Murphy’s Law (2) When Starting a Practice

“Murphy’s Law” is an old adage that is typically stated as: “Anything that can go wrong will go wrong”. When you start a new practice you’ll experience many examples of Murphy’s Laws. I’ve opened over 3,000 new practices. Just when I think I’ve heard them all, a new twist on Murphy’s Law comes along. Here are a few of my favorites. I offer them with the hope that they just might help you avoid getting “Murphied”.

:dropcap_open:O:dropcap_close:ne of the biggest mistakes a new doctor makes is hiring the wrong CA. The average DC has 2-3 different CAs during his or her first year in practice, especially if the DC is male.  The trend for the male DC is to hire based on how the CA looks.  Obviously, with this criteria there will be practice problems.  A potential new CA has to be tested for his or her skills, knowledge, and abilities with basic business knowledge (math, filing, communication, computer skills, etc.).  By accurately measuring a potential CA’s skill level before hiring them, the doctor can avoid having to fire an incompetent CA.  A new practice needs all the help it can get.  Start by hiring someone whose skills can help your practice succeed.

 

There is only one person you can count on to build your practice…you.  I’ve had hundreds of doctors who set up their practices in their hometown because their relatives were well known.  Their relatives implied that they would refer hundreds of new patients to the new DC. Some did and most didn’t.  The result was few referrals, and the patients that were referred were preceded by their relatives requesting that they be treated for free.  These doctors soon learned that operating a “free clinic” is no way to make a living.  

 

When a new doctor opens his or her practice, they try to please everyone (e.g.: not collecting insurance deductibles or co-pays, family plans, cash patient discounts, etc., etc., etc.)  What these doctors don’t realize is that deals don’t work…and always backfire on you.  For example:  Patients who pay their deductible and co-pays talk to their friends who don’t pay for these items, and you’ll lose all these patients.  When the insurance company audits you, which they will, you’ll have to repay the insurance companies thousands of dollars and be blackballed.   Having different fees for different members of a family doesn’t work either (i.e.: the husband pays the usual fee of $50 per visit, the wife pays $30 per visit, the children $20 per visit if they all come in at the same time).  When the wife or children come in by themselves and you charge them your usual fee, you’ll lose the entire family.  And there may be times when you bill a patient for their portion of an insurance claim and they demand that you reduce your charges to the cash fee.  If you say “no”, you’ll lose the patient.  If you say “yes”, the patient will believe that you overbilled their insurance company.  That’s not the reputation you want.

 

Having started over 3,000 new practices and consulted with over 5,000 DCs, I’ve had thousands of DCs tell me their overhead was too high. To solve their problem I hired a group of CPAs and efficiency experts to analyze the doctor’s overhead to determine how to reduce their overhead.  After an exhaustive study, what they reported to me was simple.  The most they could reduce a doctor’s overhead was 10 percent.  The basic items that comprise a doctor’s overhead couldn’t be lowered (office lease, equipment leases, utilities, staff salaries, taxes, fees, etc.).  Most of the high overhead that could have been reduced occurred when the doctor initially set up his or her practice (i.e.: expensive equipment, paid too much for rent, etc.).  This is why The Practice Starters® Program recommends a low overhead practice, with low office lease rates, for its Practice Starters® Program clients.  Before you open your practice is when you can establish a low overhead practice.  Not after.

 

Many new DCs think that their best buddy in college will be a great partner in practice.  After all, what could be better than two good friends sharing overhead expenses and practice-building experiences?  Unfortunately, few partnerships work, because no two people share the same work ethic, want to treat the same number of patients, work the same hours, or want to use the same equipment.  All of these things build resentments.  Maybe not in the first month or the first few months, but in the end, partnerships don’t go the distance.  

I have consulted in the opening of over 3,000 new practices and in this process have only seen one partnership work. There were two brothers that practiced together for 10 years… and haven’t talked to each other for the next 20 years.  Save yourself a lot of grief, don’t start a practice with a partner.

I once had two doctors heatedly disagree with me when I taught this point at a seminar.  They loudly told the rest of my clients that I was wrong and they were going to prove it.  They started their practice in a 2000-square-foot office—the right size for two doctors—equipped the office for two doctors and borrowed over $100,000 to start the practice. Within 60 days, one doctor announced that he didn’t want to treat many patients per day, devote any time to marketing, work more than part-time, or pay his portion of the monthly overhead or their $100,000 note at the bank.  He walked out on his best buddy.

Unfortunately, the remaining doctor was now stuck with a very high overhead and high loan payment.  He worked hard, very hard, struggled and finally became very successful in spite of the fact that he was screwed by a partner that didn’t want to work.

 

New DCs want to start their practices as fast as possible.  Usually the first office site they inspect becomes “the best office site in town”.  They don’t want to look elsewhere because they’re impatient and ready to start their practice. I’ve guided over 3,000 new DCs into practice and perhaps only one percent end up practicing in the first site they found.  Why?  Here’s a little known fact: there are always better locations, better deals, lower lease payments, and more accommodating landlords.  All you have to do is find them.  No DC should choose a practice location until they have explored all their options.  No DC should begin looking at practice locations without being armed with a specific list of criteria the location must meet.  A knowledgeable consultant can provide that criteria.

 

The opening date you have in your mind… won’t be your opening date.  

Don’t try to establish an opening date for your new practice… you’ll never open on that date.  Your opening date will be when everything that needs to be done is completed… not until then.    Remember, everything takes twice as long as you anticipated… and then double it. If you pressure yourself to open on a certain date, all you’ll accomplish is greatly increasing your stress… unnecessarily. 

 

Did you encounter a different Murphy’s Law when starting your practice? If so, I’d like to hear about it.  Send it my way at [email protected] .  I’ll see that it gets published along with your name. For more information on starting a new practice go to www.practicestarters.com.