1) WHOLE LIFE INSURANCE: When I was a medical resident, one insurance salesman wasted a whole day of mine to convince me to buy a “Whole Life Insurance”. He said it has ‘Cash Value’, and the earlier I buy it my rates will be cheaper. Some of my friends did buy it but they could not maintain the high payments of a ‘Whole Life Insurance’ – which are almost as huge as car payments. The truth is there is not enough residency stipend to maintain these payments. And most likely you will end up dropping it. I prefer a 30 year term life insurance as it is cheaper to maintain and runs out once there is a good likelihood of all debts being paid off.

Here is the link from MSN to learn more about Types of Life Insurances.

2) OPEN RETIREMENT ACCOUNT WITH US: One Insurance salesman wanted me to open a retirement account with his firm. He was well versed with the benefits offered by my residency program, including a matched 401K, which almost nobody saved into. Yet he conveniently forgot to mention it to me.

Ask your Residency Progam Coordinator about the benefis offered by your residency program. And save money in the 401K, especially if it is matched. Even if you want to open IRA then go to low cost funds like www.Vanguard.com .

3) PHYSICIAN RECRUITERS’ SCAM: In the final year of my residency a physician recruiter wanted me to go to an interview in a god forsaken place in he middle of no where. I told him even if I get a job there I will not take it. Yet he persisted. But so did I. I never went there as it would have been a waste of time. Later I find out that the physician recruiters sometimes get paid based on how many candidates they manage to get interviewed for a spot.

4) EARLY PARTNERSHIP: A friend of mine was offered an early partnership in a medical practice within six months of his employment. He was ecstatic. He signed it without realizing that a partnership does not have a base salary guarantee and his income instantly dropped into five digits, as he did not have enough patient base. Read my article on Timing your Partnership in a medical practice.

No doctor has time to read all of these papers. They all rummage through it and sign wherever the signature needs to go. After all there are atleast 100 or more signatures to be done everyday for which there is no compensation.

Among these papers are those sent by some shady vendors and companies. Here are few examples of those:

1) Diabetic Supplies:Diabetic Supply is a big business. That is why you hear those ads about free diabetic supply delivered to your door. Automatically! It is not that automatic. Once the patient requests diabetic supply from the company, they will send a form to the physician to sign. This form has the diagnosis codes and frequency of use, which is usually already filled out by the company salesmen. What they won’t tell you is that they documented the patient needs to check his or her sugar 5 times a day. Even when they are not on insulin. If you sign this form without correcting it, they will send the patient enough supply so they can check their sugars five time a day. This is called Upselling – Selling more than what someone needs. If Medicare comes after them, they have a good defence – “the doctor told us to do that!”

The doctor did not even have the time to read the form thoroughly and gets dinged for overutilization of medicare resources!!

2) Motorized Wheelchair and Scooters: You get these prefilled forms that patient needs a scooter. He may not need it. He probably will do fine with a manual wheel chair. But those sell cheap. So these wheelchair dealers will try to get you to sign a motorized wheel chair for the patient. If Medicare audits, then your neck is on the line.

3) Change Meds to Generic and save $$$: But they won’t tell who saves the dollars. The company or the patient. The patient many a times still pays the same. But if you sign it thinking patient would not mind saving this money, you will be in for a surprise. The Pharmacy will turn around and tell the patient that the doctor asked us to change it. The patients will be angry that they were not consulted before doing so.

4) Refill these prescriptions: Patients who have not followed up with you in a year may go to the pharmacy to see if they can get their meds. The pharmacist will send you a fax. Sign it for refills for next few months will increase your liability as you are now responsible for the side effects of the meds if not monitored. If such a request comes in just give out enough pills to give the patient time to et to your office. Definitely NO REFILLS!

Moral of the story: No one can read everything. But know what to check for each document before you sign it.

Any time that you have to buy an equipment or service, you will have to do your homework. Just because one salesman gives you a price for a product, does not mean that is the market value of that product. People in the business community are well aware that physicians lack of training in the business aspect of anything. They use that to their full advantage by inflating the prices, selling unnecessary services, and even to the extent nickling and diming the doctors.

Always be paranoid and when dealing with business people. Even if it saves man appears to be your friend, he may not be so. Salesmen and are trained to develop a relationship with their customers on a friendly basis. And that is how they get their stuff sold.

Be aware of common sales techniques. It is important. For it will give you better handle on negotiations. Here are some of the commonly used sales techniques:

Upselling: It is a technique by which a salesman will sell you something more than what you initially asked for. For example when you go to buy food at a fast food restaurant, they ask you if you need French fries and Coke with it. Even though you did not initially plan to, there is a good chance you will say yes to the offer. This is Upselling.

Management fees: Somehow seems like all the doctors get charged management fees. Whenever we tried to buy a product or service, the salesman would tag on a management fee to the whole deal. If you look closely they charge anywhere between $100 to $200 management fee per hour. That is ridiculous. Even Physicians do not make that much for an hour anymore.

Inflating price then giving discount: Many times salesman will give you a very high price. Then he or she will deeply discount it for you for a limited period of time. It will make you feel you are getting a deal. You will be surprised, if you did some research, that even the deeply discounted price is much more than that product or service is available for elsewhere.

Deadlines: One of the favorite ways for the salesman to close a deal is by telling you that the offer is good until end of the week. In my opinion, if they can give you a product for X price this week, they should be able to give you the same product for X price next week.

