be mistaken by the IRS for payments for referrals, which is illegal. And there is always the problem of making certain all payments are eventually made.
You may wish to continue working at the practice as an employee for an agreed-upon period of time, and this is often to the buyer’s advantage as well. Transitioning to new ownership in stages often maximizes the value of the business by improving patient retention, and allows patients to become accustomed to the transition. However, care must be taken, with the aid of good legal advice, to structure such an arrangement in a way that minimizes concerns of fraud and abuse.
Dr. Eastern practices dermatology and dermatologic surgery in Belleville, N.J. He is the author of numerous articles and textbook chapters, and is a longtime monthly columnist for Dermatology News. Write to him at dermnews@mdedge.com.
My previous column on practice valuation prompted a number of questions on the mechanics of selling a private practice. As usual, I cannot hope to cover this complex topic comprehensively in only 750 words, but here are the basics.
A generation ago, the sale of a medical practice was much like the sale of any other business: A retiring physician would sell his or her practice to a young doctor and the practice would continue on as before. Occasionally, that still happens, but changes in the business of medicine – most significantly the growth of managed care – have had a big impact on the way medical practices are bought and sold.
For one thing, there are far fewer solo practitioners these days, and polls indicate that most young physicians intend to continue that trend. .
For another, because the rules governing such sales have become so numbingly complex, the services of expert (and expensive) third parties are essential.
While these issues may complicate matters, there is still a market for the sale of medical practices. However, you must do everything possible to ensure you identify the best possible buyer and structure the best deal.
The first hurdle is the accurate valuation of your practice, which was covered in some detail in my last column. Briefly, for the protection of both parties, it is important that the appraisal be done by an experienced and neutral financial consultant, that all techniques used in the valuation be divulged and explained, and that documentation be supplied to support the conclusions reached.
Keep in mind that the valuation will not necessarily equal the purchase price; other factors may need to be considered before a final price can be agreed upon. Keep in mind, too, that there may be legal constraints on the purchase price. For example, if the buyer is a nonprofit corporation such as a hospital or HMO, by law it cannot pay in excess of fair market value for the practice – which may rule out any valuation of “good will.” In some states, the purchase of private practices by hospitals is prohibited altogether – so you might need to consider a long-term lease rather than a sale.
Once a value has been agreed upon, you must consider how the transaction will be structured. The most popular structures include purchase of assets, purchase of corporate stock, and merger.
Many buyers prefer to purchase assets, because it allows them to pick and choose only those items that have value to them. This can leave you with a bunch of “odd lot” assets to dispose of. But depending on the circumstances, an asset sale may still be to your advantage.
Sellers typically prefer to sell stock, because it allows them to sell their entire practice, which is often worth more than the sum of its parts, and often provides tax advantages.
The third option, merger, continues to grow in popularity and is a column subject in itself, and I will address it separately next month.
Tax issues must always be considered. Most private practices are corporations, and the sale of corporate stock will result in a long-term capital gain that will be taxed – currently at 15%-20%. As the saying goes, it’s not what you earn, it’s what you keep. So it may benefit you to accept a slightly lower price if the sale can be structured to provide significantly lower tax treatment. However, any gain that does not qualify as a long-term capital gain will be taxed as regular income – currently in the 32%-37% percent range – plus a Social Security tax of about 15%.
Payment in installments is a popular way to defer taxes, since they are incurred on each installment as it is paid; but such payments may be mistaken by the IRS for payments for referrals, which is illegal. And there is always the problem of making certain all payments are eventually made.
You may wish to continue working at the practice as an employee for an agreed-upon period of time, and this is often to the buyer’s advantage as well. Transitioning to new ownership in stages often maximizes the value of the business by improving patient retention, and allows patients to become accustomed to the transition. However, care must be taken, with the aid of good legal advice, to structure such an arrangement in a way that minimizes concerns of fraud and abuse.
Dr. Eastern practices dermatology and dermatologic surgery in Belleville, N.J. He is the author of numerous articles and textbook chapters, and is a longtime monthly columnist for Dermatology News. Write to him at dermnews@mdedge.com.
