Lyndsey: Hi and welcome to Nuesoft's Medical Pratice Management Podcast Series. I'm Lyndsey Coates. Today we have Dr. Steven M. Hacker joining us. He's written a book: The Medical Entrepreneur. He's also hosting a symposium by the same name from March 29th to April 1st at the Marriott in Delray Beach, Florida.

It's a two and a half day event where physicians come to hear from Dr. Hacker learn how to be more successful in the business and learn more about their medical practice, practice management, and all kinds of entrepreneurial issues that are critical to physicians.

Dr. Hacker, doctors come out of school ready to practice medicine but they aren't necessarily ready to run a medical practice and there are really important educational stuff that comes along with learning about a business.

Can you give us a little background on what experiences you've had related to this and how you became so knowledgeable?

Dr. Hacker: Sure and thanks Lyndsey for inviting me to participate in this podcast.
So to begin with I've been in private practice now for almost 20 years and I've  grown this from a small solo practice to a large multi-physician group practice. So I have, from a purely practical standpoint, I have a tremendous amount of experience in running and growing a successful practice.

In addition to that I've done several entrepreneurial start-up companies, several of which have become large companies. And have started them, founded them, and then sold them. So I have that entrepreneurial experience.

Lastly as you mentioned, I've authored this very successful book that physicians buy from all over the country to help them called The Medical Entrepreneur- to help them tackle the issues that might be intimidating to them or that are critical to understand while they are in the midst of trying to launch or grow a medical practice.

Lyndsey: Excellent. So we have Dr. X and he decides, he or she, decides to start a practice. So where should they get started? I mean what's the first thing that they should look into? Should it be property or lawyer? Probably a bank? I don't know...

Dr. Hacker: Well, those are all good questions, Lyndsey. I mean every- I don't know if there's a specific order. But as it relates to the specific question and what you're asking me- they sort of have to do all of those simultaneously. It is important for them
to have a lawyer. And there are different lawyers that they would need for different legal matters.

First of all, you need a healthcare attorney as it relates to doing certain contracts. Particularly if you're going to employ others or you're going to be employed. A board certified health-care attorney is a nice professional to have at your side to make sure that you avoid making any legal missteps since the field is so crowded with regulatory issues that need to be aware of. In particular stark issues as it relates to contractual healthcare law.

But you also need, theoretically, a corporate attorney to help you negotiate any potential issues that may or may not relate to the property that you are either going to lease, rent, or buy.

And so it's not as critical to have an attorney do those things: lease, rent, and buy. But it's advisable to have an attorney, not necessarily a healthcare attorney, assist you with those issues when it comes to approaching property office space- that type of thing.

I'll back up for a second. Kind of the best and I talk about this in the book- the best defense system is to surround yourself with the very, very best professionals. I would definitely recommend it. I think it's critical and by professionals I do mean accountants, lawyers, insurance agents. You're going to need all types of different insurances. When you start, you need to understand liability insurance. You need to understand office overhead insurance. Disability insurance- whether you're going to do it through the corporation or you're going to do it individually. Then you need a specialist insurance as it relates to malpractice and understanding the differences between those as well.

Then you have to go through the analysis of, you know, whether you want to rent, lease, or buy an office. But as it relates to property, the analysis that you as an individual doctor need to consider are, you know, do I have the capital to make a purchase? Am I in a place where I think I'll be for several years? Or I'm still not sure- I'm in a geographic location that I don't want to be tied down if I do purchase an office.

Part 3: Most physicians have a boatload of student loans, not cash to start a practice so they need to take out business loans. What financial steps should they take?

Lyndsey: OK. So most doctors come out with a boat load of student loans as opposed to,
you know, amount of cash so are they going to have to get a loan or...

Dr. Hacker: Sure. The other professional that doctors need to surround themselves with is a really good bank relationship. It's critical, particularly when you're starting and again I talk about this at length in the book where your line of credit with the bank is sort of your life line when you're starting out.

And it's also critical when you're running your practice at different times because for a variety of reasons- but what you learn as you get into practices is you'll have different cash-flow periods where the cash-flow, know now, becomes very low. Like for example Medicare chooses not to pay or they're holding payments. And you need to fund your cash-flow to keep your payroll going. In that case, you need a line of credit to do that.

Most businesses have a line of credit. Physicians' practices should be no different. So you need a banking relationship. You need a line of credit. That's separate from what you might do in terms of acquiring real estate. It's true if you have significant student loan debt, it may impact your ability to get a mortgage. But most banks right now, even given the crises, you know, will land physicians or set up mortgages for physicians as it relates to what they call owner-occupied real estate.

It's a big difference to get mortgage financing for a property you own than is it- that you own and run your practice out of than it is just getting commercial property someplace else. The banks understand the difference. They generally know the physicians in their own practice will be able to handle the mortgage payment and they're happy to land in the owner-occupied real estate.

Always my own personal preference to buy real estate whenever you can. You're in a down market right now. This is a perfect time to buy an office if you know where you are going to be. And you're going to there for several years- I would advise buying. I bought when I first came out, you know, eighteen years ago. There's been some ups and downs but you should always buy.

And then, you know, you would at that point in time work with an accountant and an attorneys in setting up the arrangement for how you structure the ownership of that real estate as it relates to the corporate structure of your practice as the tenant of that real estate.

Lyndsey: What about equipment and software. Not every practice management system or EHR is going to be right for every practice so what resources or tips can you give somebody picking up something for the first time?

