IdeaLab: ‘How I Realized My Dream Practice’

“Now what have I done?”

That’s what I was thinking as I left the meeting at which I had agreed to purchase a rural clinic from the large healthcare corporation which had been my employer the previous decade. My offer was accepted without negotiation. Documents were signed and deadlines were established. I knew my life was about to change. It was 2001.

I had not been happy as an employed physician. Still, my wife Tammy, who would work with me in the new venture, and I were apprehensive about the future. We were about to become self-employed - or unemployed, depending on your perspective.

And boy, am I glad we did.

Factors for success

Having already spent nearly 10 years in rural family practice gave me a reasonable idea of what to expect. I knew the demands and needs of the local population and the larger tourist population that visited our area in the summer. I was also realistic enough to know that I couldn’t meet all of their needs, and that I would have to focus our clinic’s efforts on those needs that we could meet. We concluded that success was not contingent on what we could do in the short term, but what was truly sustainable in the long term. We broke this down into two primary areas:

• Financial sustainability. The clinic we were starting would clearly be a for-profit business. We would not succeed unless we generated enough revenue to run the business and provide ourselves with a reasonable income. I had examined the clinic’s finances under the previous management and concluded that it was losing money because of inefficient operations and excessive management fees.

Confident that we could operate the clinic in a financially viable and sustainable manner, I formulated a conservative budget for its first six months.

• Physical and emotional sustainability. I knew anyone could work hard and put in long hours for a short time, but this was not realistic over the long term. We determined a sustainable schedule over the course of a year and prepared a budget accordingly.

Services offered

We decided initially that our clinic offerings would be outpatient only. No obstetrics or inpatient care.

I know other physicians who thrive on providing OB care, but for me it was neither financially nor emotionally feasible; I felt far too much stress associated with each delivery.

Eliminating inpatient care was a more difficult decision. I had enjoyed caring for my hospitalized patients. But numerous discussions and papers written about inpatient management indicated that there is higher patient satisfaction, a reduced complication rate, and shorter lengths-of-stay when inpatient care is managed by a hospitalist rather than a private attending physician. Giving up inpatient care also reduced the emotional and physical demands on me, and it made financial sense, as I could see four to six outpatients in my own clinic in the time required to travel and see a single inpatient.

General clinic services would include urgent care and outpatient management of acute and chronic medical problems. We had a small in-house lab and we contracted with a national lab to perform services that we couldn’t reasonably offer. The clinic building also had a small X-ray machine and processor.

We also decided to offer various procedures that were cost-effective and efficient and could be performed during a typical clinic visit. These included excision of skin lesions, skin biopsies, joint injections, and uncomplicated orthopedics. We declined to offer flexible sigmoidoscopies and cardiac stress-testing; startup costs for these services would be too high, and facility requirements and the time needed for performing them would be too much.

Open-access scheduling became a key attraction for new patients. People want to be seen when they are sick, not when it is convenient to the doctor. We encouraged our receptionist to make an appointment for people the day they call, if at all possible. The results were substantially increased patient satisfaction and revenue.

Technology

We decided to begin the clinic with an EMR system. We chose SoapWare as our vendor; its system was reasonably priced and offered individualization in the form of free-text, templates, and other data-entry methods. With a central server holding our data, as many as 10 computers could access patient information from any exam room, the billing office, and the lab without interruption. Still, we grew so quickly that the system could not handle the volume of data entered daily, so we upgraded our hard drives and tape backup systems within the first year.

Staffing

Our original intent was to operate the clinic with me as family physician, and Tammy, an RN, doing just about everything else: nursing, billing/coding/insurance, receptionist, and lab/X-ray technician. But news of our plans for the local clinic spread, and we were soon approached with opportunities we hadn’t previously considered. Within a few months of starting the clinic operation, we hired two nurse practitioners, one part-time and the other full-time. This, in turn, required increased nurse staffing.

More significantly, we learned of a local physical therapist who wanted to sell her practice but couldn’t find a buyer; I thought it worth considering. We ended up doubling the size of our existing clinic building, with a major portion of the expansion to include a fully functional integrated physical therapy facility. Our physical therapy staff grew to include two therapists, a certified assistant, and an aid.

We also hired an experienced insurance and coding staff person from the very first day. This allowed us to do all of our own coding, billing, electronic filing, and collections. That way we could keep local control and increase patient satisfaction when there was a coding or billing dispute because we could answer questions and correct problems immediately.

All told, our clinic now has more than 20 employees and some 8,500 active patient charts.

We discovered that many of the people who came to us seeking employment were less concerned about salary and benefits than with job satisfaction. Recognizing this has been very important to our success. Monthly staff meetings are essential for sharing information. Everyone has equal opportunity for input on issues and decisions. We try hard to treat everyone equally. This helps build a very stable and satisfied staff. Our own job satisfaction was the key reason we decided to run an independent clinic, and our employees’ job satisfaction would be the key to retaining them.

Financial details

We funded the start-up costs through personal savings, emergency room work at the local hospital about one night a week, and taking no income out of the clinic until about five or six months after the start. We still accept government medical assistance programs, though reimbursement is very low.

Currently, we have high real estate costs due to the recent addition and facility upgrade, with a monthly mortgage payment, but the $600,000 building will be paid off in 12 years at the current rate. We anticipate refinancing in the near future to improve cash flow. And we recognize that our greatest asset - a well-trained, competent staff - is also our greatest expense. We strive to offer competitive incomes and benefits to retain qualified staff personal.

Lessons learned

It costs a lot more to run a clinic than I had originally estimated. It also takes a tremendous amount of staff input and work. Still, it’s been worth it. Here are some important tips I’ve picked up over the years for those thinking of starting their own practices:

• Conflict resolution is essential to running a small business. Immediate attention to these issues helps resolve problems before they become overwhelming or excessively distracting.

• Be especially attentive to needs in your community and be willing to take a risk to meet them. For example, our recognition of the lack of physical therapy services and our willingness to take the risk of offering these services has been very beneficial to the overall stability and growth of our clinic.

• Plan for your own emotional and physical sustainability. Such planning has allowed us to form a work environment that is enjoyable and, in the long run, enhances the financial sustainability. When business decisions are filtered only through a balance sheet viewpoint, there will likely be serious long-term disenchantment.

We made most major business decisions from a lifestyle viewpoint first and then determined if it was financially viable. This is the foundational issue behind much of the physician burnout and career frustrations experienced today. We decided that it would be better to work until age 65 or beyond and enjoy the ride rather than work like a slave for short-term financial gain, be miserable, and retire early.

I may not earn the same level of income as many of my physician colleagues, particularly specialists. But my income is very sufficient for a comfortable lifestyle. On average, I work four days a week and see about 35 patients a day, beginning at 8 a.m. and finishing by 5 p.m. I don’t do formal night or weekend call, deferring all calls or emergencies to the emergency rooms at the local hospitals. We take five or six weeks of vacation a year and I can leave the practice with confidence that operations will continue as we expect.

We certainly have frustrations. But we have formed a work environment that is sustainable for the rest of our working lives - one that is so enjoyable that there is really no need to consider an early retirement. In my opinion, this is a reproducible work model that could be implemented in a number of communities with equal success and satisfaction.

John W. Ingalls, MD, is a family physician and founder, with his wife Tammy, of Ingalls Family Medicine in Webster, Wisc. He can be reached via editor@physicianspractice.com.

This article originally appeared in the October 2007 issue of Physicians Practice.