Establishing an Independent Nurse Practitioner Practice

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Establishing an independent nursing practice is an opportunity to obtain greater autonomy in your practice and focus on a particular population or healthcare venue. However, an entrepreneurial spirit, fine-tuned knowledge base and clinical skills, and the desire to provide quality healthcare are not enough to be successful. Financial self-sufficiency is the number one issue to address from the onset if your nurse-managed health center is to remain viable.1 If nurse-managed practices are to survive, NPs must arm themselves with business acumen and financial know-how to make their practices efficient and sustainable.

Advantages to Independent Practice

Independent practice provides the opportunity to specialize and maximize the care of the client as well as the time to provide the educational base necessary to enable the client to become a true partner in the healthcare regimen. Independent practice affords NPs the ability to focus their energy on an area of interest such as women's health or alternative therapy. A flexible workload allows time to focus on client needs and deliver much-needed education and preventive healthcare. 

Independent practice must be sustainable, and a focus on payment for services can utilize a variety of sources. Beside third-party reimbursement, contracts for service can be sought in industry and community groups. Income can be tied to workload for professional employees and as new opportunities and requests for service increase, expansion of services and practice growth will expand revenues.

As an independent healthcare provider, you will be responsible for staffing. This provides an opportunity to work with people you respect and who share your philosophy of healthcare. Independent practice enhances problem-solving skills and self esteem and provides the opportunity to constructively deal with change, resolve conflicts and implement strategies to create a profitable practice.

Barriers to Independent Practice

Why then do so few NPs consider this alternative? Nurse practitioners have long been lauded in the literature with respect to the high quality of patient care and cost-effectiveness.2,3,4 Their practice has been compared to physicians in primary care practices and findings suggest that NPs provide comparable high-quality care with similar positive health outcomes.5 What barriers to practice are so prevalent that they dissuade this competent, highly educated and cost-effective group of healthcare providers from establishing independent practices? 

Nationally, Pearson identifies four major roadblocks to independent NP practice as direct reimbursement from third-party payers, statutory limitations to NP scope of practice, inconsistent and restrictive prescriptive authority and denial of hospital privileges.6 Historically, physicians were the first healthcare providers granted legislative autonomy. This autonomy and recognition enhanced the public's confidence that the actions of physicians were always directed for the good of the public and not for personal gain. Financial security, legislative strength and a unified medical community also play a role in organized medicine's control of hospital policy and third-party reimbursement.7

Additionally, common problems applicable to most new start-up businesses contribute to the dearth of independent NP practices. Major obstacles to overcome with the start of most new businesses include start-up costs, cash-flow and collection of receipts in an ongoing practice, practice management issues including city, state and federal regulations, high costs of insurance, and managing personnel. The obstacles inherent in starting a business coupled with the unique barriers confronting independent NP practice have provided a challenge to many individuals.

Unique Aspects of an Independent Nursing Practice

Business start-up can be an anxiety-producing time for any business owner. Creating an independent nursing practice has additional unique considerations. Scope of practice varies from state-to-state. Know your state laws and the extent of any collaborative or supervisory provision. Prescriptive authority also varies between states and may or may not include some aspect of prescribing scheduled drugs.8

Healthcare services by an NP may be reimbursed from third-party payers at a lower rate or not at all.9 Managed care may be pervasive in your geographic area and may limit or deny access to managed care panels for NPs.

Although your practice may manage clients with acute and chronic illness, you must determine how to provide 24 hour coverage for emergencies and handle clients who are hospitalized. Even if your clients are covered by a hospitalist as an inpatient, you may have to apply for hospital privileges to provide healthcare or counseling to your client prior to discharge.

A major question to consider is the scope of independent NP practice in the state in which you practice. Forty states currently have statutory or regulatory requirements for physician collaboration, direction, or supervision. However, only eleven states (including the District of Columbia) have independent prescriptive authority that does not require physician involvement or delegation.6 If your practice is not located in one of these enlightened states, carefully read and clarify the policies regarding collaboration or supervision of your practice and the regulation of your prescriptive authority. Developing a collaborative agreement with a physician and creating appropriate protocols, including protocols for controlled substances, are other areas to investigate if this is a state requirement for NP practice.

