Practice Model: Outsourcing Administrative Work

The practice of dermatology has become increasingly challenging post-COVID. Private practice, in particular, can be rewarding but perilous. Most young dermatologists prefer to work for a private equity firm, hospital system, or large academic institution. These organizations guarantee a relatively large steady paycheck and “good work-life balance.” But there are disadvantages to working for larger organizations: lack of control of your schedule, support staff, and large device purchases. Gaining approval for an expensive device that may have great return on investment or getting an extra dedicated medical assistant can be arduous. Private equity, multispecialty groups, and academic institutions require you to jump through hoops. I believe these hoops can increase physician burn out, decreased collections, and internal strife.

Private Practice: Grit and Determination

I learned a lot from my mentors. They were all great dermatologists who practiced in a variety of settings. I witnessed the unique advantages and disadvantages of each practice setting. I realized that I liked the kind of control that you only get from owning a practice. However, I was not fully aware of the pitfalls that came with being the ultimate decision maker and primary stakeholder.

Private practice takes grit and determination. If an employee or provider calls out sick it’s your problem. To succeed you must be solution oriented and calmly take on each challenge. When you are starting out there may not be someone to help manage employees. This can lead to costly human resources mistakes that can result in legal costs and pain. Physicians are not taught about employment law and many have little to no idea how to manage staff. To prevent an issue with staff it is best to contact an employment attorney. I also always advise physicians to carry employment practice liability insurance to protect against any employment claims.

Finance and Management

Most residencies fail to teach the first thing about the financial aspect of running a practice. I believe that this is a disservice. A resident can often tell you every subtype of Pityriasis ruby pilaris but they are unable to tell you what a basic office visit reimburses. There is something fundamentally wrong.

Management is also difficult. The pay scale for providers, office managers, medical assistants, and biologic coordinators can vary widely. To succeed you must have a deep understanding of the competitive landscape—the first deals I made with providers showed that I clearly had a lack of understanding in this area. A private practice can become extremely busy and a doctor may feel a sense of urgency to bring on another provider. It is imperative to not hurry to bring on a provider. As a physician-owner you must make sure that whomever you hire shares your fundamental philosophy or it will not lead to a long-lasting relationship. You truly are in the driver’s seat—you can turn left, right, or stop at any moment. Each day is a chance to change and do something different. You have the ability to be nimble and change as you are not beholden to the bureaucracy of a large organization.

There are also financial implications to owning a practice. As an owner you can deduct expenses that an employed dermatologist would not. The cap on continuing medical education is defined by only you. There are tax advantages depending on your structure. If you have a multi-clinic structure you may be able to have a MSO (Management Services Organization) that is tax advantaged and a defined benefit plan.

Lean and Efficient

If you want to grow your practice you have to be lean and efficient. America is not the way it was 10 or 20 years ago, and neither is medicine. Reimbursements are declining, overhead is up, and inflation is here to stay. Lidocaine costs a fortune. No one cares unless you are a dermatologist in private practice. Very rarely do employed dermatologist have to worry about supply costs and overhead. This is surely advantageous in the current environment where supply chain shortages are the norm. To put this into perspective, 3 years ago a 25-pack of multiple-use lidocaine vials cost about $100. Now, if you are lucky enough to find any, it will cost about $400. Support staff wages have rapidly increased. The same medical assistant who used to cost $20 an hour now makes $25 an hour. Everything keeps getting more expensive. Provider salaries have stagnated or slightly decreased.

Fortunately, your practice has continued to grow, and you are seeing more patients. However, this all comes out of the pocket of the dermatologist. But you aren’t making more money because your expenses are crazy. And you are really working hard. I am talking about double booking every 15 minutes and seeing 50 or 60 people every day in addition to administrative duties. You are feeling burned out.

Outsourcing

In medicine, we are taught to not talk about money: It is taboo and looked down upon, but private practice, in a sense, must be looked upon as a business. To survive you must make tough choices. One of the first tough choices I made was to outsource my call center and some of my billing. It saved my practice lot of money. I was able to absorb increased costs in other areas so I didn’t have to cut staff or provider pay. Some patients don’t like it. Well, have you called a lot of major companies recently? They have call centers overseas because of the same reason—it is cheaper.

The process of outsourcing was difficult. It required hundreds of hours of IT support, training, and retraining. However, these jobs tend to pay well in other countries so most of the employees will stick with you. In the United States, I found it very difficult to keep entry-level positions filled. To combat this, I decided to make the change earlier rather than later in my practice. I do not believe that it would be feasible for a large practice to transition overnight. Changes must be made incrementally and thoughtfully.

I would suggest hiring one to two call operators, training them appropriately, and then increasing slowly. The call center has been fixed but you are still seeing 50 or 60 every day and that wait list is getting longer. You care deeply about your patients. Perhaps you think about bringing on a PA or NP. Some dermatologists will say its blasphemy. They will blast you on social media. Let me tell you, I would love to hire only dermatologists if I could. But there are not enough dermatologists for all the need. So, you try your best to find, train, and keep good APPs. In my practice, the APPs are essential. They handle the acne, the warts, the rosacea—the things that are relatively simple. I could not practice without their help. It also generates revenue for the practice and helps the simpler patients be seen in a timely fashion.

As I write this, I realize that I am not the authority on anything. Each day we evolve and grow. There is no such thing as failure, only opportunity to learn and better serve patients.