Setting up your practice

Setting up your practice
Chapter Two Setting up your practice

So, you want to start you own practice ?
What can you offer ? Your passion (s) Your specialty(ies) interests What your community lacks Your potential niche(s) …Your pioneering unique idea(s)

So, you want to start you own practice ?
Are you a great PT ? Will people need & want your svcs ? Do you know how to build & manage a self-supporting business ?

What can YOU provide ? Your uniqueness ? Your value ?
Feasibility Study: Define your market – 1/ (lead-up part of written plan) What can YOU provide ? Your uniqueness ? Your value ?

Feasibility Study: Define your market – 2/7
Can you earn adequate income ? (adequate client base, adequate payment) Can you earn secure income ? (powerful dominance, wide diversification)

Feasibility Study: Research your market – 3/7
What is your MARKET BASE …………….. Population, demographics Referral sources… current svcs What is your PAYER BASE ………………. Wealth.. local economy Employers & insurances (number, size, diversity)

Your MARKET BASE… II Health care systems… who/what is already in play? Health care local?… or they drive to reg. med. center? Where do people go for health care? Driving distances & direction? Newport vs Bangor

Who are the players: your allies vs. competitors: (HOPTS, corporatePT, MD, POPTS, Chiro, LMT, ATC, PTIP) Are they any good? Customer loyalty? Their strengths? Their weaknesses? Any empty niches? Unmet needs? * Their likely responses to you? * Referring hospital Is there room for you ?

Population size & demographics Providers quantity & quality Payer-employer diversity Empty space geography Referral sources Unique PT fit

Are you capable & ready for success? You have the resources? skills inventory.. commitment.. risk tol.. capital Family-peer-mentor support Can you build a solid Business Plan ?

PT REBELS (we are relying on you for this)
Traditional PTIP Clinical patient care Fee-for-service... Third-party billing but: PTAWKI now at grave risk.. TEOPTAWKI ? Crisis = Opportunity.. Re-think PT.. Re-define PT Alternative models for PT roles Cash-based… unique-need PT… “expert consultant”

PT REBELS Alternative clinic hours Unique niche’s Tele-health PT ??
headache, prenatal-postpartum, TMJ, ergonomics, et al… Tele-health PT ??

Alternative Practice formats MSD prevention, for example
But who pays for prevention?.. No one, except.. Industry, ergonomics, back school, tendinitis school, stretching programs Is $300 per hour OK ? IMPACC… Emerging : workplace wellness; aging worker

1983 story - IMPACC (every PTIP has a story)
PBMC… local workplaces… on-site visits… Admin didn’t get it... GH Bass & Boise Cascade… IMPACC… OPTC… IMPACCUSA… Then… SC-impacc 1993

Start-Up… Gradual ? or.. Dive right in?
Quit your job to dive right in… or… Moonlight, gradually ease into independent practice. 4-day job, clinic, 1 to moonlight to do your own thing. e.g. Dick Baldwin, home health, various PTs impacc Save aggressively! Clear debt. Build war chest. Write, refine, work, re-work your BUSINESS PLAN

Dave Ramsey…………………………………… “Total Money Makeover” “EntreLeadership”
Conquering Debt Dave Ramsey…………………………………… “Total Money Makeover” “EntreLeadership”

The modest startup approach
low cost.. no debt. efficient, small, manageable, affordable. modest clinic… equipment vs. PT skills. Aim small… miss small Smaller, survivable mistakes lower risks.. easier win.. survive failures

Startup costs-budget 1/3
Equipment.. Office… Clinic Supplies.. Office… Clinic Rent & Utility deposits Marketing.. Signage Printing – forms – paper v. computer Billing setup… EMR technology Recurring costs (rent, utilities, insurances) Living expenses (pending payroll) These costs exist prior to receiving actual income

Startup purchases 2/3 waiting room furniture
clerical office furniture-equipment-supplies treatment rooms furniture-equipment-supplies gym equipment-supplies-modalities Splints-tapes-theraband-etc Intake forms-appt cards-brochures-exer handouts Electric-heat-internet-telephone-insurances Signs, advertising, mailings Billing setup, credentialing, software, hardware Personal living expenses while you wait for income

Startup purchases 3/3 Clinic Equipment... Clinic Supplies
Ali-Med catalog………… Office Equipment… Office Supplies Staples catalog………….

Waiting Room … Business office
X

Treatment room 2

Gym area

Handicapped access BR Doorways Ramp Parking

Modalities ? NMES IFC TENS LLLT C-txn

Value: teach self-rx

HEP2go VHI Your paper

Most important “equipment” ?