Dr. Hacker:  This is really good, you know, kind of give myself a shameless plug here. At the symposium will be going through at length how to analyze either the purchase or the leasing or the use of electronic health records software as well as practice management software.

So the symposium is going to be a great place or any physician they really get an understanding before they commit themselves to something that's not going to work in
their particular scenario.  

But it is an analysis like everything else. You know, you have to make sure that the system is right for you- that the system has expertise in the specialty that you're in that you've gotten to demo and feel very comfortable with it.

You can buy a system that is loaded locally onto servers that you might have in your
office. You can use an ASP system where you don't have to manage the software, you just pay monthly fee. You know, you want to look at a system and see if the electronic health record is data driven and meets the criteria necessary to get health IT stimulus dollars- it's certified, CCHIT certified, ideally.

And that, you know, you and your staff are very comfortable using it. It doesn't impede your workflow, doesn't slow you down- that's critical. Ideally it has practice management features. Most softwares today have those features bundled in, including the e-prescribing and practice management, which I do like- it to be the same system for that.

Then there's understanding what the warranties are with the software. What the maintenance costs are, what the true costs are, what you have to do on your end. If you have to hire somebody on your and that's  got some technology expertise to maintain either the software locally or even to integrate with other systems you may already have in place if it's an ASP model.

Lyndsey: Another component is marketing and it's something that is foreign to a lot of physicians so I've started seeing a lot more practices with websites but there's is still a great deal that don't even have one. How big of a component is this, especially when you're opening a new practice but for medical practices in general.

Dr. Hacker: I think marketing is a huge component. I think you know today it's more and more competitive, there's more and more doctors in more crowded areas and particularly in the more urban areas. Most of the doctors are competing with each other for patients. So I do think that marketing plays a role. And its also specialty specific. Some specialties, marketing at no relevance because the patients are just tied to the insurance plans and to pre-negotiated contracts between the hospital and the specialty group.

Other practices that are less tied to those types of contractual relationships between insurance companies and hospitals such as family practice even OBGYN perhaps but certainly plastic surgery, dermatology. Some other more internal medicine in the outpatient setting- those doctors are going to be competing for patients and in that respect marketing's important.

If you derive ninety five percent of your patients from insurance contracts, it's less important. But marketing today, you really need to think about your practice as a business and understand what more can you can do. What marketing you can do on a realistic budget. What it costs you to acquire a patient- what we call cost of acquisition, customer acquisition

You need to understand things like lifetime value of that patients so if he comes once or once every six months and what it's worth spending to acquire that patient.  You need to go through different- a few different analyses in deciding how to market so that you spend your money wisely.

But there are cheap ways for market today using the internet. There's you know with SEO with search engine optimization- websites, every website should be optimized by the web hosting team that developed your website. It's critical to have a website. We get many, many patients from our website everyday where as, you know, when I started it was the yellow pages. But now that, we haven't advertised in the yellow pages- twelve years, fifteen years.

Lyndsey:  They're still around, right?

Dr. Hacker: Still around. For sure you know I would just say, you know, really promote on the web. You know work to make sure your website enables patients to find you. And get them information. Interact with your practice. But certainly you need to do a careful analysis so you don't blow your budget without any idea on how to measure your return on investment.

Lyndsey: So what have you seen that's the single biggest inhibitor to doctors opening a practice?

Dr. Hacker:  I would say the single biggest inhibitor- doctors opening practices- they believe they either can't get patients. They feel they can't run a business. They just don't have that mentality.

And I would argue that every one of them could run a successful business. They shouldn't be intimidated- that it's a mistake. And that running their own practice is really a still viable option.

It's not as attractive as it used to be, you know, twenty, thirty, forty years ago because of so much government regulation. But it has so many benefits when you run your own practice over not running it. And not being employed to somebody else. You get the creativity that enables you to really let the practice take on your personality.

And I don't know and I talk about this in the book, too and I don't know of any doctor that's ever spoken to me and gone into private practice that's ever regretted it. And I'm a huge believer and a huge advocate for people to go out, do it smart, read a book like mine and understand what the risks are, which are minimal. And understand, be prepared and I'm convinced you'll do well. You'll be successful. Most of all you'll be happy. You'll have more free time. And you'll always make more money when you're on your own your own boss.

Lyndsey: You'll get to be your own boss. Be your own boss and do a job you love.

Dr. Hacker: Correct, correct and you'll make the decisions.

Lyndsey: Yeah, absolutely. And what about physicians that are already in practice and have their own practice? What kind of advice can you give them to be a better business owner? 

Dr. Hacker: So for those doctors that are already running their own practice I think the best advice I could give you is to go back and always always analyze your budget. Make sure you create a budget each year. Try to stick to your budget. Understand where you're spending money and understand where you're earning money. And do an analysis to understand where your best profit centers are. Where your best return of investment is. And measure what you're doing so that you can understand how to improve it, you know,
year after year.

You know, always re-evaluate your expenses, you vendors, your insurance, you always have chances to bring that down. Your overhead's constantly going up in this environment so you need to just watch every single penny. And you need to be aware of where your time is best spent to kind of generate the most revenue opportunities.

Lyndsey:  Well, thank you so much Dr. Hacker for joining us. We really appreciate it. I hope some of our listeners are able to join your symposium at the end of March. And next month we'll be talking to LEED certified architect, Jeffrey Griffin about designing the space of your practice. Have a great day.