Practice valuation
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Too often, physicians are not receiving a fair return on the equity they have worked so hard to build over several decades, either because they have waited too long and must accept what is offered, or because they simply take the buyer’s word for their practice’s value. Don’t put yourself in either of those positions, and don’t entertain any offers until you obtain an objective appraisal from a neutral party.
Of course, a medical practice is trickier to value than an ordinary business, and usually requires the services of an experienced professional appraiser. Entire books have been written about the process, so I can’t hope to cover it completely in 750 words; but three basic yardsticks are essential for determining the equity, or book value, of a practice:
- Tangible assets. Equipment, cash, accounts receivable, and other property owned by the practice.
- Liabilities. Accounts payable, outstanding loans, and anything else owed to others.
- Intangible assets. Sometimes called “good will” – the reputation of the physicians, the location and name recognition of the practice, the loyalty and volume of patients, and other, well, intangibles.
Valuing tangible assets is comparatively straightforward, but there are several ways to do it, and when reviewing a practice appraisal you should ask which of them was used. Depreciated value is the book value of equipment and supplies as determined by their purchase price, less the amount their value has decreased since purchase. Remaining useful life value estimates how long the equipment can be expected to last. Market (or replacement) value is the amount it would cost on the open market to replace all equipment and supplies.
Intangible assets are more difficult to value. Many components are analyzed, including location, interior and exterior decor, accessibility to patients, age and functional status of equipment, systems in place to promote efficiency, reasons why patients come back (if in fact they do), and the overall reputation of the practice in the community. Other important factors include the “payer mix” (what percentage pays cash, how many third-party contracts are in place and how well they pay, etcetera), the extent and strength of the referral base, and the presence of supplemental income streams, such as clinical research.
It is also important to determine to what extent intangible assets are transferable. For example, unique skills with a laser, neurotoxins, or filler substances, or extraordinary personal charisma, may increase your practice’s value to you, but they are worthless to the next owner, and he or she will be unwilling to pay for them unless your services become part of the deal.
Once again there are many ways to estimate intangible asset value, and once again you should ask which were used. Cash flow analysis works on the assumption that cash flow is a measure of intangible value. Capitalization of earnings puts a value, or capitalization, on the practice’s income streams using a variety of assumptions. Guideline comparison uses various databases to compare your practice with other, similar ones that have changed hands in the past.
Two newer techniques that some consider a better estimate of intangible assets are the replacement method, which estimates the costs of starting the practice over again in the current market; and the excess earnings method, which measures how far above average your practice’s earnings (and thus its overall value) are.
Asset-based valuation is the most popular, but by no means the only method available. Income-based valuation looks at the source and strength of a practice’s income stream as a creator of value, as well as whether or not its income stream under a different owner would mirror its present one. This in turn becomes the basis for an understanding of the fair market value of both tangible and intangible assets. Market valuation combines the asset-based and income-based approaches, along with an analysis of sales and mergers of comparable practices in the community, to determine the value of a practice in its local market.
Whatever methods are used, it is important that the appraisal be done by an experienced and independent financial consultant, that all techniques used in the valuation be divulged and explained, and that documentation is supplied to support the conclusions reached. This is especially important if the appraisal will be relied upon in the sale or merger of the practice.
Dr. Eastern practices dermatology and dermatologic surgery in Belleville, N.J. He is the author of numerous articles and textbook chapters, and is a longtime monthly columnist for Dermatology News. Write to him at dermnews@mdedge.com.
.
Too often, physicians are not receiving a fair return on the equity they have worked so hard to build over several decades, either because they have waited too long and must accept what is offered, or because they simply take the buyer’s word for their practice’s value. Don’t put yourself in either of those positions, and don’t entertain any offers until you obtain an objective appraisal from a neutral party.
Of course, a medical practice is trickier to value than an ordinary business, and usually requires the services of an experienced professional appraiser. Entire books have been written about the process, so I can’t hope to cover it completely in 750 words; but three basic yardsticks are essential for determining the equity, or book value, of a practice:
- Tangible assets. Equipment, cash, accounts receivable, and other property owned by the practice.
