Physiatry Practice Management Resources

The entire nation continues to experience a medical malpractice liability crisis. Facing physicians is the concern of frequency and severity of claims that either continues to rise or remains steady. Much has been written about the impact of the liability crisis on physicians, the medical community, patients and access to care. They need not be reiterated here. The question remains, what can we do about it? Strong, and, more importantly, innovative risk management strategies can reduce both the frequency and severity of claims.

The process of risk management means focusing on those circumstances and/or situations which cause either clinical complications or professional liability risk. It also means trying to prevent those circumstances which make these claims more attractive to the lawyer. For example, generally, we know that documentation – or the lack of it – is what can cause a plaintiff’s lawyer to determine that investment in a claim is worthwhile. We also know that plaintiff attorneys use aggravating circumstances such as communication issues or service lapses against a physician. Therefore, if we know that documentation is not occurring to the extent or in the manner that could help to prevent a lawsuit, you can focus on documentation. That might mean using the SOAP method of documentation or it might mean incorporating certain new forms of documentation into your everyday practice. We set forth below a number of such examples and a process.

Where Does Your Risk Lie?

The first step in reducing liability risk is always understanding where your risk lies in the first place. Knowing where the risk lies means that you can fashion tools and strategies that can literally impact that risk in a positive fashion.

You can use national data to understand where risk lies, focusing first on general risk management issues and then on specialty-specific risk. We know that risk generally lies in areas associated with poor or ineffective communication, poor or lack of documentation, and service lapses. The majority of claims from a clinical perspective generally allege failure to diagnose, misdiagnosis, or improper performance. (See for example, PIAA Closed Claims Data for Ob-Gyn 1985-2003; PIAA National Closed Claims Data 1985-2000). If you have a quality assurance committee, it can track or trend data in the right way.

For those physicians and practices insured by an alternative risk financing vehicle, you may have data available through that organization. For example, one local insurer in a nine-county region in Pa. blindly tracks and trends data associated with claims and lawsuits. From this data, we know that claims generally arise from service issues, communication issues, and documentation issues associated with allegations of failure to diagnose, misdiagnosis, delay in diagnosis, and improper performance. You may be able to use hospital data.

Specific to your own organization, you can also use data from a third-party resource by way of a baseline office risk management assessment. Those physicians insured by an alternative risk financing vehicle may have this already available to them through their insurer. Others can purchase these services from a third-party vendor. The baseline assessment can show you where your practice’s risk lies, so that you can develop strategies and tools to reduce that risk. In this way, you can drill down on your particular risk, taking your analysis to a new level.

What Strategies Can You Use Now?

We know that many lawsuits are initiated due to anger and frustrations of families and patients related to service. Whether it is a phone call that was not returned or questions not answered, these types of issues often trigger a patient or family member to seek an attorney, looking for explanations. This is why incorporating five-star service strategies and an event management program into your practice can go a long way to preventing claims and lawsuits, or at least building positive evidence if a lawsuit is initiated.

A "Five-Star Culture" is the first step, and it must be believed and practiced every day by every member of your team: management, staff and physicians. Patients recognize five-star service, and they also recognize when they do not receive it. Incorporating a five-star culture takes work, and a thoughtful plan must initially be in place. It is a component of your practice which needs constant attention. One way to maintain such a culture once it is established is to create a five-star focus group. This group can internally manage your culture and introduce innovative ways to keep it alive. The group should include both physicians and staff, who should review data and complaints. They are the group that will keep the program alive.

Similarly, an event management program is key to reducing liability risk. Event management is a process whereby support can be given after an adverse event occurs in an effort to ensure that good communication and appropriate documentation occurs. It is important to have an event management policy in your office and to educate your staff on the process. Event management may mean having a meeting with a patient and/or family members to discuss patient care, so that everyone is on the same page, and to answer questions and address concerns that have been raised. It may mean taking the time to thoughtfully respond to a patient letter that contains a complaint or concern. It can take several forms and every situation will need to be managed differently.

What it does in the first instance is address the immediate concern. It then also provides a means for continuous quality improvement – a learning laboratory. You also look at it from a quality assurance aspect: what could you have done differently that would have prevented the concern, the question or the complaint? What can you do now to incorporate a process, tool or strategy in your practice so that it does not happen again to this patient or to any patient? In this way, you not only lead to patient satisfaction, but you also move towards positive risk reduction.

