Insights

"Don’t Fret about ICD-10" Robert Goff, CEO University Physician Network advises Start up Practices

With over 40 years of healthcare experience under his belt, Robert has seen the industry transform better than most. An expert in care delivery, organization and financing, he has done it all. From being a hospital administrator to a regulator, care executive, consultant and an entrepreneur, Robert is truly the epitome of knowledge and experience.

Goff currently serves as Executive Director and CEO of University Physicians Network, LLC (UPN) in New York City. University Physicians Network is a physician founded, owned and operated organization, committed to help member physicians cope with the changes and challenges of the healthcare business environment.

CureMD's Jason Hughes caught up with Robert on “Things to consider before starting a new Practice” and here’s what he had to say.

Question: First up, sustaining in the current healthcare landscape is relatively easy for experienced practices, but it’s a different ball game for new startups, especially small and medium practices. What do you think are some of the challenges they face before starting operations?

Robert: No one is finding it easy, regardless of the size. The marketplace, the environment is changing. Whether you are established or starting out, you are facing the same challenges. The challenge is, to build a practice that suits consumer needs. Remember I said consumers, not patients. The consumers are demanding very differently than patients. You have to break consumers down.

There are two different types – those looking for a quick transaction, and are not necessarily looking for a relationship with the physician. Then you have the patient, who is interested in a relationship with the physician. These tend to be old, more compromised, more chronically ill.

The question that practices have to ask is do they wish to try to serve both. Do they wish to build their practice in a way that they can cater to both the patient who is looking for a quick, reliable, easy access to a physician, as well as those who are going to be more challenging, because they are medically compromised. The challenge is to remain relevant and accessible to the patient who is much more active than the consumer.

Question: Do you think that new practices should adopt healthcare IT solutions straightaway or should they wait for some time to get going?

Robert: At one point in time, the cost of using IT was more than using paper. The reality is, today, I would put a system in immediately when opening up a new practice. First, they are not cost prohibitive. Secondly, the administrative savings are absolutely tremendous. They allow a physician to make savings which they didn’t know they were losing.

Let me give you an example. The AMA (American Medical Association) says 17% of all medical claims are denied by health insurers for timely filing. A proper, medical record system integrated with billing, will not allow that to happen. The AMA also says 7% of all documented patient information is never billed out. A proper integrated IT system in the practice is going to take care of that. From that standpoint, you want to make sure you catch every dollar you can and the IT systems are going to help. Also, they will be instrumental in proving that you are providing care consistent with the guidelines, when we move to value based care.

Thus, I am a firm believer that you should get a system before your practice goes live, a system that is scalable yet not costly.

Question: Should a practice outsource its medical billing straightaway or do it in-house for some time?

Robert: You know it used to be easy when a practice started; they used to get their spouse, even their mother to do the office billing because it was low volume. The question is: what expertise do you have available in the office? Do you have someone who is very good? Are you concerned that you don’t understand the billing and coding enough?

It is interesting because a number of systems out there, CureMD for example, have the ability to facilitate the billing in house, so you can start one way and move to another when you feel the need. It really depends on what kind of expertise exists in the office. Billing is becoming more complicated. It is not just a matter of sending out claims and expecting they will be paid. There are challenges to them. You have to make sure they are paid in a timely manner. Again, you need to consider what kind of resources you have available on day one or do you want to use outside expertise.

Question: Especially when the ICD-10 is also just around the corner, I think it becomes that much more important to have a billing partner with you.

Robert: I’ll tell you something about ICD-10. It is exceedingly complex – going from 17,000 codes to 69,000 codes. But before someone freaks out about it, for most physicians, they use about 20-30 codes in routine billing. That’s not an overwhelming number -say it’s now expanded from 20-30 to 40-60.

Most of the changes in coding affect areas like Orthopedics. For physicians in internal medicine, the changes are not as dramatic as people are leading one to believe. It is something though, which you have to address. If you are not billing electronically, you are going to be paid less by the payers. For example, Medicare will only accept electronic remittances – others like Aetna are moving in the same direction. Paying electronically will give you the kind of control which you are not going to have when you do paper-based billing.

Question: Do you think it is more financially viable to start up a medical practice with more than one physician?

Robert: When you have multiple physicians, multiple things happen. You will need more space, more equipment, higher overheads basically. And you are also sharing between 2-3 people. One thing: it makes your lives easier. Holidays, schedules are easily spread out. Additionally, physicians coming together are of different specialties and can become a referral source to each other.

A lot depends on the area you are opening up in. Can it support 2, 3 new physicians? Obviously you want to have a large volume of patients to see. Also, marketing will have to be bigger to support the 3 physicians. I like to have the practices open up on a small scale. It allows them to have better control and share the burden of administrative overheads, as well as sharing of coverage issues.

