According to the US Bureau of Labour Statistics, about 20% of small businesses fail within the first year of starting operations. Only a third of the small businesses survive after ten years of operations. After the Covid-19 epidemic, this situation is worse. All businesses, irrespective of the sector, are facing challenges.
Many small private care practices face difficulty continuing their operations due to a sudden decrease in patient footfalls. Covid-19 has transformed the entire model of successful business operations in the health care sector. Social distancing, new rules about telemedicine, internet of medical things have transformed the whole health care industry.
Successfully restarting your business depends on how quickly you build your confidence and resuscitate your business. It depends on how you promptly remap your business. What are the goalposts or targets you have set for yourself? It depends on your short-term objectives and long-term goals. Revamping your products or services to present a renewed version to attract consumers to your business is necessary. This article outlines some of the steps that will be useful in successfully restarting your healthcare business.
Small Steps To Adopt And Restart Your Closed Business
- Don’t let fear control you.
- Identify your limiting beliefs and persevere to achieve success.
- Cultivate a growth mindset that connects success to perseverance and hard work. You can achieve success when you work with renewed determination and a growth mindset despite past failures.
- Control your emotions. Don’t let external events shape your emotions.
- Turn your shoulds into musts.
- Ask yourself the right questions – failure should make you ponder.
- Make better plans- Break down the causes of failure and look at it objectively. You need to make constant strategic innovation and check whether failure resulted from operational mistakes. Even small changes to your business map can have significant effects when looked at as a cohesive whole.
- Suppose your business is affected by Covid-19, reboot the parts that can be successful. Move through your plan virtually before you restart physical operations. Assess what has changed permanently and fundamentally. Analyze the customer base, capabilities, collaborators, competitors, or environmental and regulatory conditions. See how your strategic direction can change at this inflection point. Analyze all parts of your business for the following:-
- What is superior to other available choices in the market?
- What parts are world-class?
- What are above average parts and worth retaining?
- What are minimally viable tasks, and what activities can be outsourced?
- What are vestigial parts that you should eliminate from the ecosystem?
- Ensure your supply chain, distribution ecosystem, and in-house team is ready to start.
- Reboot your marketing and sales channel. Consumers will not come back automatically. Rebuild service awareness and interest and motivate them into using your services.
- All plans are individual and must fit the facts and circumstances of each case.
- Make a virtual business plan that considers the appropriate strategies with proper guidelines, parameters, and supporting infrastructure.
- Build physical locations and restart the activities you envisage under the new virtual business plan.
- Show leadership in communication as you empathize with your consumers and show them your genuine interest in understanding how the Covid-19 epidemic has affected them and how you can get help.
- Be rational, objectively explain the hard facts and make your customers a part of your solution by pointing out the mutual benefits.
Evaluation Of Business Relationships
- Debt Vs. income, the terms and conditions, and your relationship with your vendor
- Carry out a customer survey and find out how you can help by providing practical solutions
- Re-examine your relationships with vendors, suppliers, and service providers. Cultivate new relationships if required.
- Community: show appreciation to the vendors, suppliers, and customers who continued their relationship with you during your difficult times.
- Evaluate your cash flow, investigate new technologies, create emergency plans and checklists
- Leverage the power of social media
- Focus on your business plan and work with determination to achieve your new goals.
The healthcare industry is growing by leaps and bounds, and the business volumes are ramping up. The healthcare industry is expected to touch US$ 5.5 billion in value by 2025. Consolidation and mergers are also growing apace. Becker’s hospital review posts that 60% of the community hospitals are a part of an enterprise health system. Large enterprise systems and big hospitals effectively control the medical ecosystem. As the result of the curtailment of competition, the industry is rapidly emerging as an oligopoly. So, one may ask, why do we need small practices?
Doctors and physicians are small cogs in a big wheel in large hospitals. Healthcare providers have greater autonomy in small private practices and follow independent policies. When a large number of smaller private practices are opened, there is greater competition in the system with widespread distribution of profits. Patients have the choice of access to more personal private practices and their physicians instead of an impersonal hospital administration system. Another significant benefit of increasing private medical practices is reaching underserved and unreached local areas where no big hospitals are available.
Doctors and physicians who have an entrepreneurial spirit can start their practices and work independently. As a doctor in private medical practice, you gain a sense of ownership and agency. This feeling is not generated through working in a major hospital system.