An important aspect of event management is communication. How you communicate is just as important as what you communicate. Patients and families can tell when you are being insincere or not taking the time with them that they feel is needed. Dealing with an angry patient or family member is not easy, and many have the tendency to think the issue will go away. However, there is a better way to manage and communicate in such a situation. For example, let the patient vent. Show the patient empathy. Then most importantly, develop a plan to address the concerns. This may mean that we need to change the way we communicate, and changing behavior is not an easy task. There are many communication programs and workshops available which can help physicians and their staff make this change.

Documentation also plays a key role, not only in whether a lawsuit will be filed in the first place, but also in defense of a lawsuit. Plaintiff attorneys are using documentation against physicians in the courtroom – using technology to display medical records and documentation in front of juries, including on computer screens in the technology courtrooms across the nation. It is time for physicians to use documentation for them.

Setting aside what to document, there are many forms and strategies physicians can use to reduce liability risk. For example, a change in the history form – by incorporating an introductory paragraph which sets forth the importance to the patient of providing accurate and complete information, and using a patient signature at the end which also reiterates the accurateness of the information provided. This helps to place responsibility, rightly, on the patient – the concept of patient accountability.

One can also use a procedure-specific informed consent form which delineates the specific risks and alternatives to a procedure, for a specific procedure, instead of using a generic informed consent form. The procedure-specific form also uses "including but not limited to" language when listing those risks, which will prevent a physician from being boxed in to a set of risks. In addition, the form can include a new type of witness attestation, which is not merely a witness to the patient signature, but rather a witness that the patient has no other questions, their questions have been answered, and that they have read and understood the form. This can go a long way to prevent "he said, she said" in the courtroom. It is time we bring an end to the lack of informed consent claims.

There are also ways to manage patient expectations and family expectations so as to prevent claims and lawsuits. When patient expectations are not in line with reality, we often see patients visiting lawyers. The procedure-specific informed consent form is one way. For example, you can provide the patient with a copy of the form to take home with him or her. This can help to prevent a patient going to a lawyer and saying and that they did not know of the risk. There are many other ways to manage patient expectations. For example, in the practice of bariatrics, one cause of claims is often that family members do not understand the implications of the surgery and/or the potential results (including positive results). One way to manage those expectations is to have the family member or significant other involved and to have them sign a Spousal Consent form.

It is time for physicians to take the age-old topic of risk management to the next level. Risk management is not about defending lawsuits or claims. It is about safety, communication, analysis of data and creation and execution of tools to reduce those clusters of circumstances in the first place. It means having in place a process for when things go wrong so one can not only positively impact the patient and their families but create positive evidence in case there is a claim. This will allow a more aggressive defense to be undertaken. All of these strategies done in a serious fashion will help to change the liability equation in the future.

By James Saxton, Esq. & Maggie M. Finkelstein, Esq.
Physicians News Digest

James Saxton, Esq., is a shareholder with Stevens & Lee where he is Chair of the Healthcare Litigation Group and Co-Chair of the Healthcare Department. Maggie Finkelstein, Esq., is an associate with Stevens & Lee, associated with its Healthcare Litigation Group and Healthcare Department.

by Barbara Anan

It was late August last year and, following my usual half-day in the office on Saturday, I was looking forward to heading off to Rehoboth Beach, Del., for a few days of relaxation.

Reccommendations From the Experts

The Attorney: You should have the following personal emergency documents — a living will that details terms of life support and a general will that delegates power of attorney.

"It is advisable to expressly give the power of attorney for both your business and personal checking accounts," says Washington, D.C. attorney David Lynn.

This should also include any additional bank accounts for the business, such as savings. "It is necessary to arrange how the covering physician will be paid and what business management responsibilities they will have," Lynn adds.

The substitute doctor should have in his possession a key to the office just as a neighbor should have a key to your house. The covering physician also should have the name and phone number of your attorney and accountant, adds Lynn.

The Accountant: It's a good idea to meet with your covering physician before a disability occurs and go over the financial aspects of the practice, according to Mike Healy, a CPA with Goodman and McAllister in Rockville, Md. That means lining up a probable substitute ahead of time.

Make sure your spouse knows where all important practice papers, files and checks are kept, as well as the location of your safe deposit box. Equally important, he or she should know your account PIN numbers in these days of electronic transactions.

Other important numbers include the practice's federal tax ID number.

Make a list of which managed care plans your practice participates in, who does the billing, and how filing and payments are processed.

For physicians who use computer programs to write checks, balance accounts and keep patient financial data, "make sure your spouse knows your password for entering the system," Healy says.