In case of 2, 3 people opening up a new practice, it will mean there will be 2, 3 different opinions and you will have to come up with a way to resolve those differences if you are going to administer and run a practice with multiple physicians.

Question: What marketing channels work best for new practices? Real marketing, referral or social media interactions?

Robert: I think any physician – established ones too – need to have web presence. When I ask physicians where they are getting new patients from, very few of them tell me they are walking in, or even recommended. They tell me they are being checked online. People are searching for the physicians before they go and see them. Therefore, having a web presence is important. If you are comfortable, get on to the social media.

Marketing, on the other hand, is an idea that is something very foreign. Word of mouth works best. Physicians, their spouse, families, should be marketing through the word of mouth – which can be done in a number of ways. Get everyone to have business cards so they can spread the word.

Additionally, people in the practice should get involved in community events. For example, the public is very interested in health education. Physicians should make their presence felt in synagogues, churches, community centers and should come across as an expert in a very positive way.

Newsletters in the community by the physician are a good option too. Another good marketing tool is the weekly newspaper of a certain area. Find a way of accommodating people. If a person wants to be seen, the physician should see him. It may mean changing the normal work hours. Some Saturday evenings, some Sunday evenings. You want to build your practice by accommodating people. Once you build your practice, you can have fixed timings. Meet primary care physicians; meet their needs. If you become responsive to their patients, you will build your practice.

Question: What is the ideal number of staff a small practice should start with? There would not be much revenue in the beginning I assume.

Robert: From a pragmatic standpoint, physicians can start out with themselves and one person. But they should be prepared to expand as the volume increases. You should be able to allow the practice to grow to take overheads. Physicians should not be taking information from a patient which a nurse or medical practitioner would do, but that’s how you start small. If volume picks up, then the physician will be able to delegate the pre-exam medical work to a medical assistant so that they are able to see more patients

I am not a believer of big overheads to begin with. I’ve seen physicians (solo physicians) start out with no staff whatsoever and have a paid service to greet the patients when they called. It really has to be a thought process of how many people you need on day one and to be able to quickly ramp up the volume as patient volume picks up.

Question: Out of all the state and federal requirements to set up a practice, what is the most important one and why?

Robert: The requirements for physicians’ practices are not just limited to opening the door. You got to have a state license for practice, your physical space has to meet building code requirements and the American Disabilities Act (ADA) is also important. How will patients on wheelchairs or if you are a pediatrician-strollers- come in to your practice. You have to think from that standpoint.

You also have to have a way of handling biological spills, the specimens of any kind, needles, medical waste, etc. You have to have a proper way of disposal of such items. Another important aspect is how you will document your encounters with proper codes because that’s how you will be paid.

Question: What are the best practices for any new medical start up to ensure that it is getting the maximum out of its investment and it stays profitable over a long period of time?

Robert: I have a piece of advice that I’ve been preaching for 20 years and that is to participate with insurances and to have a fool proof financial policy that encourages credit card payments for patient responsibility. This way you can save credit card information for your patients (with their approval of course).This way, the insurance is billed, and if the insurance is rejected, or if there’s an unknown co-pay or deductible, they can quickly be billed to the credit card. It gives the practice the ability to maximize its legitimate revenue.

Another important element is to have technology which can monitor what’s going on in the practice. Physicians are under-utilizing the reports that come from their IT systems. With these reports you have the ability to monitor whether you are being paid properly, who is paying, how much you have received, what services you are providing, which services are you referring out, so you can adapt.

The other advice I’d like to give to physicians is to beware of salesmen. They will often get you into schemes and will make you money by buying a piece of equipment – being involved in equipment arrangement. These things are often fraudulant . I’ve seen physicians start out, fall into a trap because the salesmen gave them a really good sales pitch, but it was not based on facts. So before you commit to anything, make sure you know what is legitimate under current law.

Question: How long does it take for a small or medium sized startup to turn a profit? Any estimated ROI period?

Robert: I am hearing physicians are operationally breaking even after about a year. That is from fairly recent conversations I’ve had. However, I’ve been told that it is longer. About 2-3 years ago, it was 6-9 months. So now there is this longer period of time where a practice is operationally covering itself.

A lot is going to depend on how that physician is able to build a patient base that includes new and returning patients. An average primary care physician runs about 3,000 patients. It really depends how fast you can achieve that number. Physicians should be able to fund close to a year’s expenses when starting off.

Robert Goff will be speaking on ICD-10, startup practices and much more on CureMD’s User Conference this year in New York City (November 9th-10th). You can register here for free!