10 Tips for Starting Your Own Business

By Barbara C. Phillips, NP

For years my patients and colleagues asked me, "When are you going to start your own practice?" My answer was always the same: "Never." So how did I end up with my own practice after all?

I stopped working for someone else in January 2005 so that I could devote myself to OlderWiserWomen, the online network for women that I created in 2004. I was fairly burned out and didn't particularly want to practice clinically anymore. After being in nursing for 28 years, I felt it was time to start taking care of me.

A year later, I agreed to help out a physician neighbor who owns a family practice clinic. Within days, I knew it was not a good fit for me. As I pondered what to do next, a patient asked me if she could see me elsewhere. I went home and started tossing around the idea of opening my own practice.

Six months later, I opened the doors to Aberdeen Primary Care in Aberdeen, Wash. Although I am a year into practice ownership, I can assure you that the learning curve remains steep. I'm exhausted, yet I cannot conceive of working for someone else again.

Due to time constraints and the urgency for me to make a practice change, I bypassed some of the typical recommendations for starting a practice. Without the recommended amount of planning, time and financial backing, I have learned the importance of some unconventional elements.

1) Develop a support system.

I did not create this business alone. My business partner practices traditional Chinese medicine (acupuncture and herbal medicine). In addition, she has an MBA, taught practice management for alternative health care providers and ran her own practice for 8 years. While her practice and challenges are somewhat different from mine, I appreciate having by my side someone who has previous business experience.

When we opened, I contracted with an accountant who has experience with medical practices and nurse practitioners. I leaned on her and received helpful financial advice.

I am doing our own books right now, but I may outsource that in the future. As we grow, the accountant will likely handle the payroll in addition to all the quarterly tax reports and annual taxes.

2) File the necessary paperwork.

One of the first tasks after you identify some helpful relationships is deciding on and filing the required papers for your legal business structure. You'll need to obtain your business tax ID number and your national provider identifier (NPI). Keep these records, along with insurance documentation, licenses and certifications (RN, NP, DEA), W-9, in one folder. Almost everything else you do will require copies of these documents.

My business is structured as a limited liability corporation (LLC). This establishes my business as a distinct legal entity, and I saw tax advantages in choosing an LLC. More information about business structuring is detailed in a companion article posted at www.advancweb.com/np.

3) Find an affordable location.

You need to have a business address to obtain those designations and numbers, so practice space — or at least a practice address — is vital from the beginning.

One of our biggest initial problems was finding an affordable practice location. In our small community (only 60,000 in the county), available space is scarce. We had two choices, and neither owner was ecstatic about renting to a nurse practitioner and an acupuncturist. We had to provide education and make assurances that we were not going to run some sort of illegal nonmedical practice. It took 4 months just to get to the point where we could sign a lease.

Also consider space requirements. One of us thought that using a room for a staff kitchen was unnecessary, but it has turned out to be a blessing. We also have five exam rooms — enough space to add another nurse practitioner, which we hope to do this year.

When signing your lease, think about things you will need and want. Be very specific. We wish we had added a clause that would have protected us if the space had not been ready for occupancy on the agreed upon date. Don't be afraid to ask for things that will help you get your financial footing, such as reduced rent payments for the first few months while you build your business.

4) Research budgetary projections.

As soon as possible, start gathering information about reimbursement rates from payers. With this information, I was able to make a preliminary budget and determine the minimum number of people I needed to see per day in order to meet our financial obligations. Because it was preliminary, I used the lowest reimbursements to make my projections, which gave me a built-in buffer.

Keep in mind that while many payers (Medicare, Blue Cross and Blue Shield) discount reimbursement to NPs, your vendors and suppliers will not. The only thing in your overhead that is likely to be cheaper for you than for your physician counterpart is the cost of malpractice coverage. You will still pay the same (or perhaps even more) for vaccines and other medications, supplies, equipment and salaries.

5) Scout around for insurance.

Shop early for your liability insurance. Almost all payers want to see proof of your malpractice coverage prior to credentialing you. This includes many of the plans you may already be credentialed with. (Often, you will have to be recredentialed with your new tax ID number.)

While shopping for new coverage, I soon discovered that the company I used for years would not cover me in my new practice because I was practicing with an "alternative health care provider." This was despite the fact that she functioned as a separate legal entity and had her own liability insurance. Another company took up to 7 weeks to decide whether they would cover me. NPs are independent in the state of Washington, something the company was uncomfortable with.

When you shop for coverage, don't forget you need to cover your clinical staff members as well.

Consider business owner's insurance to cover liability or damages in the case of on-site injuries, fire, business interruption, disability and so on.

6) Hunt for affordable and functional equipment.