Mobilization table?

Clinic practice ‘on-the-cheap’ (SmartCare)
No receptionist (phone, schedule.. $40k) No aides (hands-on by the DPT !... $40K) (10 yrs… $800,000 retirement funding, or avoid BK) Outsource billing (gain space; production capacity) Outsource payroll (errors & hassles & time) WebPT (no software-HIPAA)

Recurring – Fixed vs Non-recurring Equip & Startup & Unexpected
Expense Budget Recurring – Fixed vs Non-recurring Equip & Startup & Unexpected

Your own insurances W. Comp 500 Malpractice 1500
Business liability 500 Premises liability 500 Health, disability, term life Local agents & APTA

Expenses fixed…recurring
Rent-lease Licenses-permits Payroll Banking fees - CC fees Payroll taxes: FUTA-SUTA-SS-Medcr Payroll mgt company Fed-state income taxes Accounting; tax prep Sales/use taxes Continuing ed.. Utilities: phone, internet, heat, elect Subscript.. Memberships Trash remove; snowplow; lawn Housecleaning; repairs; maintenance Billing fees; EMR Refunds Insurances (many) Office supplies Clinical supplies Equip replacement Advertising-marketing Charity-donations

That is the expense side of the business
Next.. is the income side of business

44/120

Income stream 1/7 Refer.. Eval.. PA.. treat.. bill..
..wait.. re-bill.. …collect.. Patient balance billing co-pay.. deductibles.. Don’t neglect this ! Medicare cap.. MPPR.. visits rationed Treat in January… paid in March (maybe/some)

Predicting income stream 2/7
Define your payer base (you need a diversity of payers) How much do they pay What they will & will not pay for When paid Payment hassles Prior auth?... MPPR Contract… PPO-network sign-up required? …More on this later

Fee-for-service… Billing codes… CPT Codes eval 97164 reeval 97110 ther ex 97112 nmusc reed 97140 manual ther 97014 estim 97012 mech txn MANY rules & nuances re these !!... CCI… modifiers KX-59

Income stream 4/7 How much.. How fast.. Codes pd Medicare.. 60
Medicaid Anthem BC-BS Aetna Cigna Harvard Pilgrim Worker Comp Auto liability Rip-off Private pay (discounted)

Must follow CCI with medicare-medicaid-Anthem/BC Some see ionto as experimental Most do not cover TMJ (ok re HA, neck dysf) Hallux valgus surgery is cosmetic Hallux DJD is rehab Medicare cap… Medicaid cap… MPPR Cigna, United, HPHC, Humana… OrthoNet, et al

Income stream 6/7 CCI… what codes cannot be billed together
(e.g. manual, exer, txn, Neuro, gait tng) Modifier KX (Medicare cap exception) (1950) Modifier 59 (re-eval) (multiple Dx Rx) Multiple procedure reductions… Decreasing pay 100%-50%-50% UCR = insurance decides what is UCR (ripoff) NO private pay for Medicare patients !! (no opt-out)

Income stream 7/7 Getting set up to do billing….
Hardware… Software.. Clearinghouse Competent billing professional EMR software - web site (WebPT) TIN… NPI… Credentialing… Provider #s… Contracts All these must be in place first. Your billing skills vs contracting a billing agency !

Insurance Contracts Insurance contracts NPI (per PT… per clinic)
Credentialing… CAQH… Provider #’s Insurance contracts Reasonable reimbursement ? Networks will rent-lease cheap fee schedule to others Be very willing to say NO !

CASH-PAY? Total.. or.. Hybrid Insurance billing OPTION vs self-pay
(Wcomp in Maine) Insurance billing OPTION vs self-pay

Wait Rm poster pg 1

Wait Rm poster pg 2

Alternative-Expanded Hrs (access advantage)
7am - 4pm Tues-Fri 9am - 6pm Mon-Thurs Saturday AM hrs? Improves income via improved access

55/120

Expenses vs. income lead to.. Pro Forma
Schedule of expected income & expenses. Illustrated monthly over year time-frame. Business & personal merged. Shows maximum deficit points & break-even point. Liberal immediate costs… conservative slow income. 52 weeks expenses… 46 weeks income (annually). Example…..

