Journey to My First Private Practice

Its been a while!!

noreply@blogger.com (Doc Zealous) — Tue, 19 Jul 2011 02:31:00 +0000

Sorry folks for the long pause.... its been just a little over a year since updating!

Here's whats happened. We opened our practice in the First Quarter of 2010... right when we opened, we headed into a whirlwind of a year. As you can imagine, we've been busy.. I've been averaging 60-70 hour weeks doing business stuff and practicing. You really wear two hats :)

Quick Highlights:

Our practice grossed $550,000 in its first year. We are just seeing some of our patients come back (20-30% returning, but I guess not everyone comes back every year). Overall we are up 20% from Year 1.
Hire slow, fire FAST!!!
It took us a year to get on every medical panel
Its a good idea to have $40,000 in working capital. We had a $300K loan

I'll let you know which months are slow and what my thoughts are on timing. I have so much to share, and I haven't forgot about you guys.... I've kept meticulous records, so stay tuned!

Its been a while!!

noreply@blogger.com (Doc Zealous) — Tue, 19 Jul 2011 02:28:00 +0000

Sorry folks for the long pause.... its been almost a year since updating!

Here's whats happened. We opened our practice in the First Quarter of 2010. I'll let you know which months are slow and what my thoughts are on timing.

Our practice grossed $550,000 in its first year. We are just seeing some of our patients come back (20-30% returning, but I guess not everyone comes back every year). Overall we are up 20% from Year 1.

I have so much to share, and I haven't forgot about you guys.... I've kept meticulous records, so stay tuned!

Enrolling in Medicare with a partner

noreply@blogger.com (Doc Zealous) — Mon, 15 Feb 2010 15:11:00 +0000

Here are the forms you have to fill out, if you are partners in a company:

855B - One group application form
855R - Each doctor has to fill one out
CMS588 - Electronic Funds Transfer form
CMS460 - Participating provider agreement

Permit approved

noreply@blogger.com (Doc Zealous) — Sat, 13 Feb 2010 04:00:00 +0000

The City approved our renovation permit! We are good to go, but are still "negotiating" our estimate with our general contractor. They added in few things that we didn't originally call for, and we are less than content with how this process has transpired so far.

In the future, I would conduct business like this:

Architect. Approve all architectural plans (scan through this stuff with a fine tooth comb, and question everything)
Input from your interior designer with the finishes
Submit the plans, and finish schedule to several different contractors for bids.

We did everything backwards, and only got one bid..only because the contractor we chose had done a few friends and several optometrists office. Last week, I invited another contractor to bid.. for obvious reasons!!

We also got our phone number hooked up!! I just got one phone number for now, so that I can fill in all my insurance applications and make business cards to handout. When we get closer to the date, I will add another phone line and a fax line.

General contractor & Eyedesigns

noreply@blogger.com (Doc Zealous) — Thu, 04 Feb 2010 18:30:00 +0000

Eyedesigns sent us a post card saying that our project will be ready April 1st, and to allow an additional 3-10 business days for shipping.

Our general contractor also came back to us with our renovation budget. Initially we were given a $97,000 estimate in November/December. Since then, the designer had added some extra finishes, niches, etc. and we changed the floorplan. Well yesterday, we get an updated budget for $157,000. Needless to say, we were shocked and upset. After speaking with the GC, he mentioned how changes and add-on's cause "budget creep." So we are scaling back on certain areas to stay within budget.

The City should have our permit ready for demolition next week.

Using Quickbooks, and tracking all of your expenses

noreply@blogger.com (Doc Zealous) — Sat, 30 Jan 2010 15:37:00 +0000

It took me more time than I wanted to grasp Quickbooks. But here are some important tips, to help you get started:

Any money that you spend before the formation date of your company should be entered into the Journal Entry (Company-->Make General Journal Entries). Under the "Account" it should be labeled as 18000 - Organizational Expenses, put in how much you spent in the "Debit" column, then type in a Memo (ex. computers, or incorporation of company). Quickbooks will then create a line below it automatically that will "Credit" it, so just make sure you label the "Account" as 31000 - Owner Equity.

If you put in any of your personal Cash or Capital after the formation of your company, this is entered into the Journal Entry also. The "Account" should be labeled as "Owner Equity"

Happy belated New Year!

noreply@blogger.com (Doc Zealous) — Sat, 23 Jan 2010 22:47:00 +0000

Sorry, I haven't posted much. But as you've probably guessed much has changed! For my readers that are concerned, I will never post wholesale costs. Our tenants officially vacated our property in December, so we were able to get moving with the build out of our office. We are permitting with the City this week and should have an open private practice (*fingers crossed*) by May 1st!!

