Physicians Practice - July/August 2008 - (Page 71)

loan documents were signed. Banks and lenders are happy to lend money to medical practices because they are exceptionally good credit risks. A look at the balance sheet and income statement will not show the soon-to-arrive tsunami of debt unless you carefully look at the cashﬂow statement. Don’t forget about overhead. The satellite ofﬁce should be a separate revenue/cost center from your main ofﬁce. The expenses should include all salaries and beneﬁts for physicians and staff, all supplies and drugs, all purchased services, professional liability costs, all costs related to the lease and utilities of the satellite facility, cost of borrowing (interest), and other expenses. The terms and conditions of each lease must be carefully scrutinized. All revenues generated from patients by the satellite facility and all expenses — including all of the physicians’ work, even if generated elsewhere (such as a hospital) — must be assigned to the satellite ofﬁce in order for the group to evaluate the proﬁtability of that particular location. Clearly, our biggest error was not paying attention to the increase in overhead that resulted from the additional location with renovations, equipment, and staff. The manager was overly generous in ordering furniture, computers, and supplies, and no single physician was looking over the manager’s shoulder to question her judgment until it was too late. The manager by then had resorted to hiding unpaid bills, fearing the implications of conveying the bad news to the group. Based on an inaccurate business plan in terms of inﬂated revenue projections, the error may have been forgivable for a few months. But after six months it was clear that the overhead had become a crushing burden. If we expected the new location to be profitable in the future, then the logical response to the overhead problem would have been to reduce expenses by closing or sharply cutting back one of the two primary ofﬁces. But these WWW.PHYSICIANSPRACTICE.COM locations were our sacred cows, and we did not have the stomach to butcher them. Limit “jack of all trades” mentality. A niche area is best served by a limited number of physicians who want to treat patients with that particular problem. We attempted to be “fair” to all by scheduling almost all the physicians to take turns at the location, working half-days each. Bad idea. Consistent treatment protocols were not met, patients were treated and billed differently, and efﬁciency and productivity suffered as a result of physicians hurrying to travel to the satellite ofﬁce and back again. It was chaos. In this era of super specialization and competitiveness, the “jack of all trades” physician concept simply does not work. Pick the physicians who truly want to work at the new location and are motivated by the challenge of a new service, and make sure patients are dealt with in a consistent manner, regardless of the location of the practice. Opening a satellite ofﬁce is a microcosm of the many challenges physicians face in keeping their medical practices viable. In a competitive era with operational and ﬁnancial challenges facing every medical group practice, nimbleness garners a signiﬁcant advantage. But making decisions too quickly, without proper discussion of the array of options and consequences, is not being nimble — it’s being sloppy. • Bhagwan Satiani, MD, MBA, FACS, FACHE is a professor of clinical surgery in the Division of Vascular Surgery, and medical director, Non-Invasive Vascular Laboratory at The Ohio State University College of Medicine in Columbus. He is also president of Savvy Medicine (www.savvy-medicine.com), a company geared to provide business education for healthcare professionals, and the author of the three-volume “Smarter Physician Series.” JULY/AUGUST 2008 | PHYSICIANS PRACTICE | 71 http://merage.uci.edu/go/HCEMBA http://www.savvy-medicine.com http://merage.uci.edu/go/HCEMBA http://WWW.PHYSICIANSPRACTICE.COM

Table of Contents Feed for the Digital Edition of Physicians Practice - July/August 2008

Physicians Practice - July/August 2008 Contents The Bigger Picture: Battle Royale in the EMR Market Letters Physicians Practice Pearls: Hire Right Noteworthy Cover Story: Healthcare Reform: Voting for Change Patient Relations: Dealing with Problem Patients The tech Doctor: Is Self-Service Medicine Inevitable? Technology: Do EMRs Make You a Better Doctor? The Guide Idealab: Cash-Only Care Still Works The Administrators Desk: Who’s in Charge? Ask The Experts What Went Wrong: ‘Why Our Great Idea Didn’t Work’ Coding Start It Up: How to Launch a Practice: Operations Partnership: Don't Let Partner Conflict Destroy Your Practice Appraisals: What’s Your Practice Worth? Getting Advice: How to Hire a Consultant Classifieds Advertiser Index

Physicians Practice - July/August 2008

For optimal viewing of this digital publication, please enable JavaScript and then refresh the page. If you would like to try to load the digital publication without using Flash Player detection, please click here.