So You Want to Own Your Own PracticeNews Article
Many practitioners hold the dream of one day owning their own practice. While hanging your own shingle and being your own boss may seem simple, the success of your practice will depend largely on the strength of the foundation you lay prior to opening your doors for business. As such, I have put together a simple checklist of items to consider prior to embarking on your professional dream of independent practice.
- Entity Formation – Every business should form a legal entity, such as a limited liability company or corporation, to protect the business owner(s) from legal liability. When selecting the entity type, an individual would be well served to collaborate with an accountant and attorney during this process. Proper entity formation will require filing paperwork with the Ohio Secretary of State, as well as obtaining an employer identification number (EIN) from the Internal Revenue Service and drafting the relevant governing documents for the entity
- Insurance Contracts – Insurance providers are generally the most substantial source of revenue for a healthcare practice. It is not uncommon to take four (4) to six (6) months to obtain the necessary provider numbers from Medicare and Medicaid, as well as negotiate provider agreements with commercial insurers.
- Billing – Without a strong billing department, no provider would last long. The practice can either hire an outside billing company to bill for the practice’s services or hire a person to do all billing services in-house. Regardless, the practice will need to make sure that all necessary billing software is appropriately implemented and that any relevant terms of the billing arrangement are set forth in a written contract.
- Termination of Employment with Current Employer – Many practitioners are moving from current employment into their new practice. Prior to making the transition, the practitioner should resolve any outstanding contractual issues, such as non-compete restrictions, notice of termination requirements, etc. Appropriate patient notifications should also occur.
- Office Space – There are many options for practice location, so the practitioner will want to make sure that all options are fully evaluated. Generally, there are three (3) options for choosing office space: (1) build new space, (2) buy existing space, or (3) rent space. Remember to have all documents, such as lease agreements or sales agreements, reviewed by legal counsel prior to signing them!
- Insurance (Med-Malpractice, General Liability for Premises, etc.) – Insurance coverage will provide peace of mind in general, as well as valuable protection if an incident occurs. Prior to purchasing such coverage, the practitioner should evaluate whether any cost-saving measures exist. A management services organization (MSO), group purchasing organization (GPO), or trade organization may be able to negotiate lower premium costs.
- Staff Hires – A common difficulty of starting a private practice is finding the delicate balance when hiring staff members. A practitioner should consider what staff positions are necessary, desirable, or merely convenient if affordable. Depending on the nature of the staff position, an employment agreement may be necessary.
- Employee Handbook – As a practice grows, an employee handbook will become advantageous for notifying employees of company policies, procedures, and corresponding discipline.
- Employee Benefit Plans – The practice will need to decide what benefits will be offered to employees, such as health insurance, life/disability insurance, retirement plans, etc.
- HIPAA and FACTA (“Red Flags”) Compliance Plans and Training – A HIPAA Compliance Plan provides the basic parameters for the practice and its staff with regards to protecting the confidentiality and security of patient information. Effective May 1, 2009, healthcare providers will be required to have a FACTA (“Red Flags”) program. FACTA stands for the Fair and Accurate Credit Transactions Act of 2003. FACTA requires a compliance program that sets standards for identifying and dealing with activity that may put a person at risk of identity theft. Identity theft includes both financial and medical identity theft. On an annual basis, a practice must conduct HIPAA and FACTA training for all of its staff members.
- Corporate Compliance Plan – A corporate compliance plan specifically addresses certain legal issues of which all staff members should be aware. Of particular importance are policies and procedures concerning billing matters and prevention of false claims to insurers. Like the HIPAA and FACTA training, corporate compliance training regarding these written policies and procedures should occur annually.
- Purchase/Lease Equipment and Supplies – Like insurance coverage, there may be cost-savings available on equipment and/or supplies if it is possible to affiliate with an MSO, GPO, or trade organization. Any contracts for equipment purchases or leases, as well as vendor agreements, should undergo legal review prior to signing. It is always best to fully understand the ramifications of a contract prior to signing it.
- Asset Protection/ Risk Management – Because a business is a valuable asset, a business owner of any type should consider issues relating to estate planning and implementing an asset protection plan to protect both the business, business owner, and the business owner’s legacy for years to come.
Please note that this checklist is not meant to be an exhaustive and exclusive plan for practice start-up. It is merely a tool to facilitate discussion. Any practitioner seeking to open an independent practice should engage the services of an attorney and accountant with experience specific to handling both corporate and healthcare matters.
Article by Jeana M. Singleton taken from the OAAPN Newsletter Challenge