The Financial Consultant: The physician's spouse should have the name of his or her financial planning firm and the consultant. "Depending on the type of retirement plan you have, you can withdraw money to meet financial obligations," says Ricardo Rosenberg, a vice president with Prudential Securities in Washington, D.C.

Various plans are subject to different tax levels on withdrawals that are used for disability. Find out whether your plan taxes only on the amount withdrawn or if a penalty tax on early withdrawal is assessed as well.


My husband and I arrived on Sunday, and the following morning set off on a bike ride along the boardwalk and down this quaint beach town's many side streets.

This pleasure trip turned to tragedy, though, when I blacked out and crashed to the ground.

When my husband didn't see me in his bike mirror he retraced his path and found me lying bleeding and unconscious on the ground, in the throes of a seizure. A passerby called an ambulance on a cell phone and I was rushed to the ER.

Learning to walk

A physician there took care of some sutures for a cut around my left eye and a neurosurgeon was brought in to diagnose the extent of my injuries. The diagnosis: a left temporal lobe contusion that caused a subarachnoid hemorrhage.

After the neurosurgeon performed a life-saving craniotomy and subsequent tracheotomy, I remained unconscious for eight days.

The etiology of the bike accident was and is still unknown. Tests have ruled out a myocardial infarction and an aneurysm. At 50, I have suffered from hypoglycemia for 29 years, but have no other medical conditions.

When I regained consciousness from this traumatic brain injury, the CCU nurse said that after I adjusted my glasses, my first words were, "I have patients tomorrow morning at 8:00."

But now, a year after the accident, I am still unable to provide care for my patients, and have had no choice but to sell my practice to the optometrist who filled in for me during my recovery.

My preliminary rehabilitation (I still suffer side effects of my brain injury) took five months and was a grueling journey. When I was transferred to a rehabilitation hospital, I could not sit up or walk. I had to relearn everything — how to lift a fork and glass, how to bend over to reach a pot in the kitchen cupboard, how to walk up and down stairs and shower. It wasn't until three weeks after the accident that I could walk unaided.

I have now regained functioning of numerous systems, but my vision and cognition still suffer the after-effects of my injury. I work on building muscle strength and body balance daily, and to this day, often walk with my head down to keep from falling. Shopping was and still is a chore. At first, the overload of visual and auditory stimuli made it unbearable to be in any store. I experienced dizziness and saw double.

At the end of January this year I was finally able to begin driving again, and went to the grocery store by myself. However, I still required help unloading my items onto the conveyor belt and carrying bags to and from the car.

I have had an extremely difficult time accepting the seriousness of the injury I suffered and the fact that it will have long-lasting effects on my lifestyle and daily functioning.

Still in recovery

And as you can imagine, this past year has also been a terrifying and stressful time for my husband, Phil, who spent long, arduous hours monitoring me lying in what seemed to be a lifeless state, entangled in bandages and tubes.

When I was released from the hospital, Phil had to cook dinner every night for several months, do all the shopping and paying of bills, and generally be on hand to help me with daily tasks like bathing.

As for my practice, Phil was responsible for keeping it functioning until a substitute optometrist could take over. (I have since sold the practice.)

A spouse will always bear the brunt of responsibility when his or her partner suffers a disability, but the burden doesn't have to be quite as large as the one I placed on Phil. Like many practitioners in the prime of my career, I had no emergency plan in place in the event I suffered a life-threatening injury or illness. A heart attack, stroke, unplanned surgery or traumatic brain injury can affect any practitioner at any age. Unlike chronic disease states which develop slowly and frequently with predictable stages, an acute, disabling event can occur in just a few minutes. It can alter your life personally and professionally for a few brief weeks or, as in my case, a lifetime.

Planning It Out: Stay Open or Close Down Temporarily?

As with any solo or group practitioner, who will cover the patient care becomes the primary question. Since most doctors are not on salary with paid sick leave, meeting income and expenses becomes a consideration. Office staff can reschedule non-acute patients for the first week.

Ideally, you will have designated a substitute practitioner ahead of time who can take over for you — if only on a temporary basis. This gives your spouse or office manager time to find a long-term replacement if necessary.

It would be helpful to include in your emergency plan a list of contacts at local medical societies and board certification organizations who can help line up a covering physician.

Pay can be structured either on a per-hour rate, for doctors under contract, or as a percentage of gross or net for a long-term substitute.

Immediate concerns

A spouse or designated other should make a list of staff and their home phone numbers, as well as a list of suppliers and their phone and account numbers. Also include a list of office policies. He or she should have office keys and the alarm code.