Pro Forma Month… expenses… income…. Deficit.. June 10,000 1,000 -9,000
July , , ,000 Aug (get by) 5, , ,000 Sept , , ,000 Oct , , ,000 Nov , , ,000 Dec , , ,000 Jan (salary) 10, , ,000 Feb , , ,000 Mar , , ,000 Apr , , ,000

Going Forward Write an annual Budget ..and follow it
Expenses vs. Income Each month Planned & committed Write a monthly expense budget Every income dollar is assigned to an expense (including a monthly savings deposit) Plan: low-ball income.. high-ball expenses

Budget Discipline Write a conservative & cautious BUDGET
Assume 52 weeks of expenses; but 46 weeks of income

Write an annual Budget ..then follow it
Expense budget includes savings (retained earnings) Retained earnings becomes your capitalization Savings account of 3-6 months‘ expenses Self-funded line-of-credit update equip - safety net – security – wealth Will you have accident-illness-surgery-pregnancy? Odds? 60/120

(Eventually…) Profit & Loss Statement

Writing your Business Plan

Writing your Business Plan
* name of business marketing plan define business metrics & benchmarks owners qualifications systems (EMR billing-acctg-payroll-banking) mission statement capital (startup, ongoing, savings, emergency) services-products Pro Forma yr 1-2-3 customer base executive summary income streams Many formats… web sites templates competition

Mission Statement (second reading)..1/4
This practice will succeed at providing value to its clients seeking to restore function lost to the effects of movement disorders.

Mission Statement ..2/4 This practice will be a community leader
in providing effective patient care (etc) utilizing evidence-based PT methods that yield excellent treatment outcomes

Mission Statement ..3/4 This practice will succeed at
building a healthy, secure, stable business model that supports its work and its people $$$

Mission Statement ..4/4 This practice will be ever alert and responsive to the rapidly-changing healthcare marketplace, evolving its services to continually meet the needs of the community, while continuing to support a viable practice

My Business Plan SmartCare PT
Musculoskeletal outpatient PT patient care clinic… plus… diversified… Workplace injury prevention & ergonomics consulting LH, DPT, OCS, 40 yrs, clinical, admin, program devel, business mgt To provide my community the best MSD rehab… & prevention from MSD (List dx’s Rx-ed by outpatient PT and prevention programs for industry) Customer base: Dixf-Rumf-etc towns… statewide for prevention services Referral base P2P, MDs, workplaces Income stream re insurances, pvt pay, industrial consulting (cash) Scope of competitors (PT, hosp, DC, LMT, CMMC, FMH, POPTS, Occ Hlth) Marketing Plan (comprehensive) Metrics: refer, bill, collect, expenses, outcomes… target benchmarks Systems for billing, payroll, checking, acctng, banking, tax Capitalization… startup, ongoing, savings, emergency, exit plan? Pro Forma Executive summary… tells the story of starting & running SmartCare

Capitalize your business
Start-up capital business+personal: needs, savings, poverty Operating capital Ongoing; fluctuations Savings; credit line Supports a period of losses Emergency fund Capital Fund

Debt is evil - I Interest = renting someone else’s money
Bank line-of-credit.. Floating interest 100% payoff annually.. Demand note Leased equipment.. Credit card.. Huge interest rates Debt can kill a business Fund growth vs fund shortfall

Debt is evil - II debt is NOT a requirement debt is dangerous-drug
Family loan?.. Investors? Intrusion.. Discomfort.. Risk Don’t do it Savings is far safer.. self-fund capital.. no interest burden Build savings aggressively retained earnings! This includes personal debt, as well.. Dave Ramsey !

Selecting your community 1/2
City vs. suburb vs. town Travel direction Lewiston to Portland Houlton to Bangor Portland to Boston Locate that edge Dover-Foxcroft Demographics & diversity MDs, insurances, business base, wealth base Old Medicare… Poor Medicaid

Selecting your office setting 2/2
Neighborhood.. Landlord.. Lease.. Sq Ft.. Future.. Parking .. Access.. Décor.. Privacy.. PO box vs street address

Select Corporate Structure
Establish a corporation…………… … Tax & lawsuit advantages… TIN S-corp, C-corp, LLC, SC, PA, Sole Prop Separate vs. personal tax filing Fringe benefits, SEP-IRA, sell Accountant Advice !!