Different Kinds Of Private Practice Set-up
When you want to restart your medical practice, you can consider any of the five different variations:
- Solo Practice:
In such a system, you have complete autonomy and independence. You control how your practice operates. You may incur higher startup costs to purchase medical equipment, EHR, and other computer systems. As the sole proprietor, you are taking all the risks. Both the charges and the benefits from your practice entirely accrue to you. You are responsible for the business and its clinical sides, and you work longer hours.
- Group Practice:
You share the responsibilities of the private practice with other doctor partners. You divide the working capital and other start-up costs with other physicians in practice. Group practice means shorter working hours, lower capital participation, and lower profit share. As the liability and duties become shared, individual autonomy and authority are reduced.
- Hospital-owned private practice:
You can restart your medical practice within a hospital-owned network of hospitals. The hospital network defrays the working capital costs and reduces your system overheads. The marketing overheads are also covered, and the business risk from starting a solo practice is minimized. You are subject to certain constraints regarding the employees you hire. If the area of medicine you are interested in is urgent care, a hospital-owned network may be the right place for you. Hospital-owned networks control 16% of the urgent care business in the USA.
- Federally qualified health Centre:
This is similar to operating under a hospital-owned health Centre network. You are subject to similar constraints like operating under a hospital-owned network. A hospital-owned network is privately operated, whereas the Federal Government controls a Federally qualified health Centre. There may be restrictions on the amount of working capital allocated to your health Centre as there are caps on the amount of working capital distributed to different health centers.
- Academic health Centre:
When you start a private practice within this setup, you need to sacrifice your autonomy. Still, there are fewer caps you can get allocated on the working capital expenditure budgets.
Key Parameters To Consider When Setting Up or Restarting A Private Practice Business
Ensuring Adequate capital resources
Though actual dollar amounts depend on the size of practice you want to ultimately open, you should aim for a US$ 100,000 capital raise or a credit line. This initial funding works as seed capital to finance equipment and working capital to cover operating costs. Your payroll and other expenses are covered through this working capital line until your practice establishes stable revenue lines.
Creating a Pro-forma business plan
- Try to project the revenue and operating costs stream realistically through your pro forma business plan. In your pro forma business plan, you should also factor in capital inflows and expenditures through equity or debt financing. You may project a proforma balance sheet up to 3-5 years into the future. All your assumptions should be backed by proper market estimates and costs. Operating costs would include items like lease rent, costs of EHR systems, and other software expenditures. Payroll and other operating expenses of the practice’s day-to-day running may also be factored in.
- Your projections must be realistic and verifiable to convince your venture capitalist, financier, or banker. Also, most doctors start with a negative net worth and are in debt. So, a rational and sound business plan grounded in reality, broken down by months or quarters, is an absolute must.
- Submit your business plan to the bank specialists in healthcare or medical services. The specialists are well-grounded in the realities and the unique factors affecting the healthcare business.
- Make a pitch to multiple banks. Many banks will make different offers based on your particular circumstances. Choose the best funding according to the interest and amortization schedules that best fit your circumstances.
- Stay conservative in your estimates and your financing requirement. You don’t need high-end furniture and ultra-costly medical equipment when you start or restart your practice. This ensures that any difficulties you have in building a revenue stream initially do not materially affect your payment ability.
- While you are waiting for the bank’s feedback and the official sanction of your loan, lease your office space and modify it according to the needs of the private practice.
- Complete the basic steps, including incorporating your private practice as a legal entity, getting a Tax Id, setting up liability and medical malpractice insurance, and establishing your credentials and rapport with your prospective base.
Purchasing Computer Equipment, Furniture, And Staffing Your Practice
- EHR systems
EHR systems are an essential part of private medical practice. EHR systems (Electronic Health Records) help record patient data, maintain their records electronically, and help in effective communication with patients. It is a one-stop-shop that provides the all-inclusive benefits as follows:
-Maintaining patient records and medical histories
– Ordering prescriptions and lab tests
– Communicating with other providers such as insurance companies and labs
-Controlling your revenues cycle and receivables follow-up.
– Receiving Federal incentive payments
- Practice Management Systems
This tracks and controls the front office information and facilitates the effective management of your practice. This integrates with the EHR systems effectively. A Practice Management system is essential as it generates and controls the billing and revenue cycle. This system is used by your front office and back office staff to bill patients and send claims to patients. It helps in the proper follow-up of your claims with patients. It sits upon the EHR system eliminating duplicate records.