I don't buy the idea that you have to spend a huge amount of money to open your business. Nor does everything need to be brand new. I did a lot of shopping at surplus retailers as well as eBay. I did purchase new examination tables because the cost was not that significant (less than $1,000 for two tables), and the safety factors were better than what I could get with used tables (i.e., weight limits). I still don't have everything I'd like to be equipped with (anyone want to donate or sell a decent used autoclave?), but I do not have significant debt. Remember, shop around.

As far as clinical supplies, we can tick off a list of necessary items in seconds. But be sure to consider other needs: How do you want your phone system to work? How many lines do you need? What will be the flow of paper through your office? Where is the best location for your fax and printer? Should they all be networked? What about Internet access for you and your staff?

Another piece of "equipment" to consider is an electronic medical record system (EMR). Some EMR systems are free; others cost nearly $100,000 plus a monthly subscription cost. The EMR system I have does not do everything I would like it to, but it works adequately. Total cost was $1,500 plus $200 for each additional provider (this includes $500 per year for support and upgrades). A monthly subscription is not required.

Like it or not, EMR is the wave of the future. In addition to improving accuracy, EMR eliminates the need to have lots of storage space for charts. Don't forget that you will need computer laptops (mine came from eBay) or tablets for the exam rooms, as well as laptops for your clinical staff.

7) Outline your staff strategy.

In addition to liability insurance to cover your clinical staff, consider employment laws, FICA taxes, unemployment insurance, workers' compensation insurance, occupational safety regulations and our favorite, HIPPA (Health Information Privacy and Portability Act).

You'll need a front desk person and a medical assistant (MA), along with possible backups for when these staff members are sick or take vacation. Right now we have a part-time certified nursing assistant who floats between the front and back offices. But when she calls out sick because her children are ill, the two of us have to pick up the pieces. I plan to hire at least two part-time MAs shortly.

And don't forget about health insurance coverage for yourself and your employees.

8) Learn all you can about billing.

If there is one thing I wish I had known more about before beginning this practice, it would be billing. Reimbursement is the cause of most of my business headaches.

I admit I was scared of the billing process. It always seemed to be a big dark secret — complicated and fraught with all sorts of frustrations, denials and audits. So, what's a new business owner to do? Outsource it! Unfortunately, we ended up with a company that did not follow through. So 6 weeks after we opened, I learned to file reimbursement claims.

My big lesson was this: Start learning about coding today, even as you continue to work for someone else. Which codes are being paid for, which ones are being denied, when do you need a modifier? For example, I had a 99214 denied and a nebulizer treatment covered because I did not use a modifier. Learn the various rules. Are you aware that Medicare will deny coverage of an annual gynecologic exam if you use a preventive CPT code?

9) Let people know about you.

Being the first NP-owned clinic in town is at once thrilling and daunting. We had to provide a lot of education — to patients as well as other providers. A staff member from a local provider's office actually called our practice and insisted that a physician had to be in charge of our clinic (this despite the practice's employment of two certified nurse midwives). We've found that most of our educational efforts have been spent with our physician colleagues and their staff.

Having worked around the county for most of the past 10 years, I was not worried about attracting patients. I had always enjoyed a good reputation, and some of my former patients still wanted to see me. In addition, our town is short on primary care providers.

Nevertheless, no one will come if they don't know you are there. And that means some sort of marketing plan. Initially we advertised in the local newspaper. Shortly after we opened, our ad in a new phone book made a significant impact on our practice as well. But the best marketing came from word-of-mouth. Patients can be your best source of advertising.

Do not underestimate other professionals as sources of broader recognition. I contacted every pharmacy in town to let them know I was moving my practice. In addition, I also contacted the local hospital's emergency department and discharge planners, other practices, durable medical equipment suppliers, pharmaceutical reps and the local department of health and human services office. Insurers are also a good source of referrals.

10) Look Ahead.

I still have a significant amount of things to learn, I still work way too many hours, and some days I wonder why I am doing this. Most of the time, I have many answers for that.

If you are thinking about opening a practice, you should first identify why you want to do it. You also need to identify your exit plan – from the beginning: What are your goals with this practice? How long do you want to be in practice? When it's time to move on, do you want to sell the practice, or just shut it down? You have to know where you're going to make sure you get there!

I believe that more and more resourceful and creative nurse practitioners will make the jump into private practice. It only takes a few core steps to mark out the path to myriad opportunities.

Barbara Phillips is a family and gerontological nurse practitioner who owns Aberdeen Primary Care in Aberdeen, Wash., and www.OlderWiserWomen.com. Reach her at bphillips@OlderWiserWomen.com.