Six spine and neurosurgeons outline common financial mistakes independent physicians can make.
Ask Spine Surgeons is a weekly series of questions posed to spine surgeons around the country about clinical, business and policy issues affecting spine care. We invite all spine surgeon and specialist responses.
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Note: The following responses were edited for length and clarity.
Question: What are some of the most common financial mistakes that independent surgeons tend to make?
Rolando Garcia, MD. Orthopedic Care Center (Miami): The most common financial mistake that independent surgeons make is investing in medical projects with high risk and potentially high returns. Historically, spine surgeons have been conservative investors given the great deal of effort for their returns. Too often, spine surgeons are influenced by friends and colleagues to invest in high risk investments in either new technologies or new independent projects with the promise of high returns.
Vladimir Sinkov, MD. Sinkov Spine Center (Las Vegas): The financial mistakes for the surgeons are divided into two categories — insufficient payments for work performed and excessive overhead costs to run the business. Insufficient payments can be caused by incorrect coding and billing as well as not following up on timely collections and failing to file appeals on denied payments. Excessive overhead costs can be due to inefficient marketing in radio or TV ads, excessive office fit-up and rent cost and excessive staffing costs. Ancillary sources of income can be a great source of revenue to keep the practice financially stable and failing to add those ancillaries to the practice can be a costly mistake.
Scott Russo, MD. Orthopaedic Associates of Michigan (Grand Rapids): Financial mistakes can be broken down into two major groups: personal and professional. From a personal standpoint, an independent surgeon new to practice may go out and purchase a new home or car and put themselves into deeper debt, when in fact paying down debt and becoming financially independent is a critical component to a happy and healthy life.
From a professional standpoint, the process of revenue cycle management is critical, and one needs to have the best employees in this important aspect of one's practice. In addition, focusing very carefully on minimizing expenses while at the same time maximizing appropriate medical revenue is key to a successful financially stable practice.
James Chappuis, MD. Spine Center Atlanta: The most common mistake is trying to run practices on their own without the help of well-trained business managers. Another mistake is not understanding the basic principles of business, which is the cost to do business. With surgery, the question is: What is your cost to do an individual surgery? This is because if you're going to negotiate being paid for an individual surgery, you have to understand what the cost of that given service is in order to know if you're going to make a profit. You must have a strong understanding of your business, the cost to do business, your overhead, and how it ranks with other practices so that you can maintain a certain profit margin. If a surgeon with this problem is reading this, I recommend considering hiring a consultant to evaluate your practice.
Brian R. Gantwerker, MD. Craniospinal Center of Los Angeles: Over-commitment is one of the most commonly made mistakes. Much like if you are ordering off a menu, your eyes are bigger than your wallet. In the case of renting office space, you need to think carefully about trying to sublease or split space with a colleague or other specialty to help defray your costs. Also, not understanding your revenue cycle is a cardinal error. Paying off bills too soon can be a significant mistake and you end up cash poor just when payroll hits, or worse, having to pull from your personal savings or line of credit to make ends meet.
Issada Thongtrangan, MD. Microspine (Phoenix): Investment in something that you have no knowledge about is always a big risk. I would invest in something that my financial advisor has a depth of knowledge about so they can show me the evidence, pros, cons and risks. Overspending with unnecessarily luxury materials is another big one.