- Medical Billing Service:
Alternatively, you can choose a medical billing service responsible for billing the patients and following up with them for claims. You need to do a cost-benefit analysis to see which is a more cost-effective and efficient solution; hiring your staff to do the billing and follow up on claims or outsourcing this function.
- Choice of Medical Transcription software or service:
There are traditionally three methods of performing medical transcription.
-Transcription by dictating to a secretary or a staff member
– Outsourcing to a transcription service
– Using a voice recognition software or a Dictaphone
The medical transcription should be accurate and reliable as the medical notes are passed on to other providers, insurance companies, or specialists. Analyze to see the most efficient and cost-effective solution that renders reliable and correct information and choose that system.
- Check the backgrounds of the potential staff members to be hired.
A private practice stores confidential patient information. Staff members must deal with patient information for billing claims and offer clinical services. They have to be trustworthy and reliable. They should not have a criminal background or any unsavoury past. A background service does the job of checking the credentials of your prospective staff.
- Credit card processor:
You can partner with your funding bank to obtain a credit card processing machine as customers will pay using credit cards or cheques. Most of your payments will be routed through insurance companies or Medicare, but some patients may pay at the point of care. Some credit card companies offer discounts and other perks to medical providers, so make it a point to shop around for the best credit card processor.
- Hiring an Office Manager
Hire an office manager or a professional consultant with the necessary experience to oversee the efficiency of your team of staff and office operations. Whichever method you use, the conduit should provide the appropriate feedback on how the private practice system operates.
- Providing ancillary services:
If you are a specialist like an orthopedician, you can provide X-rays or MRI services and earn additional revenue but providing other services comes with additional costs. Do a cost-benefit analysis and choose according to your capital available.
Preparing To Open
- Complete the steps hitherto outlined, including incorporating as a legal entity and getting a tax ID.
This ensures that you derive certain tax benefits and also helps to limit your liability. The different forms include an S-Corp, LLC, C-Corp, or a general partnership. Choose the form of enterprise carefully.
- Credentialing with payers:
All the physicians must be credentialed with insurance companies to submit claims. This process can take anywhere between 90- 150 days. Give yourself sufficient time. The physician’s work history, proof of malpractice insurance, hospital privileges, and attestations have to be provided for the credentialing process.
- Policies and Procedures
A set of policies and procedures governing the operating systems and compliance procedures: Accounting procedures, Billing and claims filing procedures, other systems procedures should be delineated simply and unambiguously to ensure efficient and effective functioning. The policies should be periodically reviewed and updated. Incorrect and antiquated procedures should be phased out.
- Buy Insurance:
Buying insurance is crucial for medical professionals. Medical malpractice and liability insurance are absolute necessities. Additionally, you may need Workmen’s Compensation insurance for covering your staff liabilities. When you request funding from the bank, the bank may make it a precondition that you secure personal and liability insurance.
Evaluation of Performance
The final step is opening up your practice and evaluating practice performance. This is a culmination of your efforts to convert virtual plans into reality. Once the practice starts functioning, establishing practice evaluation yardsticks is a must. Systematic analysis of the variances between your Pro-forma business plan and actual performance must be carried out. Corrective actions must be initiated whenever conflicts are detected.
Overriding Factors To Be Kept In Sight Always
- Planning construction of the private practice: Sufficient time should be budgeted for planning and setting up the private practice. Construction activities invariably suffer time and cost overruns. Ensure that your pro forma business plan and financial budgets provide for unexpected contingencies.
- Awareness of Regulatory changes and Payer rules: Ensure you and your staff are always on top of changes in insurance companies’ HIPAA rules and payer rules. Also, keep abreast of the rules of Medicare and Medicaid. This reduces claim rejection incidents. Ensure your internal operating systems protect patient confidentiality as HIPAA mandates secure systems. Appropriate vetting of your in-house staff is also necessary.
- Marketing and Advertising are the lifeblood of any business, from burgers to private practices. You need to sell the advantages of enrolling in your practice to clients. Don’t stint on this particular cost center as it determines your future revenue stream. Also, use the help of social media. Build an attractive and helpful website that is informative. Use professional help to maximize your clicks and hits on the website and popularize your social media and online presence. Brush up your digital skills as they are essential in a post-Covid world. Remember the Rule of Seven in Marketing and Advertising your business.