Reimbursement is another major question to consider. Investigate how pervasive managed care is in your practice location and determine if NPs are admitted to managed care panels and listed as primary care providers. Investigate the area hospitals to determine if NPs are given hospital privileges. Even if NPs are admitted to hospital panels in your area, you will need a collaborative arrangement or referral agreement with various physicians in the area for management of your patients when they are acutely ill.

Clear-Cut Strategy

Your strategy, the foundation of your business plan, will determine your practice setup. It will convey the unique aspects of your practice and distinguish your business. Develop business strategy by being observant to consumer healthcare needs, the direction of the healthcare market, and potential competitors. Review your practice's strengths and weaknesses, your practice philosophy and long-range goals.10

Focus the scope of your practice to a particular cliental or practice area. A healthcare practice is a highly competitive, consumer-focused business that commonly uses the strategy of specialization. Specialization reduces competition and drives reimbursement.

Need for the Service

Determine the makeup of the prototypical clients and the most prevalent reasons for healthcare utilization and follow-up care. Demographic data can be obtained from local healthcare departments and state divisions of health as well as local and state healthcare professional organizations and healthcare delivery systems. Local businesses such as pharmacies and medical device companies may also provide information about the healthcare needs of the local population as well as advertising and articles placed in the local newspaper.11

Timeline for Business Start-Up

Organization will move your business proposal from planning to lift-off. Nine months is a reasonable timeframe to accomplish the tasks needed to open the practice. The key undertaking of business start-up is persistence and attention to detail. A sample timeline for completing major tasks is presented in Table 1.

Establishing an Independent Nurse Practitioner Practice

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Ms. Knowles -

I'm not sure how you would be able to do this, since the owner is the one who gets credentialed and contracted with insurance companies. If you're not an NP, then they're not going to contract with you, so you won't be able to accept insurance. You could try a "cash only" type of clinic, but after paying an NP and other staff, I doubt you would break even. Also, since you're in Texas, you would also need to find a collaborating physician for the NPs and they don't come cheap!

Cyndee March 31, 2014

I just came across this thread - I posted something long ago. As far as opening a practice in Texas, you are required to have a collaborating physician in order to make a medical diagnosis or write ANY prescription...not just controlled substances. We are NOT independent in this state.

Before anyone opens a practice, you will need to make sure you'll be able to get insurance contracts before doing so. This can be very difficult if not impossible to do. I believe the insurance companies are coming around, however, they reimburse us very little and they sure aren't willing to negotiate!

PLEASE do your research before opening a practice. Don't expect to make any money for at least a couple of years. Solo physicians are having a tough time, so expect it to be even more difficult for NPs. Just go into this with your eyes wide open.

Cyndee March 31, 2014

Hello, I have a few questions. I live in Massachusetts and we still have restrictions for starters, and I am looking to open my own practice. Its not impossible just harder. I am still a student in my last year, however I am starting the process now as it can be a huge undertaking and my community just underwent a catastrophic even where are hospital and all it's affiliations will close its doors at 10am Friday morning thus leaving over 500 people with no jobs, and thousands without medical care in a variety of areas such as OB/GYN, a few of the general medicine, and surgical offices also are VNA/Hospice. With that said now is the time to act as far as trying to get one of the buildings because its going to be auctioned in the near future and my set-up costs will be decreased substantially. I was planning on having others practice with me as I still require a collaborating physician in MA. Can I still get the practice going as a business owner even though I will not be practicing myself until next year? Also, what exactly is required of a collaborating physician I can't seem to find anything specific to MA. My goal was to always do this, but now I am starting early, my community is in great danger as now are nearest hospital is about 30 miles away, and this is a very low income community with transporation concerns and things like pre-natal care will be lacking in this population, not to mention the thousands that are now without primary care providers! We are also worried that the practices that are further out in that 30 mile community will not be able to handle the now mass influx of patients that are without care and will be moving into that direction to seek providers. For those interested in reading about it, its the North Adams Regional Hospital in North Adams MA, that announced just yesterday they were closing giving patients and staff only a three day notice before closing!! Thanks again, any insight is greatly appreciated! I am currently searching for a very strong "shark" that is savy in the business world as I am not, but I know what I want and I will do what it takes to get there!
Becca RN, BSN
Doctoral Family Nurse Practitioner Student
University of Massachusetts Amherst

Rebecca  Randall,  RN (DNP/FNP student)March 27, 2014
North Adams, MA

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