The responsibilities for the spouse in and out of the office should be itemized. The office staff should also have a written plan outlining their responsibilities. Their role in integrating the substituting doctor should be outlined.

In my case, my husband told the staff that the clinic would remain open and to continue with their duties. Their hours were reduced as the substitute doctor was only working part-time. They, along with the substitute provider, were told to assess follow-up patient care by reviewing patient charts. Recalls for six- or 12-month follow-ups were printed and patients were notified that a different physician will be seeing them.

My staff told patients that I had had a terrible accident, offered some details, and said I was recuperating. They said that although they didn't yet have a date for my return, Dr. X was covering for me in my absence and gave his schedule. They also told patients a little background about the substitute's experience.

Effect on partners

Partners can share in the same feelings and concerns as a spouse or family member. He or she can feel overburdened to take on additional patient care and administrative work while the partner is disabled. Again, it takes a great burden off whoever is left to pick up the pieces of the practice if pertinent operational information is available in an organized, coherent list.

Maintaining patient loyalty

Maintaining patient loyalty is extremely crucial and vital to any practice's survival. Have staff tell patients that the doctor plans to return as soon as possible. Tell them, "Dr. X has provided care for you for many years and now, due to unfortunate circumstances, cannot do so temporarily. However, Dr. X wants to be able to provide you continuity of care and has hired a physician who is familiar with your case and will give you great care until she returns." I lost only a handful of patients due to my illness, and some patients simply postponed their annual visit.

Financial Impact

There's no way around it, plan on a 50 percent revenue loss. The substitute provider simply will not have the same motivation to keep revenues high as the owner of the practice. For this reason, paying the practitioner a percentage of gross revenues may be more beneficial than straight salary. Staff members can't do much regarding revenue but they can help the covering physician with patient flow. In addition to the drop in revenues, my retirement plan contribution was severely curtailed.

To lessen the income loss, good disability insurance coverage is imperative. This includes both a business interruption policy and a personal coverage plan. A business interruption policy includes provisions for rent, utilities, staff salaries, insurances, legal and accounting fees, and all expenses incurred. Before deciding on the amount of coverage, include those expenses that occur monthly, quarterly and annually.

Note these policies do not traditionally cover a colleague's salary. A separate disability personal policy should be included in the coverage. This in essence will provide you with monthly income. Each insurance company has different policies.

Consider the waiting period for coverage to begin. Practitioners often choose 30 days for business interruption and 90 days for the personal plan. The extent of coverage varies between policies, with business interruption traditionally being for 12 months and personal policies until age 65. A careful consideration is partial disability and what the waiting period is, if, for example, you return to work and then must leave again within a few weeks. Do you need to wait another 90 days before coverage kicks in?

By Rebecca E. Jones

In today’s challenging healthcare market, physicians, especially those who operate small practices, should maximize their financial resources in order to best treat their patients. And many do, by cutting expenses, buying supplies on the cheap, and reducing staff.

Plan for Success

True fiscal success does not occur until you define, set, and follow a strict budget.

Following are some tips for creating a sound financial framework:

* Review spending habits. Go over expenditures item by item, categorically on the ledger. Identify both fixed costs, like rent and payroll, and variable expenses, such as supplies and seasonal needs, from the past two years.

* Rate your practice. Compare your findings to both regional and national averages, to determine how your practice performs.

* Plan for variety. Create three budget scenarios, from best to worst case, and monitor them every 90 days. Figure out which one will produce the best results for your practice — and stick to it.

* Take responsibility. If you see an increase in an expenditure category, understand what went wrong and figure out how to avoid a recurrence in the future.

Remember, if you fail to plan, you are merely planning to fail.


However, the experts say that true fiscal success does not occur without defining, setting — and following — a stringent budget. And according to Michael Fleishman, vice president and principal at Gates, Moore & Co. in Atlanta, that’s precisely what 99 percent of small practices don’t do.

“They can be very unsophisticated in terms of finance,” he says.

Chip Lewis, managing director at PSA Financial Center in Lutherville, Md., agrees that the majority of small practices do not adhere to fixed budgets and they tend to react to, rather than follow, market trends.

“Physicians tend to make decisions on an ‘as-needed’ basis because they come from a science background, not a business background,” Lewis says. “Unless they ... learn the importance of a budget, they don’t contemplate the negative effects” of not having one.

Lewis adds that to succeed and make a profit, physicians need “to think and act like businesspeople.”

Line by line

Fleishman says that the best way for a small practice to start a budget is to review the practice’s spending habits from the past two years.