General Rule: Always add a few weeks extra when general contractors tell you when you're buildout will be complete.

I've been practicing at a private practice $400 a day, for the last 3 months. Although he offered me a full time position, I declined. I've learned quite a few things from the seniordoc. He has an impeccable reputation with patients, and a devotedly loyal staff (unlike my previous employer), and his office grosses around $1.1 million on 4 days a week! I'll have to post more on his management techniques and what he does different.

Along with this, I took a one year lease at Wal-Mart, 2 days a week to "prep" me. I plan on testing out my exam forms, systems, patient flow and figure out how to verify/bill medical insurance before the private practice is open. I've been averaging about $400 day net profit there also.

So far I've:

Hired two employees. Lesson Learned: How to handle W-4's and do payroll www.paycycle.com
Averaged ~10 patients a day (in 3 months). Lesson Learned: How to manage a front desk, schedule appointments, learn what patients commonly ask, learn how patients treat the front desk, maximize appointments. I will make sure in my private practice that when every patient checks out that we ask "Does anyone else in the family need an appointment?" and I always ask patients to refer friends and family to me at the end of an exam: it works!!!
Become a medical provider (BC/BS). Lesson Learned: How to verify and file insurance. I use Availity.com to verify a patients insurance benefits, and to submit claims. The system is confusing and redundant, so I got on the phone and had Availity walk me through it.

You know what makes me sick though? My exam fees are $79, and the private practice doctors around me charge LESS!!!!

I will post more on this!

Must read tax planning advice

noreply@blogger.com (Doc Zealous) — Tue, 17 Nov 2009 16:27:00 +0000

http://www.wickenslaw.com/Format_2005/Dental_Practice/Dental_%20Law.htm

It's geared towards dentists but this is a definite MUST read!!

How to credential with insurances.. the easy way.

noreply@blogger.com (Doc Zealous) — Sat, 14 Nov 2009 16:14:00 +0000

CAQH is a consortium of health associations that aim to streamline the credentialing process. Here's how it works. Providers (you) fill out one application online, and submit them to as many insurance panels as needed.

The tricky part? You have to first be given a CAQH ID, by an insurance company. I chose Humana, and was able to get a CAQH ID in 2 days. Look around, I believe Blue Cross also provides these ID's in a short amount of time. Once you've recieved a CAQH ID, you'll be able to log on and fill out everything about yourself, where you practice, etc.

You'll have to fax all of your supporting documents (DEA, Malpractice, etc) for them to review it. Presto! You're done.

Filling out Medicare's application

noreply@blogger.com (Doc Zealous) — Mon, 09 Nov 2009 16:26:00 +0000

If anyone has done this in the past, you already know how tedious this process is. I'll try to simplify the process and go through each section that you need to fill.

Firstly, if you are a sole owner of a company (PLLC, LLC, PA, PC) then you will only need to fill out the 855R form.

Section 1A: Check the box that says you are a new enrollee in Medicare.
Section 1B: Check the box that says identifying information, and practice location
Section 2A: Fairly simple, fill out your personal information.
Section 2B: I used my home mailing address for correspondence. You can use your practice address also.
Section 2D: I selected Optometrist. Write Primary beside it.
Section 4A: Use the business name and its Type 2 (Group NPI). Where it says Medicare ID number, write pending.
Section 4B: Write the business name, pending where it says Medicare ID number, and use the Type 2 (Group NPI).
Section 4C: Fairly simple here. In the NPI box, use your Type 1 (Individual NPI). Write pending where it says Medicare ID number.
Section 4E: If you want your payments sent to your house, or your practice select the appropriate check box.
Section 4F: Not necessary
Section 8: If you are not using a billing agency (likely NOT, if you are a startup). Check the box that says it does not apply.
Section 15: SIGN and done!

VOILA!!

Ordering office and clinic supplies

noreply@blogger.com (Doc Zealous) — Fri, 06 Nov 2009 17:12:00 +0000

Over the past few months, I've created list of where to buy RX pads, light bulbs, cautery kits, sundry jars, recall cards, etc.

Feel free to suggest more.

