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EstablishingYourOwnNPPractice
David Stull, CRNA, CFP®, CRPS®
• How we are different…
• Fee‐Only – NO Commissions• We are Fiduciaries – CFP and CPA
• What we do…
• A Personal Financial Plan• Monthly Investment Management• 401(k) and Other Retirement Plans
FiveStepstoEstablishingYourOwnNPPractice
•What is the best way I can increase the probability of establishing a successful independent practice?
•What is the best way I can increase the probability of establishing a successful independent practice?
•Prepare a written business plan!
Step1WrittenBusinessPlan• A business plan is a document that encapsulates the practice strategy, future directions of the practice and an action plan to achieve your objectives.
WrittenBusinessPlan• Question to answer ‐ How does my education, training, skills, interests and personality translate into a profitable business?
• Education – Highly educated• Training – Highly trained• Skills – Highly skilled• Interests – Specialty• Personality – ?
WrittenBusinessPlan• Personality – Hard work, perseverance, management skills
• Advice – “It is a tough job to get started and handle the healthcare and the office”
• Advice for new grads – Get experience first
WrittenBusinessPlan•What are the elements of a business plan?
WrittenBusinessPlan•What are the elements of a business plan?
• Executive summary – Vision
WrittenBusinessPlan•What are the elements of a business plan?
• Executive summary – Vision• Business description‐What you will do
WrittenBusinessPlan•What are the elements of a business plan?
• Executive summary – Vision• Business description‐What you will do• Marketing – How they will know
WrittenBusinessPlan•What are the elements of a business plan?
• Executive summary – Vision• Business description‐What you will do• Marketing – How they will know• Competition – Who else is doing it
WrittenBusinessPlan•What are the elements of a business plan?
• Executive summary – Vision• Business description‐What you will do• Marketing – How they will know• Competition – Who else is doing it• Operations – How will it work
WrittenBusinessPlan•What are the elements of a business plan?
• Executive summary – Vision• Business description‐What you will do• Marketing – How they will know• Competition – Who else is doing it• Operations – How it will work• Financial – How it will make a profit
WrittenBusinessPlan
• Demographics
• Do the demographics match my specialty and interests?
• Texas State Department of Health Services
WrittenBusinessPlan
• Should I go solo or have a partner or partners?
• Share the cost• Share the work• Share the profits• Share the risk• Share the blame
WrittenBusinessPlan• Resources for help with Business Plan:
• Center for Economic Development• SCORE – Service Corps of Retired Executives www.fortworth.score.org• NP business owners
WrittenBusinessPlan• Do the Research!
• Community needs• Demographics• Insurance Contracts• MD Collaboration• Hospital Privileges• Competition
Step2Financing
•How much do I need to start my own practice?
Financing
• Start‐up capital ‐ $30,000 to $100,000
• The more the better
•50% of small businesses fail in first five years (SBA)
Financing• Personal funds• Friends and relatives• Small Business Association and affiliated agencies• Commercial or community banks•Work while establishing your practice
Let’sDoIt!
Step3FormaBusinessEntityWhat is a “business entity” and why do I need to form a one?A corporation treated as a person
Liability purposes
Tax advantages
FormingaBusinessEntity
• Entity options – Sole proprietor, partnership, corporation or limited liability company (LLC)• I prefer LLC for both liability protection and tax advantages
FormingaBusinessEntity
• How do I form and LLC?• Texas Secretary of State Form 205• SOSDirect• $300 fee• Operating agreement• Employer identification number (EIN) from IRS
FormingaBusinessEntity
• Keep business and personal expenses separate
• Business Checking Account
• You are both an employee and employer of the LLC
BusinessEntityCashFlow
Patient and Insurance PaymentsPatient and Insurance Payments
LLCLLC
Owner’s SalaryOwner’s Salary
Owner’s DistributionsOwner’s
Distributions
ExpensesExpenses
Owner’s Profit (K1)Owner’s Profit (K1)
BusinessEntity‐ Deductions• Expenses associated with your business are deductible and reduce your taxable income
• The IRS says expenses are deductible if they are “ordinary and necessary”
• Some expenses are deductible as business expenses that are not as personal expenses
BusinessEntity‐ Deductions
• Start up costs can be amortized – deducted over a period of time
• Keep good records and enlist the help of a CPA
BusinessEntity– TaxesPaid• Federal• Social Security• Employee 6.2%• Employer 6.2%
•Medicare• Employee 1.45%• Employer 1.45%
BusinessEntityCashFlow
Patient and Insurance PaymentsPatient and Insurance Payments
LLCLLC
Owner’s SalaryOwner’s Salary
Owner’s DistributionsOwner’s
Distributions
ExpensesExpenses
Owner’s Profit (K1)Owner’s Profit (K1)
WhatisthemostimportantthingIneedtoestablishmyownNPpractice?