Lawyers & Accountants Be an educated client… study / prepare meeting
Don’t hand yourself over to them Gwen Simons, PT, JD Tax Choice Inc Payroll agency (Paychex) FIT, SIT, Medicare, SS, FUTA, SUTA, W2, 1099 Quarterlies; annual tax prep

PT Partners ?? Don’t do it ! 90+ percent fail, expensively
death, divorce, impaired, lazy, sued, spouse, kids You could easily be forced to buy-out, sell, close, BK Usually ends in very costly break-up pre-nuptual agreement… separate bedrooms Gregg example

Joint Ventures Investors (intrusion-control)
MD’s (kickback, refer for profit, POPTS) PT corporation “partner” (USPT) (Fysical)

Buy an Existing Practice
Many advantages Many options Mature owner Exit Plan Owner finance Good will

80/120

Getting Paid Rules & Regulations

Medicare Rules MD approves plan; 90d certify; specific Dx’s
Reasonable Px-recovery-time-predict Measurable functional goals (OPTIMUM-PSFS) Plan of care signed by MD skilled Rx by PT Therapy Cap G-codes MPPR CCI

CCI 1on1.. Group therapy 8-Minute Rule! PTA-ATC-Aide fraud Modifiers KX (cap)… 59 (re-eval; complex) Bill agent guidance

FI… OIG… RAC… REFER TO APTA COURSE Cooking the books Snitches get 30%
Patients, employees Anti-kickback.. Referral-for-profit Stark Rule for POPTS FI.. OIG RAC.. Fraud

Can always get a new job BUT Cannot get a new PT license
Crooked employer? Can always get a new job BUT Cannot get a new PT license

Medicare opt-out? Not allowed for PT’s
No private pay with Medicare patients Cash pay? … No wellness; non-covered; maintenance; refuse to allow release Signed ABN under own free will

90/120

HIPAA PHI Physical Exposures Electronic exposures BA (Bus Assoc)
(locked file, locked room, locked bldg) (conversations) Electronic exposures ( ; EMR; encryption) BA (Bus Assoc) (billing agency) Massive fines

Credentialing PT license NPI (personal-clinic) SSN – TIN Medicare
Medicaid Various insurances-networks CAQH

The Other Insurances VA Tricare VAchoice Medicaid Worker Comp
Medicare Advantage Auto-liability.. third party liability Anthem, Aetna, Cigna, HP, United, Humana, ACA PPO; networks; OrthoNet; Optum; MultiPlan; Prime

What do we charge?? (We all must eat!)
Patient asks what we charge? That is a long story! It’s not up to us! Fees mostly pre-set. Fee schedule. Hospital PT 2-3x fees at PTIP WC ~ BC ~80.. Medicare ~60… Medicaid ~30. Aetna, HP, Cigna each ~60. BUT, our break-even ~70. Cannot charge less than Medicare (prompt pay discount) You MUST know your cost-per-visit………->

Cost-per-visit Checkbook = Total expenses/yr Stats = Total visits/yr
Calculate cost/visit Insurance payment below that is a loss. Can destroy your practice. Therefore, we say NO. (Let your competitors eat that one).

Payment Schemes Fee-for-service/visit (know your per-visit cost)
Case Rate (know your per-case cost) PPO (in-network.. versus OON) Silent PPO’s (rip-off) HMO (gatekeepers) ACO (hospitals) Multiple procedures discount formulas Bundled billing (Medicare.. HHA.. Post-op hospital)

99/120

Billing… must be done right… or else!!
CMS-1500… proper coding… all the fields (mostly electronic now) Super-bill.. CMS clearinghouse.. insurance co Wait to get paid.. then start calling & fighting (cannot call for 45 days… one call per month)

Proper codes Work-related, auto, health plan Plan owner DOB !! ICD10 Dx codes acceptable CPT codes acceptable? Correct modifiers (many obscure!) NPI, place of Rx Electronic vs. paper vs. fax

Collect your co-pays & deductibles ! Patients perhaps not billed for many months Waiting for deduct & co-pay determinations Deadbeats.. Collections Write-offs ? (not a tax deduction)

Billing… yourself vs. billing agency
Skilled staff.. space.. computers.. costs.. risks! Do it yourself.. or.. Billing Agency Professional agency advantages Must specialize in PT… not MD They can help start-up They do collections Get credentialed References!! Coastal Hx

Getting screwed Silent PPO’s (FirstHealth) (MultiPlan)
(OrthoNet) (Optum) (GenX) Data mining old contracts to subcontract

Getting Paid Getting screwed 1/4
Individual insurance nuances… Anthem: TMJ-ionto, CCI, Aetna not pay for eval, HP pre-authorize… Cigna orthonet.. Our Cigna hx United (optum)… Humana (orthonet) Aetna and HP: 60d lifetime limit, ACA… copays.. Deductibles.. PA