Updating DEA number

noreply@blogger.com (Doc Zealous) — Mon, 02 Nov 2009 16:11:00 +0000

https://www.deadiversion.usdoj.gov/webforms/jsp/regapps/common/updateLogin.jsp

If you've changed locations there are several other things that you must do to stay current. Change your DEA number, and update your address with your State's controlled substances department.

Practice incorporated!

noreply@blogger.com (Doc Zealous) — Tue, 13 Oct 2009 18:44:00 +0000

Today, I officially incorporated our practice online. Each state has their own procedure on how to form a company. Cost $300. When a company is formed, you get what's called a Certificate of Formation. Hang onto this, because it serves as a "birth certificate" of your company.

I advise all optometrists (and other professionals) to form a PLLC. My corporate name is "[Last Name] Family Eye Care, PLLC." I will likely take the S-corp election when I file my taxes. BUT, remember to consult your CPA and attorney regarding tax implications and record keeping rules. In some cases it is advantageous to start off as a sole proprietor, but a pain-in-the-ass to switch to a corporation down the road when you are established. I don't want to go into explicit detail of piercing the corporate veil, etc.. but Google should also help.

This is a good primer on the differences between companies: http://www.themoneyalert.com/Corp-Entity-Table.html

Next, I am applying for an EIN. Think of this as a social security number for your business. It's how the IRS keeps track of you. Luckily, you can apply for this online:
http://www.irs.gov/businesses/small/article/0,,id=102767,00.html

Once you've got the above two steps complete, you're good to go! Congratulations, you have completed the first step to the American dream... you own your own business.

Medicare numbers

noreply@blogger.com (Doc Zealous) — Thu, 08 Oct 2009 15:50:00 +0000

I am currently registered with Medicare as a provider, however, since leaving the last practice.. there are rules with how this transfers. Call Provider Enrollment to verify.

You get what's called a PTAN number (individual, and group) anytime you are employed at a practice. These numbers are no longer valid when you: start a different job, start your own office, etc... think of them as one time use numbers that never carry over.

Applying the second time around is easier, according to Medicare, since you're already in their system. What form to use depends on your situation:

If you are going to be employed again, you just need to fill out Form 855R
If you are going to start your own practice (where you are 100% owner), fill out form 855I
If you are starting your own practice with a partner (50, 50 owners), fill out form 855B. Make sure to also apply for a Group NPI number

Since I'll be doing both. Working and starting my own practice I will have to fill out form 855R and 855B with my wife.

Blessing in disguise

noreply@blogger.com (Doc Zealous) — Thu, 01 Oct 2009 04:27:00 +0000

It seems like every time I post, there's a new development. This one is big:

My boss terminated my employment contract (to be quite frank.. she was a terrible boss, and not a nice person; perhaps you gleaned that from previous posts) last week, I don't want to get into details, oh well. Luckily we have something to fall back on!!

At this point, we are amidst a relocation (200 miles away). We'll now be living within 25 minutes from our practice. HELL YEAH!!

I did receive another $5000.00 rent check from my tenants for the month of October. I also called up my contractor now that things have been kicked into high gear, and was told I could have my practice ready in 90 days. Tick-tock!

Hardware costs

noreply@blogger.com (Doc Zealous) — Wed, 02 Sep 2009 16:39:00 +0000

Little did I know, or figure into expenses that hardware would become expensive, some of these items are overkill and not necessary for a startup:

TalkSwitch Phone System. This is a biggie!! If your patient calls, and say line 1 is busy.. it will roll over to line 2, etc. A phone system does this for you automatically. When you call your cable company for your startup, ask for 3 dialtones (one fax, two phone lines).
HP LaserJet P2035N printer (my favorite is the Xerox Phaser 3300 MFP, too expensive for a startup)
ScanShell 800N card scanner
Acroprint timeQplus V2 biometric. Employee time clock, overkill at the start.. you can do manual payroll instead.
If you are in optometry school, or working for someone else at this stage... I urge you to learn basic bookkeeping/accounting, and familiarize yourself with Quickbooks.

Updates

noreply@blogger.com (Doc Zealous) — Sun, 30 Aug 2009 04:38:00 +0000

We met with our contractor on Friday to start the architectural plans, and throw in our ideas. Everything from the paint color, stone and tile down to the last electrical socket. We had to tell them exactly what we wanted. Once the new drawings come in, I'll post them. Our projected buildout for 2700 sq.ft. will be an astounding $97,000.

