Wednesday, August 31, 2022

Want to sell your medical practice?


Many physicians consider selling their practice at some point, whether that be to another physician, another medical practice, a hospital, or a private equity-backed management company. Regardless of the reason for selling, there are numerous complex issues a medical practice must consider when its owners decide to sell. Both the preparation for the sale and the actual transaction present issues.For those reasons, you should plan at least a year ahead if possible.Here are seven key considerations.

Profitability


The more profitable your practice, the easier it usually is to sell, and the more it is worth to a buyer.Consequently, you should maintain business as usual and not slow down your practice in advance of a sale. Growing practices are more attractive than stagnating ones.

Financial forecasting


You may want to develop a financial forecast sheet for a buyer. Physicians offering potential buyers documented proof of strong and consistent financial results will encounter buyers inclined to pay more than expected. Financial forecasts also show how a physician’s practice takes advantage of opportunities and addresses threats that have been described in the internal practice assessment.

Physician buyers


Dissatisfied employed physicians re-entering private practice, and physicians relocating to be nearer to their or their spouse’s family are the primary candidates for buying a practice. They have a choice of joining another group, starting their own practice, or buying your practice. You therefore are not competing just with other practices for sale but also with employment in groups and start-ups.

Your most likely buyers are already practicing in your area, since they don’t have to move or re-license, and they have a strong reason to be there. In many cases, the most likely buyer might be your competition so don’t rule out a merger either.Consider merging your practice with a local group in lieu of a sale to an unknown single buyer, with a higher compensation for one to three years in lieu of a sale price.

Due diligence



Delays due to ill-prepared sellers can have adverse consequences as time kills deals.The quicker you can respond to due diligence questions from a prospective buyer, the better off you are. Remember that due diligence is a two-way street.To avoid a financially troubled buyer, physician owners considering a sale need to have a strong team in place to help them. Due diligence is critically important to ensure that the medical group that you are selling into is financially sound. Engage a transactional consultant and accountant to assist you with this endeavor.

Buy-sell agreement


The buy-sell agreement that is drafted will include pre-closing and post-closing responsibilities of all involved parties. If the selling physician is remaining in the geographic area and will not have a continuing professional relationship with the purchasing physician, restrictive covenants will most likely be included in the buy-sell agreement. (Currently, these restrictions are enforceable if reasonable in length, duration and geographic area in all states except California.)The agreement will also have indemnification provisions.These clauses protect the purchaser in the event the selling physician breaches any representations or warranties of the buy-sell agreement. A selling physician will most likely be expected to indemnify and hold harmless the purchaser from losses that arise for any misrepresentations of the selling physician.

Your role post-closing


Prior to closing on the sale of a practice, it is important for both the seller and buyer to agree on the role and involvement of the selling physician post-closing. If the selling physician is leaving the geographic area and will no longer be practicing medicine, a formal written agreement regarding employment or consulting is likely not needed. However, if the selling physician is staying in the area and the purchasing physician wants to continue working with the selling physician during the transition, the physicians should consider executing an employment or consulting agreement outlining the roles and responsibilities of the selling physician and term of such agreement.

You may also want to provide transitional marketing services.Consider that you are selling the practice to a new owner, who may have to introduce herself to her new patients and to other members of the medical community. As part of the sale, you add value to the sale if you stay on for a couple of months.During this brief period of time, you may stay at the practice and introduce the new physician to the patients, and go with the new physician to visit practices of referring physicians and other important members of the medical community.

Final thoughts


Many buyers often seek to have a valuation performed.There is nothing wrong with that and it can certainly give you an idea of the practice’s value.Just know that the valuation may not equal the purchase price.

As you are considering a sale, remember to make a good first impression.This may entail cleaning up your practice’s website and/or Facebook presence with new pictures.Keep in mind that those are the first things a potential buyer will look at.Eventually a buyer will visit the practice, so make sure to clean up the office so that it appears modern and attractive. Fresh paint, carpet, and furnishings are inexpensive and create quality “staging.”