Individual insurance nuances… Bureau of Insurance .. Consumers for Affordable HC Optum Health WC 50% discount... Silent PPO searches Align Network, one patient, us or nothing Wcomp 10-day Wcomp Networks rule Wcomp PA rule Worker Comp petition to fix

Auto accident Auto Insure MedPay Third party… fourth party Health insur subrogate Lawyers Private pay… CMS1500 or Receipt (superbill)

Getting Paid Not getting screwed 4/4
Cash Pay Start with std fee schedule (Maine WComp rates) Prompt pay discount Superbill Receipt $ $ 90 CMS 1500 occasionally Often less OOP than insurance billing The PTIP edge over HOPTS See Snow PT, Rockport ME

Payer profile WC = 100% fee/std… 30 d 35% Anthem = 60%... 60 d 35%
Medicare = 50% d % Medicaid = 15% yrs+/ % Prior approve.. categorized vs non-categorized; kids Auto = … ¾ never % Aetna-Cigna-HP = 40% ½ never %

Screwing the system Crime does NOT pay!
Overcharged time, procedures, visits, unqualified staff Up-coding, 8-minute rule, fraud, abuse OIG… RAC… AG… IRS Whistleblowers get 30% Staff PT snitch Clerical staff snitch Patient or family snitch Press release

Just because you got paid,
does not mean they approved the visit & procedures & billing. Payment was automated, but pending later review & recovery. Recovery Audit Contractors-RAC Claw-back

IMPECCABLE DOCUMENTATION !
Eval and progress notes must objectively measure & define impairments & disabilities. Eval .. SOAP.. Function measures (OPTIMAL, PSFS, SPADI, NDI) Can you prove you deserve payment? Will the rest of us be proud ..or ashamed?

Name, name LBP S – Not much better; pain same; walking ½ mile; sleep OK O – SLR 80 (was 50) Hip Med Rot 40 (was 25) Flexion in standing 80 (was 60) mild LBP, no LE sx Extension in standing 20 (was 5) no sx Rx: McKenzie BB stretching, PNF-MET at SI-hips, HEP upgrade, NMES A – Subj says no change but all ROM-flexibility improved; no more LE sx Sx centralizing. Walking distance doubled. Sleep improved well. “You will move better before you feel better; that is happening” P - Cont BB and SLR and unilat flexion and piriformis stretches, as before Add stability exer for gluts, multifidus, transversus abdom Recheck 3 d. *** if measurable changes not seen, then alter course of Rx ! ***

Name CMC arthroplasty S – Doing more; weeded garden without setback O – Thumb oppose to base of 5th digit lacks 1.5 cm (was 2.5 cm) Grip 20# (was 8#) Lat pinch 9# (was 4#) Wrist flex 60 (was 25) Rx: CMC and wrist mobilization II; stretching-ROM exer wrist; LLLT; Estim-I; review-upgrade HEP A – Impairments improving very well. Gaining well in ADL functions P - Upgrade from soft sponge to jelly egg for grip-pinch strengthening. Follow-up in 7 days. Functional outcomes measures… OPTIMAL, NDI, SPADI, Roland Morris G-codes G8990-CL … G8991-CH … G8992-CH per functional measures

115/120

Cash Based Practice 1/4 Cash rate less due to less loss and billing costs Prompt payment discount PT after benefit rationing limits Skilled maintenance PT Non-covered PT (LLLT) NO MEDICARE Refusal to release billing Non-covered wellness

Private Pay Cash-based practice 2/4
Private Pay … Cash Pay… Often cheaper than going through insurance !! Big co-pay & deductible may mean $ out of pocket Private pay cheaper ! Plus… Fewer visits; better outcomes; less recurrences BUT: may violate insurance contract (most-favored-nation) Everyone - insur billed same.. But.. Prompt-Pay Discount

No billing costs.. Reduced fee.. Immediate cash Wealthier patient base… discretionary funds Specialized & unique: Special need.. Special skills.. Special value You have something extra re capabilities-skills! Expired coverage, TMJ, sports, LLLT, animal, fitness-wellness. orthotics, manual therapy, help me be healthy to reduce my costs-risks Huge copays-deductibles make many people private pay.. Want deals!

Consulting, such as workplace prevention-ergonomics-light duty Wellness programs Expert witness Insurance co consulting (WC-prevention; case review-mgt) Elite athletes: golf, runner, ironman, tennis, skiers, HS stars Fitness consulting… women, diabetics, post-partum, aging Post-rehab follow-along fitness-gym-health after benefits have run out ….Skilled maintenance care (fitness center-gym)

ABN Opt-out

Setting up your practice

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