- Liabilities. Accounts payable, outstanding loans, and anything else owed to others.
- Intangible assets. Sometimes called “good will” – the reputation of the physicians, the location and name recognition of the practice, the loyalty and volume of patients, and other, well, intangibles.
Valuing tangible assets is comparatively straightforward, but there are several ways to do it, and when reviewing a practice appraisal you should ask which of them was used. Depreciated value is the book value of equipment and supplies as determined by their purchase price, less the amount their value has decreased since purchase. Remaining useful life value estimates how long the equipment can be expected to last. Market (or replacement) value is the amount it would cost on the open market to replace all equipment and supplies.
Intangible assets are more difficult to value. Many components are analyzed, including location, interior and exterior decor, accessibility to patients, age and functional status of equipment, systems in place to promote efficiency, reasons why patients come back (if in fact they do), and the overall reputation of the practice in the community. Other important factors include the “payer mix” (what percentage pays cash, how many third-party contracts are in place and how well they pay, etcetera), the extent and strength of the referral base, and the presence of supplemental income streams, such as clinical research.
It is also important to determine to what extent intangible assets are transferable. For example, unique skills with a laser, neurotoxins, or filler substances, or extraordinary personal charisma, may increase your practice’s value to you, but they are worthless to the next owner, and he or she will be unwilling to pay for them unless your services become part of the deal.
Once again there are many ways to estimate intangible asset value, and once again you should ask which were used. Cash flow analysis works on the assumption that cash flow is a measure of intangible value. Capitalization of earnings puts a value, or capitalization, on the practice’s income streams using a variety of assumptions. Guideline comparison uses various databases to compare your practice with other, similar ones that have changed hands in the past.
Two newer techniques that some consider a better estimate of intangible assets are the replacement method, which estimates the costs of starting the practice over again in the current market; and the excess earnings method, which measures how far above average your practice’s earnings (and thus its overall value) are.
Asset-based valuation is the most popular, but by no means the only method available. Income-based valuation looks at the source and strength of a practice’s income stream as a creator of value, as well as whether or not its income stream under a different owner would mirror its present one. This in turn becomes the basis for an understanding of the fair market value of both tangible and intangible assets. Market valuation combines the asset-based and income-based approaches, along with an analysis of sales and mergers of comparable practices in the community, to determine the value of a practice in its local market.
Whatever methods are used, it is important that the appraisal be done by an experienced and independent financial consultant, that all techniques used in the valuation be divulged and explained, and that documentation is supplied to support the conclusions reached. This is especially important if the appraisal will be relied upon in the sale or merger of the practice.
Dr. Eastern practices dermatology and dermatologic surgery in Belleville, N.J. He is the author of numerous articles and textbook chapters, and is a longtime monthly columnist for Dermatology News. Write to him at dermnews@mdedge.com.
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Too often, physicians are not receiving a fair return on the equity they have worked so hard to build over several decades, either because they have waited too long and must accept what is offered, or because they simply take the buyer’s word for their practice’s value. Don’t put yourself in either of those positions, and don’t entertain any offers until you obtain an objective appraisal from a neutral party.
Of course, a medical practice is trickier to value than an ordinary business, and usually requires the services of an experienced professional appraiser. Entire books have been written about the process, so I can’t hope to cover it completely in 750 words; but three basic yardsticks are essential for determining the equity, or book value, of a practice:
- Tangible assets. Equipment, cash, accounts receivable, and other property owned by the practice.
- Liabilities. Accounts payable, outstanding loans, and anything else owed to others.
- Intangible assets. Sometimes called “good will” – the reputation of the physicians, the location and name recognition of the practice, the loyalty and volume of patients, and other, well, intangibles.
Valuing tangible assets is comparatively straightforward, but there are several ways to do it, and when reviewing a practice appraisal you should ask which of them was used. Depreciated value is the book value of equipment and supplies as determined by their purchase price, less the amount their value has decreased since purchase. Remaining useful life value estimates how long the equipment can be expected to last. Market (or replacement) value is the amount it would cost on the open market to replace all equipment and supplies.
