After working with thousands of rich and poor physician practices all over the United States, trends have emerged among the rich physicians. We’ve observed seven major ways that physicians increase their income.
1) Employ midlevel providers
Employing nurse practitioners (NPs) and physician assistants (PAs) is a fundamental way to increase your personal income as a physician. According to MGMA:
- NPs and PAs earn less than half of what a salaried internist or family medicine physician demands ($100K vs. $215K); and
- NPs and PAs in primary care generate nearly three times (2.75x) their own salary in net collections.
2) Sublease exam rooms
Many physicians have fallen victim to the trap of real estate. If you find yourself with more office space than you need, then subleasing unused rooms to another physician could help you pull in a little extra cash.
We’ve commonly seen physician practices sublease an empty room two days per month to specialist A, two days per month to specialist B, and so on.
3) In-office ancillary services income
There is an in-office ancillary exception to the Stark Laws that permits physicians to own and operate services such as x-ray, MRI, physical therapy, labs, ultrasound, and durable medical equipment sales in their offices. These services are considered to be an extension of their practice of medicine. Physician practices are permitted to own these services if all the patient referrals come from inside the group. Physicians from other groups cannot order ancillary services from an ancillary business owned by another physician practice.
4) Get an EHR/EMR Donation for 85% of the cost
I’ve personally talked to several physicians who abandoned their practices to seek employment with a health system because they feared they were going to soon lose hospital privileges for not having an EHR/EMR system. It is evident that in order to be competitive, every physician practice in the United States will need an EHR/EMR system that can “talk to” the EHR/EMR systems at hospitals, labs, and pharmacies (even CVS is rolling out EPIC at 750 locations).
We have observed hospitals and health systems subsidizing up to 85% of the cost of EHR/EMR systems to independent physicians and physician groups under the “EHR Donation” safe harbors and exceptions to the federal fraud and abuse laws. The Stark law exception states that safe harbor “donors” can pay 85% of the cost of certain technology under specific criteria and exceptions. Originally established in 2006, the Stark Law exception and Anti-Kickback Statute safe harbors for EHR Donations were recently extended through the year 2021.
5) Outsource HR to a reputable PEO
Surprisingly, we are continually impressed by the number of physician practices that are over-paying for employee health insurance premiums. Professional employer organizations like ADP Total Source and Insperity buy group health insurance for hundreds of thousands of small business employees through a collective purchasing.
PEOs have access to better pricing than small businesses can get on their own because the administrative costs of enrolling several hundred thousand employees at once are cheaper for the insurance carriers than contracting with thousands of individual employers on a one-by-one basis. The PEOs’ fees for administering “outsourced human resources” are usually pretty minimal.
6) Join an MSO or start one
Management Service Organizations, sometimes called Managed Service Organizations, provide “turn-key” practice management specifically for physician practices. You still own your practice, but an MSO may employ all your staff, perform all billing, provide practice information systems and EHR/EMRs, prepare monthly financial statements and management reports, and even provide office space. MSOs are essentially Centralized Business Offices for independent physician practices.
If you have an established practice and your administrative staff has some capacity, you can also provide MSO services to other physician practices or practitioners who are starting out or new to the area.
MSO fees are usually less than 15% of a practice’s net revenue, depending upon what services they are providing.
7) Take call coverage, medical directorshipsMost medical and surgical specialists are now paid for taking emergency department call coverage. Physicians on call are paid to be readily available to take phone calls and present at hospital emergency departments. This is also a good way for specialists to generate new patients for their practices. For example, if a patient needing a gall bladder removal shows up in a hospital emergency department, the general surgeon on call gets that patient.
Most every hospital department, nursing home, imaging center, surgery center, and home health agency also needs a medical director to provide medical oversight. If you have the excess capacity to go to periodic meetings, review policies and procedures, and do chart audits, the compensation rates for directorships usually start at $100 to $150 per hour and go up from there.
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HCTadvisor provides healthcare-focused business data. Contact HCTadvisor today at (303) 800-6444.