I received September's $5000.00 check for rent today.

I also negotiated a deal 2 weeks ago by searching in the local optometric newsletter for used equipment. I have purchased a used Topcon KR-8800 autorefractor, Marco 101 manual lensometer, Topcon AIT-350W equipment table, and Brewer stool for $6600. The doctor appeared to be 'closing out' her practice and the equipment was all new and purchased in 2006. I figure it's all worth roughly $15,000 new. I'll be picking it up within the next month and leave it in climate-controlled storage until July when we're ready for it.

In the meantime, here is a basic optical glossary for those looking to have an edging lab. I should've paid more attention in optics lab, but simply put, your optical is a money maker if you know what you're doing. Having a great optician will make or break that 'department' and I will post as much as I know. It's 11:42, I should crash now..

Semi-Finished: doesn't have power ground in yet. No good to you if all you are using is an edger!!
Stock Finished: a manufacturer has created a ready-made lens with the power in it (good to go in an edger)
Finished Uncut: a full service lab has surfaced lens with power in it, can customize it
Finished: edged and put into frame

Optical supplies

noreply@blogger.com (Doc Zealous) — Sat, 22 Aug 2009 03:59:00 +0000

I'm trying to keep a running tally of how much everything will cost in each 'department' of the practice. Here is my current list for what the optical will need:

Pupilometer
Job Trays
Hot Air Frame Warmer
Tool Rack
Quick Fix Pro/Smart System Pro (nosepads, screws, etc) for repairs
Optical Tags (from ArchCrown) to label frame prices
PAL Identifier
ErgoPro plier kit

This is far from comprehensive, so I'll keep adding to it.

Accountants

noreply@blogger.com (Doc Zealous) — Wed, 12 Aug 2009 05:10:00 +0000

Well I promised a while ago that I would post my accountants fees. Here they are for you to dissect:

Individual Tax Return - $225-375
LLC Return - $350-425
Sales Tax - $50/quarter
Quickbooks Initial Setup - $300 estimated
Quickbooks Support - $50/hour. Mid year trip and year end trip for 2-3 hours, each.

So, I can estimate to spend about $800-1200 yearly on accounting.

Vendors

noreply@blogger.com (Doc Zealous) — Wed, 05 Aug 2009 02:20:00 +0000

Perhaps the most important aspect of your office, is what you'll be equipping it with. This is what enables you to see patients. Rightly so, we have decided to invest in high quality equipment and start with one lane.

If I can find these pieces used (or their equivalents).. then I'll get that instead of purchasing new. Grand Total: $97,000

Exam Lane: Marco Deluxe Stand, Marco 1280 Encore Exam Chair, Marco G2 Slit Lamp ($10,500)
Acuity Panel: 20" iMac ($2900)
Autorefractor: Topcon KR-8900 ($10,500)
NCT: Reichert AT550. I may decide not to get one, and stick with just GAT. ($2,500 used)
Lensmeter: Topcon CL-200 (still considering a manual lensmeter). ($3,000)
Retinal Camera: Canon CR-1 ($23,000)
Visual Field: Humphrey 750 or Octopus 3 series ($14,000)
Edger: National Optronics 7E Edger & tracer. If we decide to purchase one, it will be new. All the older OD's have cautioned me on purchasing a used model. This is a risky tactical move; however, my competition does not offer same day service, and second I also want to keep my cost of goods low, although for a startup you wont be busy enough for this to matter much. ($27,500)
EMR: OfficeMate ($2,200) They are running a deferred license fee promotion.
Anterior Segment Camera: Canon Point/Shoot camera + adapter + EyeFi card ($900)

Vendor Choices:

VSI a good source for used equipment
Lombart
Cal Coast
Universal Ophthalmic
There are more, so I will continue to add to the list

Blueprints

noreply@blogger.com (Doc Zealous) — Wed, 05 Aug 2009 01:22:00 +0000

As promised, here is a rough sketch of our remodeled interior. We had to work within the confines of the existing structure. If you are looking for design ideas, contractors, or planners:

Eyedesigns Ask for Dave Pursel. They have great frame boards. They will design your floorplan and also sell optical cabinetry/furniture. Admittedly, expensive. Somewhere in the neighborhood of $60 square foot.
Magic Designs Speak with Cy Furman!
Fashion Optical Good ideas
Barbara Wright She is a planner/designer. I highly recommend her book, which I managed to read and take notes on while in OD school.

