Opening a Private Ophthalmology Practice – Points to Consider During the First Three Months

By George L. Mayo, MD and Kathy Mayo, DO

It is a great privilege for us to be engaged in the stimulating, challenging and intellectually rewarding field of ophthalmology. Transitioning into private practice can be an overwhelming experience. In an ongoing series of articles, we examine different aspects of the process of opening a private ophthalmology practice. In this article we review key points to consider in the financial planning and operations of the new practice. Now that we have been open three months, we are certainly getting busier, but we are not yet able to meet all of our expenses so we have had to make some adjustments.

1. When we opened, we did our best to ensure adequate operating capital. We recommend securing funding equal to double your estimates of capital requirements. As you begin to expend your capital, do so as slowly as possible. We cannot emphasize this enough. Keep only a small inventory of supplies. Start with two lanes. When possible, consider used or leased equipment.

2. Again, when opening the practice, ensure adequate personal capital. As soon as you decide on opening a practice, double down on personal savings. This will be your buffer as the practice starts to grow. We recently increased the credit limit on our credit cards. We have also switched from always using the American Express to using our MasterCard so that we do not have to pay the full balance each month.

3. Review all contracts you have made with insurers. Ask for fee schedules for your top five CPT codes. Compare payments with the Medicare fee schedule. For insurers with payments below Medicare, consider requesting that they match Medicare. Most payors may balk at the request, but it is possible that one might agree to match the Medicare fee schedule.

4. Adjust personal spending habits. If you are coming directly from training the adjustment will not be as tremendous. If you are coming from private practice there will be a greater adjustment. Cut back on discretionary personal expenditures, such as dining out, until you can validate your cash flow projections. We have also cashed in our credit card miles for restaurant gift certificates so we can still enjoy a meal and glass of wine out without actually having to spend anything from our dwindling bank account.

5. Learn about the Physician Quality Reporting Initiative (PQRI) and implement it. PQRI is a voluntary reporting initiative of the Centers for Medicare and Medicaid Services (CMS) with eight specific ophthalmic measures documented with CPT Category II codes on Medicare patients not participating in advantage plans. Additional information is available by logging on the Academy site and going to http://www.aao.org/advocacy/reimbursement/pqri/index.cfm. Participating will result in a 1.5 % bonus in payments from CMS for 2008.

6. Submit bills promptly. We recommend printing and sending submissions the same day patients are seen. This will ensure that you are paid as quickly. The only way to be paid more quickly is to implement Electronic Data Interchange (EDI) which is electronic billing. Different insurance carriers have different forms, some online and some paper. Call them or check their websites and ask.

7. Review submissions weekly. Payors will have a range of time during which they will pay a claim. For example, Medicare generally pays in 30 to 40 days. An aging report will enable you identify when a claim falls outside of the normal range for a given payor and when you need to follow up with the payor.

8. See patients for free. The first 2 months, half the patients we saw were for free. Crazy, you say? Crazy like a fox! If we were waiting to get on Aetna, for example, and we met a patient out at an event who wanted to be seen, I would book them for an appointment. Sometimes when I would call Aetna, I would find out that we would actually be getting paid 60% of their regular frees as an out of network provider. That is better than losing the patient or getting nothing. If I found out that as an out of network provider, we didn’t get paid at all, then I would tell the patient that we would see them anyway at this point – because I knew there was a good chance that if we found pathology, they would be back. We were not going to lose that patient. Within 4–6 weeks, we’d be a participating provider and get paid for the next laser or injection or office visit. Additionally, I was sure that the patient would be happy with our office and would tell their friends and family about us. We also developed a cash discounted fee for patients who didn’t have insurance or insurance we could never accept, such as Kaiser. We have had several patients that have happily paid our cash fee, knowing that it was only 20% of what we would normally charge the insurance company. That cash fee also applies to non-medically covered exams, such as a pre-LASIK exam.

9. Follow up on the insurance companies and IPAs for which you applied. If they said 30 days until you will be a provider with them, call them around that 30 day mark and see if it is official. Then if you have any patients that were initially seen for free or at a discounted out of network rate, you can call them and get them back in for their follow up visit.

10. Get out there! Advertise yourself. You can pay to put an ad in the newspaper or magazines but that can be very expensive and cash flow at this point is minimal. So get yourself out there. Join the Chamber of Commerce and attend every single function and hand out business cards. Smile, be funny and friendly, and tell people to come on in for an eye exam. Go to every local city event. Participate in business expos. Give away a prize when you hear about a fundraising event. The prize could be your services or a gift bag with sunglasses and vitamins! Go to every new business grand opening. Go to every free CME lecture – even if it isn’t a topic you really care about. It’s not only a free dinner but you never know who you are going to meet that can help you out or become your next patient.

While the challenges of private practice are great, so are the rewards, not only financially but in terms of control over your business structure and personal life. You decide what days and hours you work, what type of equipment you will use, when you take vacation and for how long. That type of control is the true reward of private practice.