WhatisthemostimportantthingIneedtoestablishmyownNPpractice?
Paying Patients!
Step4Marketing
Marketing• Determine the image you want to present. Image considerations are part of all your practice decisions.
• Nurture professional relationships as these are sources of referral for your practice.
• Most start‐ups don’t budget enough for marketing
Marketing• Webpage ‐ Necessity• Social Media• Postcards• Phonebook• Newspaper• Home Health Agencies• Hospital healthcare providers directory• Networking• Community involvement
Marketing• Start marketing now
• Focus on a specific market
• Evaluate the effectiveness of your marketing
• What is the return on investment (ROI) of your marketing efforts?
Step5EstablishandManageYourPractice
Management‐ LicensingandCertification• State nursing license and advanced practice license/certification
• National provider identifier (NPI): a unique identification number given to each healthcare provider (https://nppes.cms.hhs.gov)
• Medicaid provider number (www.tmhp.com)• Medicare provider number (www.cms.gov)• Clinical laboratory license: CMS regulates all laboratory testing performed through the Clinical Laboratory Improvement Amendments (CLIA).
Management– OfficeandEquipment
• Office Space• Utilities• Medical Equipment ‐ Buy basic, lease high‐tech• Computers• Credit Card• Furniture• Kitchen• Office Supplies
Management‐ Software
• AdvancedMD• Athenahealth• Cloud‐based
• Scheduling• Medical recordkeeping• Billing
Management‐ Insurance
• Liability (Malpractice)• Health • Disability• Commercial insurance:• Equipment insurance • Equipment malpractice insurance• General liability coverage• Worker's compensation insurance.
Management‐ Staffing• Job Descriptions and Policy and Procedure Manual
• Staffing • Med Assistants• Receptionist• Biller ‐ Outsource?• Office Manager
• Payroll – Outsource?
Management‐ Billing• Healthcare billing is complex and requires someone with experience
• Billing can be accomplished through medical management software
• Challenge ‐monitoring of claims submitted, tracking payments received, and resubmitting denied claims.
• Consider a billing service
Management‐ Taxes• As the owner, you must make sure that tax payments are made monthly and quarterly and necessary tax returns filed.
• Federal • Social Security – Both employee and employer• Medicare• Franchise
• Employ a CPA or payroll service (Quickbooks)
Money
Money
•Start up can be stressful
•Your first goal
•Break‐even
APositiveNote
Money– ExamplePractice• 1 NP with 5 employees• Established practice
• 9,500 patient visits per year• Gross Billing $1.3 million• Gross Revenues $775,000• Expenses $540,000• $235,000 income to NP
Money– ExamplePractice• Advice from this NP – “Rule of thumb – 1 employee for every exam room and 10 patients per employee per day”
• 10 patients per exam room per day
• 4 exam rooms
Money– EquityOwnership
• As you grow your business, it becomes more valuable and can be sold when you retire.
• Succession or exit plan – You sell your business over time to another NP and help your patients transition to the new NP.
• Sale can be a flat fee or tied to the number of patients who transition.
Money– RetirementPlanning
• Business owners have the opportunity to defer more from taxation than W‐2 employees
Money– RetirementPlanning
• SIMPLE IRA $12,500/yr• Solo 401(k) $53,000/yr• New Comparability Plan $70,000/yr• Defined Benefit Plan $100,000+/yr
• Must also contribute to employees retirement accounts, but owner can receive the lion’s share
Summary
•Begin with the Big Picture – Business Plan•Obtain enough business capital• Form an entity such as LLC•Market and build relationships•Consult and outsource as needed• Enjoy success!