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When it comes to reading about accounting practices and quality management, physicians are typically and easily lulled into a state of semi-consciousness.

After all, healing the sick is your thing, not developing business strategies.

But if you're a practicing physician, especially one that is a part of a clinic, you're automatically thrust into the dual role as a businessperson. That means even though you may be the greatest physician in town, you, too, have to suffer through the mundane business tasks of running an office and keeping things current and up to par — or you won't have any business.

According to Tim Wheat, a consultant with Rhea & Ivy, PLC, a Memphis firm that specializes in advising healthcare professionals on business issues, there are several things physicians need to consider when running their business. While the need for physicians will always exist, the determining factor in how successful physicians are often lies not only in the healthcare they provide, but also the type of organization they run.

"A continuing issue we see is in group size," Wheat said. "About 10 years ago, there was a huge push to have all big medical practices to better deal with insurance companies and managed care contracts. That didn't work out very well and there was a lot of "divorce" inside big practices. Sometimes when they'd fall apart, they didn't have a real business strategy. Then, there are accounting and tax issues wrapped up in that.

"There's no one single answer, but if you look at MGMA statistics, the most efficient offices tend to have between four and six doctors. Some personalities work better with just themselves or just a couple of partners. To work in larger groups, you have to have a corporate mentality rather than a 'Top Gun' mentality. Good, sound practice is a combination of smart business strategy and personality of the particular physicians involved."

Wheat said another issue is the impact of increasing numbers of women coming into the profession. Since women more often have outside familial responsibilities, that, too, can present changes in the corporate culture.

"If a physician has a Top Gun mentality, that may not fit for someone who's got to have multiple tasks outside the practice," said Wheat. "I'm impressed the way women multitask. But from a business standpoint that, along with the right size practice and personality, can affect business strategy. You can't have a Top Gun mentality and make that work. There's a lot of trial and error that goes on."

Other issues on the business side of the medical table are discussions about higher deductibles on insurance policies, which would place the decision for physicians and medications back into the hands of consumers where it belongs. No longer would the insurance companies decide who goes where, and who gets what, according to Wheat.

With the many facets of healthcare, the number one tax deferral device continues to be a program in which physicians fully fund their retirement contributions. If you're not doing that, money managers recommend starting now.

A few tips for newly licensed physicians: Although you feel you're ready to rush out to heal the vast sick world, don't hang your shield up alone just yet. Experts say for a while at least, join a group which will help you establish a referral pattern and help shoulder administrative cost.

But for those independent types that prefer to work solo, rather than under someone else's rules, there are ways to do your thing, as well.

Some hospitals and government programs offer loans for a commitment to certain underserved areas for a certain number of years. But, again, thinking also as a business person, take into account the reality that with HIPAA requirements and malpractice costs, you should consider even that decision seriously before you launch out into an uncertain financial future.

November 2006

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