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Tuesday, August 30, 2022

3 Marketing metrics for medical practices

I am fully aware that most of the readers of this blog do not have a marketing background and may not have both an MD and an MBA. However, there are just a few metrics that you might want to consider when using marketing techniques to attract new patients to your practice. I know that diving into the business side of your practice can feel intimidating, especially if you are like most physicians, including myself, who have never received any formal marketing training. And while you don't need to take on the job of a large-scale marketing department to understand the basics of medical marketing, measuring just a few marketing metrics can go a long way in ensuring your practice's success. This blog will discuss the cost of acquiring a new patient using a marketing campaign, the patient acquisition cost, and the return on the investment from your marketing dollars. When you understand this concept, you can fine-tune your marketing efforts.

Let's begin with calculating your cost per lead (CPL). Your cost\lead is the cost to attract a new patient to your practice. The CPL describes the cost for someone to become a patient in your practice. For example, this would be the cost for a web surfer who reads a blog post on your website and enters their email to receive additional information. The cost may represent the potential patient who clicks a Google AdWord for your practice and comes in for a free consultation you are conducting on a weight loss program.

When you know your CPL, you can make important decisions about where to put your money to maximize the value of your marketing dollar, or you can see what isn't working and discontinue that marketing campaign.

In the past, healthcare marketing took a lot of best-guess efforts to understand the value of your marketing efforts. You knew how much you spent, but when measuring the patients who came to your practice directly from your marketing, it was murky, and you were marketing by the seat of your pants.

These days, with all the latest technology at your fingertips, you can track your cost per lead. Accurate trackers can be enabled so you know if a patient is reaching out from an online ad, an email, a postcard, or even a billboard. You can even track that person from the beginning to the end of their patient journey through your practice. In other words, you can know the exact patient value your marketing campaign brought in—no guesswork needed.

In the healthcare industry, the cost per lead ranges from $36 to $286\patient, with an average of $162 per lead. The average CPL for health and medical companies using Google AdWords is approximately $125\patient. These are broad averages over the whole industry, but they give an idea of what you may expect as you begin calculating the cost per lead for each new patient that enters your practice.

The Calculation of the CPL

The CPL is a simple math equation.



The calculation consists of the campaign cost, or the marketing expenses divided by the number of patients who called the office for an appointment = patient cost per lead. For example, if the practice spent $2000 on Google Ads over three months and received 500 calls from those ads, the cost per lead is $2000 divided by 500 or $4.00 for each patient lead.

The cost per acquisition (CPA)

However, not all initial callers will convert to paying patients. The 50 patients who made appointments can be plugged into the same equation, i.e., campaign costs divided by patients who became paying patients or $2000 divided by 50 equals $40, representing the patient acquisition cost (PAC). Now, if each patient who entered the practice spends $800 over the patient's lifetime, that's an increase in income of $40,000, not shabby for $2,000 in marketing expenses.

The return on the investment (ROI)

The return on the investment (ROI) is the income derived divided by the marketing expense X 100. It is $40,000 divided by $2000 x 100 or 200% as a return on the initial investment.

ROI = income\marketing costs X 100

Bottom line

You have at your disposal to measure the effectiveness of your marketing efforts. The available data gives us the power to make informed decisions that will increase our practice if we have the knowledge and expertise to tap into it. If you are not looking at your patient cost per lead as you make your marketing decisions, you're missing valuable information.

Understanding your patient’s CPL, PAC, and ROI positions you to bring in new patients and grow your practice with the confidence of data-backed decisions. These leads from your marketing efforts are the lifeblood of growing your practice. Your marketing goal is to create a steady stream of new patients since some of those people will become loyal patients and add significant revenue to your bottom line. Just knowing these three metrics provides you objective data to make good marketing decisions.


