I felt compelled to respond to the article with the following letter:

“I enjoyed the article by David M, Jaspan, D.O. That I have written over and over in my head as well as lectured to offices for which I consult and bill. As a billing service and managed care consultant, (self-employed) I have often found myself between the insurance company and the doctor. While it is true that some plans are more doctor friendly than others, it is also true that the insurance companies are not always the worst enemy we have. I continuously stress to my clients and their staffs that they are the first ones touching the superbill, charge slip, routing slip, encounter form. The cleaner it is, the more advanced it is in using modifiers and trying some add-on codes that are clearly described in a CPT book/computer program the better the chance to see an improved cash flow. I also try to stress that correct is better than quick, having seen my share of superbills prepared that are sloppy and incomplete in the doctor’s haste to just get them our the door to me to do the billing from my off-site location”

After 14 years in this business on my own where I rely on a salary based on the doctor’s receipts I have no choice but to employ strict policies for myself as well as the offices with whom I have enjoyed long term relationships. And when you call insurance companies as much as I do, it helps to know what I am talking about regarding clean claims.

Fran Glucroft
Medical Office Manager
Fairfield, CT

Show me why I need some type of insurance protection, and I’ll listen carefully at least. Of course I have life insurance, mostly term life insurance. But I have some whole life insurance too because I hope to outlive my term insurance and still leave my family enough money to bury me and pay off my debts. My father did NOT believe in life insurance, preferring instead to put his money in the stock market. He passed away last year, before the market tanked (thank goodness) and all I can tell you is his stocks didn’t do so well. I’m still working… but I digress as usual.

I also have disability insurance, good car and homeowners insurance, and an umbrella policy to cover what the other policies won’t cover. I’m considering a policy for Errors and Omissions since starting PrivatePractice.MD, but that policy is more for corporate board members I think. There are all sorts of specialized insurance products so be sure to ask your agent to review your business risks and determine if those risks can be mitigated with insurance.

You work hard to start and build your business and you don’t want it taken from you due to some preventable or unfortunate event. Business Liability insurance should protect you from those sorts of risks. If you have partners you might also consider having the medical practice buy life policies for each partner which pays the surviving spouse for that partner’s equity ownership in the practice in the event the partner dies. Otherwise your new partner may be the spouse! I can see how that might cause some problems for the daily office routine (but again I digress).

Let me start by reminding you I am not an accountant or lawyer. I want to give you my suggestions of how to set up the private medical practice’s financial parts when opening your practice. You and your accountant should review your plan before you do the same. I’m hoping the financial advisors on this site will weigh in on this most important topic also. I want to give you the 20,000 foot view; they can give you the turn-by-turn directions.

Once you’ve incorporated and named your business/practice, you get a Federal Tax ID number. This important number is like your social security number. You’ll use it to open business bank accounts and also to get paid by managed care companies, etc. These managed care payments are usually made by check with an attached EOB (Explanation of Benefits), although direct deposit is often available too.

As an aside, I opened a PO Box as my “pay to” address, where the payments and EOBs are sent, as well as copay and other payments that patients mail if they didn’t pay at the time of their visit. Only my office manager and I have access to that P.O. Box. That is where my credit card and other bills are sent as well. I did not want that mail getting mixed in (and potentially lost, or stuck into a magazine by accident) with my general office mail.

I also opened a business savings account where extra checking account funds were swept into each night. This savings account was really a money-market acocunt with a little more interest paid to me than a regular savings account could offer. This account offers online bill payment so that I rarely write a paper check anymore.

You should get a business credit card to start establishing credit for your company/practice. If you get it from the bank where your business checking account is located you can usually link it to your checking account for easy payments, as well as overdraft protection. I chose a card that gives me points for dollars spent, and I use it to pay for the supplies I need as well as other payments I can make with it, and the rewards are nice little bonuses. Only chose a rewards card if you pay off the balance each month (at least the majority of the time) because rewards cards usually charge a higher interest rate on unpaid balances than non-rewards cards do.

Next, set up an unsecured line of credit (LOC) with the bank (if you can find one to do that for you these dismal banking days). It is invaluable for smoothing over cash flow issues to meet payroll, especially in the early days of your practice while waiting for the insurance companies to pay you (which may be 2-3 months after seeing your first patient). Use this LOC as a temporary resource, with the goal to pay it off quickly after tapping it.

You might want to consider taking credit cards for co-pay payments and other charges your patients must pay. Your bank can get you set up with a credit card processing company who usually gives you the card scanner for free, or very cheap.

Finally, I highly HIGHLY recommend you use a payroll service to assist you in paying your staff (and yourself, although your check will be a “draw check” and you’ll probably be paying estimated taxes. Discuss that point with your accountant.) Keeping track of taxes and other payments due is difficult, and I find the payroll service to be well worth the little bit of money I pay them to keep everything straight and on-time. They make tax time much easier also.