Intangible assets are more difficult to value. Many components are analyzed, including location, interior and exterior decor, accessibility to patients, age and functional status of equipment, systems in place to promote efficiency, reasons why patients come back (if in fact they do), and the overall reputation of the practice in the community. Other important factors include the “payer mix” (what percentage pays cash, how many third-party contracts are in place and how well they pay, etcetera), the extent and strength of the referral base, and the presence of supplemental income streams, such as clinical research.
It is also important to determine to what extent intangible assets are transferable. For example, unique skills with a laser, neurotoxins, or filler substances, or extraordinary personal charisma, may increase your practice’s value to you, but they are worthless to the next owner, and he or she will be unwilling to pay for them unless your services become part of the deal.
Once again there are many ways to estimate intangible asset value, and once again you should ask which were used. Cash flow analysis works on the assumption that cash flow is a measure of intangible value. Capitalization of earnings puts a value, or capitalization, on the practice’s income streams using a variety of assumptions. Guideline comparison uses various databases to compare your practice with other, similar ones that have changed hands in the past.
Two newer techniques that some consider a better estimate of intangible assets are the replacement method, which estimates the costs of starting the practice over again in the current market; and the excess earnings method, which measures how far above average your practice’s earnings (and thus its overall value) are.
Asset-based valuation is the most popular, but by no means the only method available. Income-based valuation looks at the source and strength of a practice’s income stream as a creator of value, as well as whether or not its income stream under a different owner would mirror its present one. This in turn becomes the basis for an understanding of the fair market value of both tangible and intangible assets. Market valuation combines the asset-based and income-based approaches, along with an analysis of sales and mergers of comparable practices in the community, to determine the value of a practice in its local market.
Whatever methods are used, it is important that the appraisal be done by an experienced and independent financial consultant, that all techniques used in the valuation be divulged and explained, and that documentation is supplied to support the conclusions reached. This is especially important if the appraisal will be relied upon in the sale or merger of the practice.
Dr. Eastern practices dermatology and dermatologic surgery in Belleville, N.J. He is the author of numerous articles and textbook chapters, and is a longtime monthly columnist for Dermatology News. Write to him at dermnews@mdedge.com.
Closing your practice
“I might have to close my office,” a colleague wrote me recently. “I can’t find reliable medical assistants; no one good applies. Sad, but oh, well.”
A paucity of good employees is just one of many reasons given by physicians who have decided to close up shop. (See my recent column, “Finding Employees During a Pandemic”).
to address in order to ensure a smooth exit.
First, this cannot (and should not) be a hasty process. You will need at least a year to do it correctly, because there is a lot to do.
Once you have settled on a closing date, inform your attorney. If the firm you are using does not have experience in medical practice sales or closures, ask them to recommend one that does. You will need expert legal guidance during many of the steps that follow.
Next, review all of your contracts and leases. Most of them cannot be terminated at the drop of a hat. Facility and equipment leases may require a year’s notice, or even longer. Contracts with managed care, maintenance, cleaning, and hazardous waste disposal companies, and others such as answering services and website managers, should be reviewed to determine what sort of advance notice you will need to give.
Another step to take well in advance is to contact your malpractice insurance carrier. Most carriers have specific guidelines for when to notify your patients – and that notification will vary from carrier to carrier, state to state, and situation to situation. If you have a claims-made policy, you also need to inquire about the necessity of purchasing “tail” coverage, which will protect you in the event of a lawsuit after your practice has closed. Many carriers include tail coverage at no charge if you are retiring completely, but if you expect to do part-time, locum tenens, or volunteer medical work, you will need to pay for it.
Once you have the basics nailed down, notify your employees. You will want them to hear the news from you, not through the grapevine, and certainly not from your patients. You may be worried that some will quit, but keeping them in the dark will not prevent that, as they will find out soon enough. Besides, if you help them by assisting in finding them new employment, they will most likely help you by staying to the end.
At this point, you should also begin thinking about disposition of your patients’ records. You can’t just shred them, much as you might be tempted. Your attorney and malpractice carrier will guide you in how long they must be retained; 7-10 years is typical in many states, but it could be longer in yours. Unless you are selling part or all of your practice to another physician, you will have to designate someone else to be the legal custodian of the records and obtain a written custodial agreement from that person or organization.
