Whether you are currently operating your own private medical practice or contemplating venturing out to start your own private practice or concierge medicine practice, you are going to face daily business tasks that are not related to patient care. But that’s life, right? It can’t be all rainbows and butterflies every day. To get to the gold, you need to dig through some dirt. Or do you? What if I told you that you don’t need to understand accounting, technology, and marketing to run your business successfully. Perhaps focusing all your attention on patient care is the best thing you can do to ensure the success of your medical practice. After all, you didn’t go to medical school to understand the difference between a balance sheet and an income statement. Nor did you learn about all the different cloud technology partners and how they compare regarding HIPPA compliance. I also bet you didn’t take any courses on website development and Search Engine Optimization (SEO). But guess what? Now that you are running your own practice, you probably know more about running a business than you ever dreamed or wanted.
When you are flying solo, some people tend to develop the mindset that they need to do everything on their own. These people embark on a journey of self-education and try to learn everything they need to make their business survive. So, after a busy day of seeing their patients, they go home and make entries into their accounting system, send some superbills, reconcile their accounts receivable with their bank, chase down delinquent patients, tweak their website, email some patient reminders, and the list of tasks goes on and on. If they are lucky, they get some time to rest or spend time with their family after all their work is completed. They didn’t sign up for this, and they don’t have to do it because there is a better way.
The better way to run your business is to have everyone focus on what they do best. As a doctor, you need to focus on patient care. Let the accountants do accounting, the technologists handle technology, and the marketers do the marketing. But if you are not directly involved in running your business, then you need to trust people who can. That means you are going to need to invest in having others focus on the tasks related to running your business. This decision can be problematic for some doctors because they get the sense that they are giving up their profits, which could force them back into the rabbit hole of trying to do everything themselves. But time is money, and every hour you are not seeing a patient because you need to do everything else is lost revenue to you.
The Economics of Outsourcing
Let’s do some simple math. Let’s denote your hourly rate with the letters HR (Hourly Rate). Let’s denote the hours you spend each month doing tasks unrelated to patient care as THM (Task Hours per Month. The (MC) Monthly Cost of your time would be calculated as follows.
|MC = HR x THM|
Let’s suppose your HR is $250 per hour, and your THM is eight days per month. Your MC would be calculated as
|MC = $250 x 8|
|MC = $2,000|
That means your monthly cost of trying to do all the tasks related to your business is $2,000 per month or $24,000 per year. Most people underestimate the time they spend each month on non-patient related tasks and therefore underestimate their monthly cost. Here’s the problem with that miscalculation. It means you will think that hiring someone to help you is too expensive, and you fall back on doing it yourself. Others will argue that since they do all this work after hours, their monthly cost is zero because they can’t see patients at this time anyway. This logic implies their HR is zero outside of office hours. This thinking is how they justify doing this work themselves. This logic is flawed because your time should always be treated as money because who knows how you could use this time for other more rewarding purposes. You’ll never know because you’ll never have the time to invest in other activities
It’s time for another formula, so let’s learn to calculate Opportunity Cost (OC). The opportunity cost is the “cost” incurred by not enjoying the benefit associated with the best alternative choice. In our case, I am going to argue the best alternative choice is not to do it yourself but instead hire someone else to do it. Let’s assume you could outsource all these tasks to someone for $1,200 per month, and let’s denote this as (OH) Outsourced Help. Our opportunity cost using the figures above would be calculated as follows.
|OC = MC – OH|
|OC = $2,000 – $1,2000|
|OC = $800 per month|
This calculation shows that you are effectively losing $800 per month or $9,600 per year by trying to do all these tasks yourself. Now, if you were to try to put a cost estimate on the stress these tasks cause you, the time it takes you away from family, the cost of the mistakes you make because you aren’t focused solely on patient care, then the opportunity cost would be even much high than you think.
So now that we understand the cost dynamics of outsourcing the business management of your medical practice, let’s focus on the 6 reasons why outsourcing is a fantastic idea.
Six Reasons to Outsource
1) You don’t need to be an accountant
Do you really want to understand GAAP, debits, credits, and journal entries? It’s true, you can buy some software like Quickbooks, Sage, Zoho Books, or Freshbooks, to do your accounting, but which software package would you buy? Also, you need to pay for and maintain this software and what do you do when you can’t reconcile your books with your bank and credit card statements. Now you get to spend hours figuring out why your accounts receivable are off by a few dollars. This accounting task will quickly become a nightmare and drive up your opportunity costs. Then, of course, you have the IRS to worry about. You need to file your taxes, and you want to minimize your taxable income. If you don’t do your books right, then you could end up paying more taxes than you should. What is the best way to structure your business to keep more money in your pocket? Should you incorporate, set up an LLC, or be a sole proprietor? If you make the wrong choice on any of these decisions, then suddenly, your opportunity cost is growing rapidly. Also, there are many different ways you can pay yourself too to minimize your tax burden. Wouldn’t you feel better knowing you picked the best way for your circumstances? A good accountant is worth their weight in gold and if there was only one thing you were willing to outsource. I’d go with accounting.
2) No debt collection or billing responsibilities
So, you were kind enough to see your patient and not collect your fees before they left your office. You subsequently sent out an invoice to ask them for payment, and it’s now 30-days past due. Now you are in a cycle of trying to collect on your fees, and it’s frustrating because you need to act like the bad person while maintaining your good personal relationship. Sometimes you need to extend credit to your patients, and that’s never a bad thing until it is. With an outsourced provider, that responsibility falls on them. In fact, the entire process of invoicing, sending out superbills, collecting payments, and depositing them to your bank is no longer your responsibility. All you need to do is make sure you log the patients you’ve seen and the CPT codes for that appointment. After that, everything should mysteriously happen for you without any involvement on your part. Even better, the whole process can be automated if your outsourced partner allows your patients to make payments online or use credit cards for payment. Providing your patients with simple and immediate ways to make payment is the best way to ensure you don’t have to chase them down to collect. A great outsourced partner will provide all this for you.