“Go over the expenditures line item by line item, categorically on the ledger. If you find you spent $10,000 on rent the first year and $12,000 on rent the second year, look at what caused the increase and see if there is anything that can be done to keep it from increasing further,” he says.

Lewis agrees and suggests that physicians determine both their fixed costs, such as annual expenses like rent and payroll, and the variable expenses, such as supplies and seasonal needs (flu shots, for example) from the past year.

“Once it has been determined where the money is being spent on a yearly basis, it is then a good idea to break it down quarterly and then monthly,” Lewis says. “It is the best way to visualize what can be spent.”

Once you have identified the increases and decreases, Fleishman suggests comparing your findings to the national averages, to determine how your practice performs.

“This will show if the expenses are typical or if it is time to cut costs,” he says.

Although financial consultant Vince Gallo agrees measuring up to national statistics is a good idea, he believes that researching local medical trends is a more valuable effort.

“The socialization of medicine occurs in different locations,” he says. “Find out what affects the medical revenues in your area and project those findings into your own budget.”

Gallo adds that, when reviewing local trends, it is important to consider regional economic factors.

“If you have a seasonal practice, you can only count on a given portion of the year to bring in the largest cash flow,” he says. “You will have to figure out your yearly income on 1/12 increments.”

When optimism isn’t enough

Although it is helpful for small practices to predict a smooth income stream, experts suggest keeping several options available in case life throws you a financial curve ball. To avoid an economic disaster, Gallo suggests that small practices design three budget scenarios: “optimal,” “worst-case,” and “most-likely.” Then track the budget according to these circumstances every 90 days and make adjustments.

“Over time you will see which one is the most realistic [for your practice],” Gallo says. “That is the best way to avoid getting into a deficit position.”

Gallo adds that it is important to include every variable cost, from capital purchases to possible liabilities.

“I saw a very successful physician declare bankruptcy because he didn’t balance his revenues or project liabilities,” he says. “That is not only disconcerting, it is unnecessary.”

Once you have successfully identified your most efficient financial plan, Gallo suggests projecting a one-year and a five-year budget.

“A one-year test-run is a good way to ensure you have found a solid budget, but after that it is time to choose a long-term strategy,” Gallo says. “It will help the business enterprise and keep everyone focused on a common goal. When working in a small practice, everyone has to have the same practice vision.”

Avoid common mistakes

Monitoring expenses like office and medical supply costs may seem minor in comparison to the large capital expenditures, like staff salaries and equipment purchases, but the experts emphasize that the little things do count.

“When considering supply costs, [physicians] have to remember that every sheet of paper, every medical bandage is an expenditure to the practice,” Fleishman says. “There are so many options available now, especially with stores like Office Depot and Staples, it is almost impossible not to save money in this area. Physicians just need to take the time to shop around.”

Lewis says that another mistake that small practices make is spending a large amount of money on inventory.

“Small practices need to maintain the minimal amount of inventory that they need,” Lewis says. “Otherwise, they find that they have a surplus of unneeded or expired supplies. Too much inventory is lost money.”

Another potentially costly activity to monitor is marketing. Although active promotion is important to attract new business, experts caution small practices to be sure they are getting what they are paying for.

“Take, for example, the Yellow Pages. It is an expensive investment and can have positive results. But small practices need to track the amount of business, if any at all, that is coming directly through this endeavor,” Fleishman says.

He also suggests that small practices steer clear of outsourcing companies when trying to cut costs.

“You never know what you are going to get,” Fleishman says. “It is too risky to spend that kind of money [when trying to cut costs].”

Instead, he suggests, small practices should adequately train their administrators.

“Why pay extra money for what can be done internally?” he says. “Unfortunately, small practices sometimes fail to budget in the money that it will take to train a good office staff. As long as you are certain that your staff is strong and competent, they are a cost that should bear no limits.”

Other factors, such as increasing Medicare rates and the number of insurance carriers that a practice accepts, are two areas that small practices tend to overlook when figuring out their finances.

“Figure out how many Medicare patients the practice has seen and include that revenue into the budget,” Fleishman says. “It is also pertinent to accept a variety of insurance plans. Fee schedules can change on a dime, so it is best to keep your carriers spread out.”

Following a budget is more than simply watching expenses. Creating this financial framework gives small practices not only the ability to judge how they are progressing as a business but also to find opportunities for growth — such as whether there is a need to add or eliminate procedures, or if there is enough money to add new equipment and staff.

“Budgeting allows you to look at your practice as a whole,” Lewis says. “It is the key to analyzing and maintaining a successful practice.”