- Use advisors in any sphere according to your financial budget. This will help you avoid repetitive, costly, and time-wasting mistakes. This will vary from situation to situation depending on the availability of resources in the financial budget.
- Medicaid and Medicare prescribe meaningful use standards for the systems in private practice. This is mainly focused on the Electronic Medical Records and Practice Management software. Ensure that your private practice’s systems are compliant with these standards.
Rule of Seven in Marketing and Advertising Your Practice
The rule of seven simply states that any marketing or advertising message must be seen by the consumer at least seven times before the consumer can be induced to buy the product or service. Repetitive messaging is the key to imprinting the name and value of your product or service in the customer’s mind.
This facilitates instant recall in his mind when he wants to use your product or service. In today’s digital world, the value of a message promoting a product or a service is lost among the myriad of messages that bombard our senses daily. Segregating and differentiating your message to remain imprinted permanently in the customer’s mind is a big ask.
Human psychology is what it is and the virtual flood of information that bombard our senses every day. Unless the message is differentiated and repeated often enough, it does not profoundly impact your customer’s mind.
Too much can never be enough.
Marketing messages have to be repetitive and consistent. Never hold back from constant repetition. Holding back the constant flow of information results in the customers forgetting or disregarding important messages that you might wish to convey. Today’s virtual explosion of social media gets the message out cheaply.
To get as many views as possible, constant reiteration is necessary. Even in our childhood, we created mnemonics to memorize certain content. Otherwise, our brains tend to forget. The rule of seven is also based on the principle that human beings need retelling to memorize and remember things. The Covid-19 epidemic brings its challenges in its wake. Our email servers automatically sort messages into priority and spam messages according to the filters.
Sometimes, important messages may be overlooked as they get sorted into spam and deleted. People have busy lives. They face numerous concerns that they focus their minds on. Registering in their mind space and maintaining a constant presence is a challenge. Amid so much noise in the marketing continuum, your message has to stand out to be remembered.
Presence of too much confusion
Official regulations regarding social distancing may create confusion in the mind of your prospective customers who do not readily visit your office. But social distancing norms and quarantine rules change on the fly. So, keep abreast of the latest regulations and constantly update your customer base to generate business.
Customers may not have an immediate need for your product.
Customers may not want your product in the immediate present. But this does not preclude their needing your product or service shortly. So your message should be ever-present, impinging on their consciousness by constant retelling. This way, when they need the product, the name of your product or service is on the top of their consciousness, creating a demand for your product or service.
Customers may have a demand elasticity for your product which is negatively affected by the high price of your product.
There may be resistance to your service offerings due to the high price of your product or service. Convincing them of the product’s value through constant repetition may help overcome this resistance. Seeing the marketing message constantly may compel them to appreciate the product’s value. This induces them to buy your medical services despite high prices.
Lack of awareness
Customers may lack awareness about your product or service offerings. They may not know you or the reputation you have built for providing efficient and effective services. Repeating your message and emphasizing the value of your service is one of the best ways to make you and the services you provide known to them. This enables them to recall you and your service the next time they are in the market for such a service.
Spotlight the things that matter most and use the personal touch to create a real connection with your customers. Communicate your concern for your customers effectively. Emphasize the safety measures you have implemented in your office. Remind them so that your patients don’t forget their follow-ups, vaccinations, essential surgeries, or other urgent medical care. Explain or have your staff explain the costs of treatment, what insurance companies usually pay, and out-of-pocket expenses. Focusing on clearing the confusion prevents patients from postponing urgent medical care.
Use of Social Media
The digital revolution following the Covid-19 epidemic goes a long way in mitigating your marketing problems. It is inexpensive and readily accessible. Creating a state-of-the-art, professional website that explains your product offerings helps alleviate your marketing problems.
Use Facebook, Instagram, Twitter, and other social media to generate more views and clicks. Repeating your messages increases your viewership. Also, if you are offering online consultations and telemedicine, reach out to your customers and make them aware of it.
Create a virtual plan, cut out deadwood activities and streamline only those functions which create a revenue stream. The basics of starting or restarting a private practice require the same kinds of due diligence and business plans to be created.
All the steps outlined above have to be gone through. The final addition to the above recipe is hard work, determination, and a never say die spirit. Learn from your previous failures and create a sustainable, workable model which pays rich dividends for you.