Once that is arranged, you can notify your patients. Send them a letter or e-mail (or both) informing them of the date that you intend to close the practice. Let them know where their records will be kept, who to contact for a copy, and that their written consent will be required to obtain it. Some states also require that a notice be placed in the local newspaper or online, including the date of closure and how to request records.
This is also the time to inform all your third-party payers, including Medicare and Medicaid if applicable, any hospitals where you have privileges, and referring physicians. Notify any business concerns not notified already, such as utilities and other ancillary services. Your state medical board and the Drug Enforcement Agency will need to know as well. Contact a liquidator or used equipment dealer to arrange for disposal of any office equipment that has resale value. It is also a good time to decide how you will handle patient collections that trickle in after closing, and where mail should be forwarded.
As the closing date approaches, determine how to properly dispose of any medications you have on-hand. Your state may have requirements for disposal of controlled substances, and possibly for noncontrolled pharmaceuticals as well. Check your state’s controlled substances reporting system and other applicable regulators. Once the office is closed, don’t forget to shred any blank prescription pads and dissolve your corporation, if you have one.
Dr. Eastern practices dermatology and dermatologic surgery in Belleville, N.J. He is the author of numerous articles and textbook chapters, and is a longtime monthly columnist for Dermatology News. Write to him at dermnews@mdedge.com.
“I might have to close my office,” a colleague wrote me recently. “I can’t find reliable medical assistants; no one good applies. Sad, but oh, well.”
A paucity of good employees is just one of many reasons given by physicians who have decided to close up shop. (See my recent column, “Finding Employees During a Pandemic”).
to address in order to ensure a smooth exit.
First, this cannot (and should not) be a hasty process. You will need at least a year to do it correctly, because there is a lot to do.
Once you have settled on a closing date, inform your attorney. If the firm you are using does not have experience in medical practice sales or closures, ask them to recommend one that does. You will need expert legal guidance during many of the steps that follow.
Next, review all of your contracts and leases. Most of them cannot be terminated at the drop of a hat. Facility and equipment leases may require a year’s notice, or even longer. Contracts with managed care, maintenance, cleaning, and hazardous waste disposal companies, and others such as answering services and website managers, should be reviewed to determine what sort of advance notice you will need to give.
Another step to take well in advance is to contact your malpractice insurance carrier. Most carriers have specific guidelines for when to notify your patients – and that notification will vary from carrier to carrier, state to state, and situation to situation. If you have a claims-made policy, you also need to inquire about the necessity of purchasing “tail” coverage, which will protect you in the event of a lawsuit after your practice has closed. Many carriers include tail coverage at no charge if you are retiring completely, but if you expect to do part-time, locum tenens, or volunteer medical work, you will need to pay for it.
Once you have the basics nailed down, notify your employees. You will want them to hear the news from you, not through the grapevine, and certainly not from your patients. You may be worried that some will quit, but keeping them in the dark will not prevent that, as they will find out soon enough. Besides, if you help them by assisting in finding them new employment, they will most likely help you by staying to the end.
At this point, you should also begin thinking about disposition of your patients’ records. You can’t just shred them, much as you might be tempted. Your attorney and malpractice carrier will guide you in how long they must be retained; 7-10 years is typical in many states, but it could be longer in yours. Unless you are selling part or all of your practice to another physician, you will have to designate someone else to be the legal custodian of the records and obtain a written custodial agreement from that person or organization.
Once that is arranged, you can notify your patients. Send them a letter or e-mail (or both) informing them of the date that you intend to close the practice. Let them know where their records will be kept, who to contact for a copy, and that their written consent will be required to obtain it. Some states also require that a notice be placed in the local newspaper or online, including the date of closure and how to request records.
This is also the time to inform all your third-party payers, including Medicare and Medicaid if applicable, any hospitals where you have privileges, and referring physicians. Notify any business concerns not notified already, such as utilities and other ancillary services. Your state medical board and the Drug Enforcement Agency will need to know as well. Contact a liquidator or used equipment dealer to arrange for disposal of any office equipment that has resale value. It is also a good time to decide how you will handle patient collections that trickle in after closing, and where mail should be forwarded.