3) No more missed appointments
Filling up your appointment calendar every day is a never-ending task. If it’s not full, then you have lost revenue and increased your opportunity cost. To avoid lost revenue, you need to make sure you can communicate effectively to your patients regarding your availability and make it easy to schedule appointments on your calendar. Scheduling is something you should not need to worry about if you have the right outsourced partner. They will provide you with automated tools for both you and your patients to keep appointments up to date. However, even doing this will not ensure your patients will show up when scheduled. They will need to be reminded numerous times, and this can quickly become time-consuming if you are trying to do it yourself. If you make every effort to ensure your patient shows up for their appointment and they don’t, then you should at least be able to charge for a missed appointment. That brings on another set of responsibilities to ensure you are at least partially, if not fully, compensated for that lost time. If you have the right outsourced provider, you will not have to worry about all these tasks. An even better partner could also take on the responsibility of pre-screening your incoming appointment requests and ensuring your practice is servicing every patient you can handle.
4) A paperless office
There is a lot to remember when it comes to tracking your patient’s progress, and often this information gets jotted down on paper and filed away until it’s needed again. Of course, this paper method works, but what if you are on vacation and a patient needs a medication change, and you need access to their information. The only way to solve this problem is to have all their information stored electronically in the cloud and readily available on any device when you need it. Your outsourced business partner will make sure you have all the tools necessary to enable you to store all your patient information safely and securely in a HIPPA compliant environment.
5) A tech guru when you need it
As a doctor, you are the expert on the inner workings of the human body and mind, and people come to you when something is not working. Unfortunately, you did not receive the same level of training on the inner workings of a computer, mobile phone, tablet, router, switch, printer, and the list goes on. So who do you turn to when it’s time to make a technology decision or fix something that is broken. If you are lucky, your outsourced business partner will give you all the support you need when you need it. You can’t escape the fact that you need technology to run your business, but you don’t need to be responsible for all that. How do you know what’s the best email platform to use, what cloud provider should store your data, what mobile technology is best for your business needs, or what software is available to run your business? With the right partner, you will not need to know any of this because you outsourced that responsibility to someone else.
6) If you build it, they will come
Remember that movie “Field of Dreams” where Ray Kinsella (Kevin Costner) kept hearing that mysterious voice saying, “If you build it, he will come.” So he built the baseball field in the middle of his farm, and he did come. I won’t say who he was because I don’t want to spoil the movie if you haven’t seen it yet. Aren’t movies great? Everything works out perfectly in the end. You might have thought that when you started your concierge practice, the same thing would have happened. You built the practice, and suddenly patients start flooding your office. That’s not how it works. A lot needs to happen behind the scenes to ensure you can find new patients consistently. Of course, as the owner of your private medical practice, you need to be your own salesperson, but that doesn’t mean you need to do it all alone. Everyone knows that word of mouth advertising is the cheapest way to find new customers, but to get the word of mouth engine roaring you need to start with new customers to spread the word. Today it is relatively easy to set up a website with no technical knowledge, but that doesn’t mean customers will come once it’s built. You need to promote yourself on as many platforms as possible, and you need to create awareness and establish credibility to drive traffic to your business. Marketing is not for the faint of heart, and a good outsourced business partner will help you build and run the marketing strategy for your business.
How to find the right outsourced partner
If you have finally decided that the economics of trying to do everything yourself doesn’t pencil out, then congratulations!. You have made the wise conclusion that the opportunity cost of not using an outsourced business provider is too high. But beware of the next common pitfall doctor’s make, which is vendor chaos. Vendor chaos happens when you go out and find all kinds of different people or businesses to work on each aspect of your business. That means you subscribe to some medical billing or practice management software service, hire an accountant to do your books, hire a part-time medical biller, maybe hire a part-time assistant to help with scheduling and charting, and then find some tech guru to build your website and help you get set up. In the end, what do you have? A whole bunch of people that are each good at what they do but have no idea what the other person is doing. That means things do not connect and integrate as seamlessly as they could. That means you need to organize and collaborate with all these different groups to ensure they can all work together. What it ultimately means is that now you have moved away from doing tasks yourself to managing different groups that do those tasks. In short, you have still not maximized the time you can devote to patient care and have not maximized your free time.
The best scenario for an outsourced business partner is a firm that can do everything and ensure all the parts seamlessly work together. Isn’t this what you liked if you worked for a clinic as an employee? You showed up to work, and everything was in place to let you focus on patient care and do your job the best you could. Your employer provided all the services you needed under one roof, and you were unaware because it all just worked, and life was great. None of this means that you lose all these advantages when you start a private or concierge medical practice. It means you need to find a company that can provide everything you need under one roof. This all-inclusive requirement is why My Practice Experts exists. We can be that single vendor that can provide all your accounting, billing, communication, electronic documentation, technology, and marketing needs under one roof. It’s like an entire medical practice in a box. So if you are just starting your practice, you can have the confidence you will be serviced exactly like you would be if you were an employee in a clinic. To schedule your free consultation to determine how My Practice Experts can help you, please click here because your time is money. Remember, if you build it, they will come (with our help).