Charging extra for various modules: Companies love to nickel and dime Physicians. This is especially true in the case of Electronic Medical records. The Electronic Medical records software is sold in various modules. Many of these modules are mandatory. This way they can bulk up on the total price without making the Physician realize it.

Appearing desperate: salesman may try to invoke your sympathy to be able to make a sale.

So once you know the common tactics the sales personnel uses, it will become easier for you to read in between the lines and continue to negotiate better through these gimmicks.
How do you make sure you’re getting a good price? Here are some pointers. Keep one practicing with every purchase you make and every time you will get better at it.

Get offers from three or four companies for a medical product or services. Never rely on bid from a single company or salesman only.

Go online, Google it, search and see how much the product or service is available online for.

Let the companies bidding for the purchase know that you have researched the price. Then ask them to beat the price.

Go for the lowest offer with the most reliable post sales service.

5) If two companies offer you the same price, go with the one which has been honest with the dealing during the process.

You can find medical vendors at directories such as VendorMD.com

Why should a medical practice acquire medical equipment: Reasons can be:

But beware of the medical  equipment salesmen. Many of them are good but many of them are not. Their job is to sell the equipment. They may promise to stick by you after the sale but admit it, how many times have you seen a any sales guy checking on you after a sale. Also the only way they can convince a physician to buy  a medical equipment is  to talk about the profitability of the tests. So ultimately it is the duty of the physician purchasing the medical equipment to decide whether or not it is a good buy.

How do you determine if an equipment is a good buy or not ? How do you know if the medical equipment salesman is telling you the truth about the reimbursement rates. The answer is you cannot guarantee the reimbursement rate by insurance companies for a particular test. The only way to do it will be to submit a claim to the insurance company. You can submit a claim only after you buy the equipment and do the procedure. Even if you submit the claim, whether it gets paid or not will take atleast one to three months. Thanks to the processing times of various insurance companies.

So here is a list of questions you should ask before purchasing any medical equipment:

You can find a list of Medical Vendors from the Medical Vendors Directory VendorMD.com for your research. Answer the above questions you do not get stuck with a medical equipment sitting in your office and laughing at you !

Why should you learn these fundamentals? Because you will be employing staff. And it is your responsibility to provide them with a stable and flourishing employer (aka job safety). So it is not selfish – it is altruistic.

Before we go around looking for bankers to finance the medical practice there are lot of things to understand. You should be able to talk finance before getting financed. Here are few of the terms and concepts you need to understand before opening the business.

1) BUSINESS PLAN: It is a written document which describes the business (in this case a medical practice), its operations, allocation of funds, staffing etc.. Not only you need a the business plan for the banks, but you may need to use it to refer to during the course of the business. It is the map to success.

2) CASH FLOW: Cash is the lifeline of business. It is like the blood in your body. When the cash runs out–the business dies. Even if there was a good chance of success few weeks later, a cash strapped business cannot survive.  Just recently I was shocked to see the doors  shut down on an upscale restaurant in my neighborhood after just one year of opening. There were lot of customers (Including me!) but I guess they let expenses run high.

3) REVOLVING LINE OF CREDIT: It is a loan offered to the medical practice for its operational and daily expenses. You can withdraw it all at one time or slowly, leaving some for the rainy days. As you pay it back, it increases back to its original value.

4) CASH FLOW STATEMENT: It is a projected expenses and earnings on an excel sheet on a monthly basis for atleast an year.

5) BREAK EVEN POINT: The time or earning at which the medical practice becomes profitable. On your cash flow statement you can estimate after how much time your medical practice will break even. Also you should be able to tell how much cash the medical practice needs to earn to become profitable.

6) OVERHEAD: The total expenses of running a medical practice. You need to earn more than the overhead to be able to make a profit  (i.e. your salary) 

I wil introduce more terms as we go deeper into the topic in the later posts.

Authors Recommendation: If you plan to open a medical practice or any other business you need to attend the classes offerred by the organization SCORE. These are retired executive volunteers who offer free advice to young entreprenuers regarding business. I got my first lesson on cash flow (the most important one!) at one of the classes of SCORE. And don’t take the advice lightly as some of these volunteers have run mega million dollar industries before. I think I should do what I always wanted to do that is write it here ‘THANK YOU SCORE ‘

In our FRAUD ALERT today lets talk about medispa business. many physicians are being lured into the medispa business by business scamsters. they promise physicians easy lifestyle, a lot of money, quick success, turnkey operations etc.

Be VERY VERY VERY careful. Many of these  sure shot success opportunities are turning into disasters. Many physicians have lost money, lost careers and are involved in litigation. I am not saying don’t do it. But if you want to do it, remember the following principles of business which I have learned over time:

1) NO business is easy!

2) NO ONE can make money for you, but yourself!

3) NO ONE can have both money and "not much to do" lifestyle. Even scamsters have to work hard!!

4) NO  business is a sure shot success.

5) In business  you will have to WORK HARD!

6) If you work hard and make smart decisions, success will follow!!  

 

Some of our friends own medispa business. They agree that setting up a medispa business and setting up a medical practice has the same ramp up period. Just like it is not easy to deal with insurance companies, convincing retail customers to buy your services is even  harder. One of the website I like is the blog medicalspamd. You will really find lot of horror stories on this website. So to sum it up, evaluate every opportunity with care and think like a businessman not like a doctor!