In the end, we ended up going with a local general contractor. We met him during a tradeshow (our annual state optometric convention) and had seen the work/projects he had done for several OD's we knew.

Look at SeeMyPractice for pictures of other doctors offices.

To do list

noreply@blogger.com (Doc Zealous) — Mon, 03 Aug 2009 20:45:00 +0000

I've decided to create a basic laundry list of what we'll need to do over the next 11 months to get this show on the road, I'll add more as I go along:

Decide which equipment to purchase and vendors to use
Develop a marketing plan, so we can get in the black fast!!
Decide which frames to use in the optical. We are targeting roughly 600 frames
Create office forms

If you're reading this blog and wondering where you can "borrow" money from to start your practice. We asked for $330,000 and got it (remember: it never hurts to ask for more money. We likely wont use all of it and are trying to stay lean with our startup). Here are some options:

http://www.matsco.com (0% down, based off your credit, and will usually need 2 years of experience). Read the fine print for a pre-payment penalty.
A local bank. I went into a local bank and asked to speak to the Vice President of Commercial lending.. I introduced myself, had a business plan and tried to win him over. He was all for it! This is the way I went.
A good introductory article

Oh, stay tuned for photos of the building and blueprints that we sent to the contractor!

WE OWN IT!!!

noreply@blogger.com (Doc Zealous) — Sun, 02 Aug 2009 19:57:00 +0000

Woohoo!! I drove up July 15, 2009 to the title company's office and officially closed on our first building!! What a tremendous adrenaline rush it was. Seeing as how it was my first deal, I would say everything went pretty smoothly. The truism in commercial real estate is that you make your money when you buy the property for as cheap as possible & also at the closing table.

Deal Highlights:

Total purchase price: $290,007.50 on our HUD settlement statement. $286,000 was the building price + $4007.50 for settlement charges. An HUD statement is a formal document which shows where money changes hands. I also received the appraisal report back from the bank shortly a week after the purchase, which valued the property at $295,000. Which means, I have built in equity right off the bat.
Amount I was responsible for: $50,076.69
Capitalization Rate: 8.03%
Cash on Cash Return: 15.3%

I also made my first payment to the bank today ($1367 is the monthly note/payment, for the next 30 years). I also received my first rent check from our tenant that occupies the building for $5000.00.. they are set to leave at the end of October. So this rental income is an added bonus. The building however, will be vacant until our finish-out starts in March 2010.

Which brings me to the next subject: Buildout!!

Our contractor has given us an estimate of the remodelling job. It was priced at $90,000 for a high quality finish out. I sent him blue prints of the property, they came and looked at it last month, and last week I also sent them pictures of my favorite offices/with comments that I would like to incorporate in our own.

In the meantime, after getting my feet wet with real estate, I purchased a few books on commercial/residential property investing because I've really enjoyed this experience. Things have been busy.

Closing date, and HVAC!

noreply@blogger.com (Doc Zealous) — Thu, 02 Jul 2009 01:09:00 +0000

Good news: The bank also informed us this week that we can shoot for July 13 as a closing date!

The only major flaw with the building as discovered by the inspection was the HVAC system. Well, I'm an optometrist.. not a handyman. So I had to figure out roughly what this would cost me. I called one A/C company and really played dumb and had him come out to the property and give me a bid. He quoted me $9500 to replace my split system units.

Well I used this information to help leverage my position. I then sent this bid over to the seller/broker and said that this added expense would be tough for us. To make this a win-win situation, I asked for a credit-at-closing in exchange for closing on the building quickly. Suprisingly, the seller agreed.

So when I close on the building for 286,000.. I will also recieve a credit for $7000.

1st attorney bill

noreply@blogger.com (Doc Zealous) — Thu, 02 Jul 2009 00:49:00 +0000

I also received my attorney bill yesterday. Guess how much? $2116.50!!! That was for reviewing the purchase contract (10 pages), email correspondence, changes to the contract, etc. He billed me for a total of 8 hours--okay, whatever. I spent a total of 45 minutes on the phone with him.

Well today, my attorney emailed me and asked me whether he wanted me to also let him review the title commitment. I'm a little gun shy of running to him with questions, expecting another stiff bill. Luckily, I had a patient of mine (title/escrow officer) look over everything for me and tell me it was clean.

I have nothing against my real estate attorney, he is good at what he does.. but I really don't see how he spent 8 hours of work on this. I'm not in the best mood right now.