One last suggestion is to consider utilizing a bookkeeper or having your accountant make a visit to your office every 2-4 weeks to balance your checkbook, or enter monies you received or paid, into a computerized accounting system like Quickbooks. Just keep your receipts and other records handy for them to check. Quarterly taxes come around quickly, and developing the discipline or system to keep your books balanced makes estimating taxes much easier. Plus you’ll have a relatively up-to-date accounting of your practice’s financial health each week or two although I’ll predict you’ll check your balances daily especially when first starting up.

Doctor’s are considered good risks for loans because medical practice is a tried and true business. On one hand doctors can obtain credit perhaps more easily that a business owner trying to start a different kind of new business. On the other hand, doctors are not always seen as the most savvy with money, and will take loans with higher interest rates than they might have otherwise, if they negotiated harder. Bankers and private lenders like to loan to doctors for those reasons, in my opinion.

When I started my practice I took a hospitalist job at a local medical center. I mostly worked a few nights and weekend days, leaving me time to see my patients in my own office during the day. In the beginning my practice was not that busy and I had much flexibility in my schedule. If my patient needed more urgent attention, I could see them in the hospital’s ER or outpatient setting. My employer knew my circumstances and worked with me, as I hoped to have a thriving practice soon and would use the hospital for admissions, testing, etc. I worked just enough hours to get health insurance, adding on hours when my office was quiet to increase my income. Overall, I tried to schedule my patients for four days per week, and always tried to have at least one full day at home with my wife and baby girl.

My parents loaned me a small amount of money to help me get my practice started. I had no savings, using much of my income earned as a resident to pay off family and friend loans taken during my medical school. I was able to secure a decent line of credit for my new practice, in the practice’s name, by giving a personal guarantee. My hospital employer vouched for me and with the hospital’s banking relationship I received the loan. Initially, that line of credit was used only to pay my one employee’s salary. She was my front desk and back office, and I did all the clinical work including taking vital signs, giving shots, etc. I also established a credit card in my new practice’s name, which I used for supplies and smaller expenses like stationary printing, etc. I negotiated a 3 month grace period with my landlord so I had no rent when I started, although I did put down the deposit he required. My medical billing service, which I had outsourced, also agreed to wait to be paid until the insurance companies began to pay me.

I admit that the first six months after I opened my practice’s doors were a little tough and challenging, but once my schedule began to fill I quickly added more staff and managed to pay off all the loans and goodwill advanced to me at the start. Now that was a very satisfying feeling, after feeling a bit stressed at the start!

Okay I say- now what are you going to do with this report? The dedicated staff person might start to go through this report one patient at a time and start to dissect each category to figure out what is due from insurance and what is due from patient. This could take your billing person the entire month and after a while one account looks like the next which leads to a very inefficient process and an overwhelmed staff person.

So what is the alternative? Although knowing what your gross accounts receivable balance is important to you because you would like to try to figure on what money might be expected, this is not a report to use to bring more money into the practice. Instead, every good billing software program should be able to produce what i term your “outstanding claims” and your “guarantor balances”.

A review of outstanding claims every month (and i mean every month) will yield results before claims get too old and the insurance company issues that dreaded code: ‘timely filing denial’. A sharp billing person should not look at this report as foreign because many of the claims on this report have probably already resulted in a denial/problem which your staff should be working on. That is what leads to hopefully a pending file that is reviewed every month. Your staff does not have to look at outstanding claims that were transmitted in the previous 30-45 days as you must give claims a chance to be processed, but surely if you look at the report from 45 days ago and prior, every month, you will get a much better handle on your accounts receivable and your staff will have a tool to review claims that should have paid. Sometimes just resubmitting claims works because the claim did not reach the insurance company. That again speaks to the issue of timely filing, which is why i can’t say enough about making your outstanding claims report your friend.

On the other side of A/R management of course is patient balance bills. If there is a balance on the guarantor report, there should be a patient bill produced each month to match each line item. I urge your staff to know what they are sending to the patient; if the billing person cannot explain the reason for a balance bill, don’t expect to be paid. So the word clean applies here too (see article “cleaning up your claims for better results”) the cleaner the patient bill, the more notes in the computer to remind the staff of why there is a balance (deductible/co-pay/cost share/ not covered/ termed insurance, and the list goes on), the more chance a patient will at least make a payment plan if not just pay the whole balance at once. When I send out 100 balance bills from one of my billing clients, I expect 100 calls and i take the time to know what is in each balance. And when a patient calls to discuss the bill i make notes about any commitments and comments with date and time noted.

Fran Glucroft
Medical Office Manager
Fairfield, CT