Starting a Practice and Surviving

In my years as a consultant I have faced many professionals with great ideas about new businesses and I found that there are two commonalities on every opportunity; money and customers. These are very simple concepts that at time we forget as enthusiasm and belief in our product or service tends to cloud our judgment. However I found that those that fail to account for the same may be facing a rather hard time in the future. Starting with the issue of money the saying of “you need money to make money” couldn’t be closer to the truth. Just consider the expenses related to deposits and the acquisition of equipment and the tally of that alone could run you into several thousands of dollars. Then consider that it will take some time, once you open your doors, to start getting paid for you services and the result could be that you need a enough liquid assets to fund your operations for a couple of months. Normally in the healthcare industry it results in an average of six months before you broke even and one year before you make enough money to pay yourself. The good news is that once you pass this stage you and your business will be in the clear unless you made a mistake or something out of the ordinary has affected your business. The next big hurdle becomes patients. While many professionals consider that just putting your sign up would be enough to attract patients the right answer is it depends. Furthermore, if you have a new concept then the learning curve will be steeper which requires more education of your referral sources and potential clients before you could really cash in. In the end it always helps to know if a referral and client base can be established before investing the big dollars into the business. While those are challenges that every new business must face, the reality in today’s day is that we are in a cycle where many of us will be facing some of the same challenges sooner than what we would like to. Right now we are facing HIPAA 5010 which luckily hasn’t had as drastic a negative impact as I had previously anticipated. However CMS is predicting that the introduction of ICD 10 will have a definitive impact in all businesses. For once, with the introduction of new codes and filters the rejection rate is expected to increase by a rate of 100%-200%. I personally was in a 5010/ICD 10 conference were they indicated that CMS is recommending providers to ensure they have enough cash available to survive for a period of six months. The same speaker said that this was a conservative figure and that industry analysts and private insurances recommend cash reserves equal to twelve months of operations. In addition to 5010 and ICD 10 I also see the need to have enough cash available to compensate for the losses due to the introduction of new technologies, increased overhead to meet legislation changes and if you are lucky enough government audits. This is not new information and the financial professionals are aware of the same for which the closer we get to 2013 the harder it will be to secure financing and lines of credits. The end result is all the same if not a little more urgent, we need to reinvent our businesses and secure enough capital to function regardless of the coming changes in our environment. So my suggestion to you is the following: 1. Write a new business plan considering the present and future environment; 2. Update or create a budget to identify potential opportunities and challenges; 3. Plan for the worst and create a back up just in case; 4. Develop a good relationship with your bank or financial consultant. As always feel free to contact me if you have any questions. In the case of financial expertise I would also recommend contacting: Larry Roselle Independence Financial Consulting Tel 321-480-4200 e-mail: [email protected] The decision is yours but the time to act is now. The above article was written by Dr. Jose I. Delgado, President and CEO of Taino Consultants Inc.