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Monday, August 29, 2022

Capturing specialty practice revenue

Two out of three physicians surveyed at the LUGPA regional meeting this past spring cited rising costs and declining reimbursement as one of the top challenges they face in a COVID-19 era of care. It’s a challenge that requires a new look at ways to increase efficiency and revenue, even as workforce shortages and pandemic-specific obstacles strain resources.


For instance, supply chain challenges—such as a contrast dye shortage that prevents some patients from receiving CT scans to monitor tumors or even detect a kidney stone—not only make it hard to treat patients’ health conditions, but also monitor progression of disease. This creates scenarios where patients who are more symptomatic may receive diagnostic testing while others go without. It is too early to tell what the long-term impact of this crisis might be.

Then there are the factors that continue to keep people from pursuing needed care, from fear of exposure to the coronavirus to concerns about the cost of care, long wait times for appointments and a tendency among some patients to put family members’ care needs—especially their children’s care needs—above their own.

How can specialty care practices strengthen quality of care, access, and revenue amid challenges such as these? Here are three approaches to consider.

1.Explore opportunities to expand ancillary services offerings—and promote them widely. For instance, at Genesis Healthcare Partners in Los Angeles, the urology practice offers genetic testing for family members of prostate cancer patients, given the increased risk for aggressive prostate cancer in men with a family history of this disease. Among the top ancillary investments for urology practices alone, according to a McGuire Woods analysis: radiation therapy, surgery centers, lithotripsy and on-site laboratories and pharmacies.


Ancillary services make care more convenient for patients by offering a one-stop experience for meeting their comprehensive care needs for a specific condition. It also eliminates travel to multiple destinations for patients whose health makes it physically difficult to navigate facilities. Increasingly, specialty practices are entering into administrative and capital partnerships to manage ancillary services and access funding to launch new services or grow existing services.

One way to more widely promote existing service lines: Leverage patient data to identify patients who might benefit from a particular in-house service. Examples across specialties include nutrition counseling, a sleep apnea clinic, a cystitis clinic, physical therapy, and behavioral health services.

2.Make chronic care management more meaningful. Leading specialty practices are exploring chronic care management (CCM) and principal care management (PCM) to strengthen outcomes for patients with chronic conditions while boosting revenue. This year, the Centers for Medicare & Medicaid Services (CMS) added four new codes for PCM, which allows physicians to receive additional reimbursement for their work in managing a single chronic condition. To qualify, the condition must put the patient at risk of hospitalization, acute exacerbation/decompensation, functional decline, or death, with reimbursement depending in part on a disease-specific care plan. CCM, on the other hand, reimburses physician practices for care provided to a Medicare patient with two or more chronic conditions outside the patient’s regular office visit. But capturing CCM and PCM activities—a necessity for reimbursement—requires a software platform for tracking and managing care activities for this population, many of whom have multiple health needs.

3.Look for ways to make virtual care more efficient. As care shifts to a hybrid environment—part in-person, part virtual, depending on the patient’s preferences and needs and the provider’s comfort level—there are numerous opportunities to make the experience of virtual care better for physicians and patients alike. For instance, rather than having the physician initiate the virtual care appointment, assign this task to a medical assistant, who can prep the patient and the physician for the encounter, start the call and alert the patient and the physician when it’s time to “go live” with care. This ensures the visit kicks off as smoothly as possible. It also preserves physicians’ time for true patient care activities, rather than administrative work associated with the encounter.

Remote patient monitoring (RPM) and remote therapeutic monitoring (RTM) are two other activities that are eligible for reimbursement from CMS—and, when used effectively, they can significantly reduce hospital readmissions (by 64% for cardiac patients alone). Key to operational efficiency and better outcomes: a tool that analyzes RPM and RTM data in real time and alerts medical assistants when the patient’s vital signs signal a need for intervention.

By exploring opportunities to strengthen patient care and services while creating new avenues for revenue, specialty practices will be better positioned to engage members with complex care needs, to minimize provider and clinical staff burnout, and to protect their bottom line.


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