As the closing date approaches, determine how to properly dispose of any medications you have on-hand. Your state may have requirements for disposal of controlled substances, and possibly for noncontrolled pharmaceuticals as well. Check your state’s controlled substances reporting system and other applicable regulators. Once the office is closed, don’t forget to shred any blank prescription pads and dissolve your corporation, if you have one.
Dr. Eastern practices dermatology and dermatologic surgery in Belleville, N.J. He is the author of numerous articles and textbook chapters, and is a longtime monthly columnist for Dermatology News. Write to him at dermnews@mdedge.com.
“I might have to close my office,” a colleague wrote me recently. “I can’t find reliable medical assistants; no one good applies. Sad, but oh, well.”
A paucity of good employees is just one of many reasons given by physicians who have decided to close up shop. (See my recent column, “Finding Employees During a Pandemic”).
to address in order to ensure a smooth exit.
First, this cannot (and should not) be a hasty process. You will need at least a year to do it correctly, because there is a lot to do.
Once you have settled on a closing date, inform your attorney. If the firm you are using does not have experience in medical practice sales or closures, ask them to recommend one that does. You will need expert legal guidance during many of the steps that follow.
Next, review all of your contracts and leases. Most of them cannot be terminated at the drop of a hat. Facility and equipment leases may require a year’s notice, or even longer. Contracts with managed care, maintenance, cleaning, and hazardous waste disposal companies, and others such as answering services and website managers, should be reviewed to determine what sort of advance notice you will need to give.
Another step to take well in advance is to contact your malpractice insurance carrier. Most carriers have specific guidelines for when to notify your patients – and that notification will vary from carrier to carrier, state to state, and situation to situation. If you have a claims-made policy, you also need to inquire about the necessity of purchasing “tail” coverage, which will protect you in the event of a lawsuit after your practice has closed. Many carriers include tail coverage at no charge if you are retiring completely, but if you expect to do part-time, locum tenens, or volunteer medical work, you will need to pay for it.
Once you have the basics nailed down, notify your employees. You will want them to hear the news from you, not through the grapevine, and certainly not from your patients. You may be worried that some will quit, but keeping them in the dark will not prevent that, as they will find out soon enough. Besides, if you help them by assisting in finding them new employment, they will most likely help you by staying to the end.
At this point, you should also begin thinking about disposition of your patients’ records. You can’t just shred them, much as you might be tempted. Your attorney and malpractice carrier will guide you in how long they must be retained; 7-10 years is typical in many states, but it could be longer in yours. Unless you are selling part or all of your practice to another physician, you will have to designate someone else to be the legal custodian of the records and obtain a written custodial agreement from that person or organization.
Once that is arranged, you can notify your patients. Send them a letter or e-mail (or both) informing them of the date that you intend to close the practice. Let them know where their records will be kept, who to contact for a copy, and that their written consent will be required to obtain it. Some states also require that a notice be placed in the local newspaper or online, including the date of closure and how to request records.
This is also the time to inform all your third-party payers, including Medicare and Medicaid if applicable, any hospitals where you have privileges, and referring physicians. Notify any business concerns not notified already, such as utilities and other ancillary services. Your state medical board and the Drug Enforcement Agency will need to know as well. Contact a liquidator or used equipment dealer to arrange for disposal of any office equipment that has resale value. It is also a good time to decide how you will handle patient collections that trickle in after closing, and where mail should be forwarded.
As the closing date approaches, determine how to properly dispose of any medications you have on-hand. Your state may have requirements for disposal of controlled substances, and possibly for noncontrolled pharmaceuticals as well. Check your state’s controlled substances reporting system and other applicable regulators. Once the office is closed, don’t forget to shred any blank prescription pads and dissolve your corporation, if you have one.
Dr. Eastern practices dermatology and dermatologic surgery in Belleville, N.J. He is the author of numerous articles and textbook chapters, and is a longtime monthly columnist for Dermatology News. Write to him at dermnews@mdedge.com.