Practice Points: Watch Their Backs
Edition: September 2012 - Vol 20 Number 09
I recently stumbled on an article from a freelance writer about the costs of stocking up on copies of magazines she’s pitching article ideas to. Newsstand prices are high, so she’s come up with some ‘creative’ ways to acquire magazines cheaply – including stealing them from doctors’ offices. Now, one can hope she meant this in a tongue-in-cheek way, but, knowing what I know about doctors’ offices (including, for one thing, that those subscriptions cost money!), it struck a chord. A lot of people feel it is perfectly OK to steal from a doctor – and, as a result, doctors often lack truly trustworthy people in their business networks.
“They can afford it”
Some of the worst ways physicians get cheated happen right inside their practices. Embezzlement is a common problem, with some experts believing that every practice will be struck at least once. Often, employees are resentful over the disparity in their income versus the practice’s physicians, and rationalize that their employers won’t miss a few hundred – or thousand – dollars. Of course, access is another driver of employee theft. Even in the best-run practices, physicians spend most of their time with patients, not directly overseeing staff. And, the average practice usually has weaknesses in its internal controls that allow stealing to go undetected, at least temporarily.
How can you help? Many physicians are unaware of the high risk of internal theft – or how to prevent it. A CPA with experience in establishing proper internal controls and sniffing out illegitimate transactions can be an invaluable resource to help a physician protect her practice. As a businessperson, you may be better able to find such talent through your own network – a referral to a trustworthy CPA is a favor many physicians would find highly valuable.
If you’re calling on a practice regularly, you will also have a chance to observe things that the doctor might miss. For example, one of the classic signs that an employee is stealing is an upgrade in their appearance – better clothes, pricier accessories, a nicer car. Because you’ll visit only occasionally, the differences might stand out more, and you may be able to point these warning signs out to your client.
Exploiting technology confusion
Another way doctors get ripped off is by ‘experts’ who exploit physicians’ need for reliable, high quality solutions to problems they can’t handle on their own. At the top of the list: the practice website. In our work streamlining practices, we see a wide range of overcharging schemes that result in ongoing expenses that don’t correspond to any actual value, such as huge ongoing “hosting fees” from site creators (sometimes $1,000/month or more) that physicians view as “security,” but that don’t include any services beyond plain vanilla hosting (which could be obtained for a few hundred dollars a year or less). Search engine optimization services (SEO) are similarly fertile territory for overcharging or outright scamming. We recently met with a doctor who was paying $950 a month for SEO services, but couldn’t get the vendor to identify a single specific task he was doing on the doctor’s behalf.
When a physician gets overcharged because he’s searching for security, or believes that a higher price always means higher quality, it can be difficult to find an opportunity to help. But, providing information the physician might not have otherwise found is a reliable way to add value. Share what you learn about quality technology solutions and vendors. If nothing else, it’s an opportunity to stay in touch. What’s more, a physician who’s being overcharged for web services will often figure it out eventually – and will welcome the information you’ve provided to help him negotiate a fairer deal.
Layoffs lead to practice losses
A few years ago, we worked with a pediatric practice that had seen an increasing number of retracted claims – i.e., insurance plans asking the practice to refund money previously paid. The cause was the faltering local economy, combined with the practice’s inability to verify eligibility consistently.
When local firms lay off employees, there can be a hidden cost to practices: employees who appear to be covered because HR departments and insurance plan records are not yet updated, or because they’re suspended during the COBRA election period. This can result in claim retractions even months down the road – a huge cost to practices. Worst of all, when the claim is retracted, the practice’s only recourse typically is to collect from the patient – which means they often won’t be paid anything at all.
In at least some of these cases, the patient knows they don’t really have coverage, but they accept the doctor’s services anyway – whether because they rationalize that their care should be free, or simply out of desperation. Either way, the practice’s services are stolen. The only way the practice can try to prevent this loss is to do be more rigorous in verifying and documenting coverage up front.
By having an ear to the ground in the local market, a rep can provide valuable intelligence to her clients: physicians may not have time or the mindset to understand what’s percolating in the local business climate, but you do. A quick heads up that a prominent local employer may be planning (or have already started) layoffs is essential information that the doctor might otherwise not learn. Pass this sort of information along, and you give your clients the chance to watch their backs – and reinforce your value to your client at the same time.