April 2001

Running With the Horsemen

By Liz Finch

Running With the Horsemen

Peter S. Kovacek, PT, MSA, talks about the four steps to success for your private practice.

Many practitioners dream of going into private practice, but it is a dream fraught with difficulties. Ensuring success requires a lot of planning and hard work, but it also requires an elemental way of thinking about your practice.

Peter R. Kovacek, PT, MSA, president of a management services company in Harper Woods, Mich, says the elements of running your own business can be broken down into four steps that make up a broad theoretical framework. Called “the four horsemen of success,” these four steps include recruitment and scheduling of patients, treatment intervention and documentation of care, billing and management of accounts receivable, and analysis of outcomes and process improvement of all aspects of business and clinical operations.

“The general principles of the four horsemen work no matter what size business you have,” says Kovacek, who consults for private practice owners, hospitals, managed care organizations, government entities, and third-party payors. “The nature of being a business involves financial motives. Whether you are 7-Eleven or General Motors, there are some very similar processes involved,” he says.

“In health care, we get patients, we take care of them, we send out the bills, and then we make improvements in the way we are doing all that,” Kovacek says. “Everything else either contributes to those four steps or is a distraction.”

Making Your Presence Known

The first element of running your own practice involves attending to the marketing/customer relations process. Private practice owners must identify potential patients and then put together the necessary systems to encourage them to come in for care. For most private practice owners, Kovacek says the first tendency is to focus on whether there are enough patients.

“When you start, you are an unknown and that is the make-or-break time of business,” he says. “You can get patients to come in by developing relationships with physicians, and by marketing to the public at large. The full gamut of potential customers must be considered.”

Success in this realm is linked to effective marketing and scheduling systems that are centralized, consistent, accessible, and understandable. The information therein will be used in subsequent business processes, such as documentation and billing, so it needs to be organized accordingly.

“The best way to schedule patients is involved in this step,” he says.

After a new private practice owner has drawn in patients, the focus must shift to treatment intervention and documentation of care. “This process is the essence of what we do and is the area where we are most likely to place our focus, at least on the intervention component,” Kovacek says.

“Clinical treatment includes the elements for which clinic staff members are responsible. The full patient experience must be positive: staff should ensure that the patient is in attendance, provide them with reinforcement when they do their exercises at home, and the staff must follow up,” says Kovacek, who also serves as president of the American Physical Therapy Association’s Section on Administration. “This is the core of physical therapy, and we need to do it incredibly well.”

Don’t Forget Documentation

Generally, Kovacek notes that practitioners spend more energy on intervention than on the documentation of care. This can cause some problems in subsequent processes if the documentation is inadequate. Documentation systems need to be data-based and evidence-driven, as well as demonstrate the capacity for real-time, complex decision-making. They likewise should be accessible, and based on each patient visit for optimal ease of use.

When handling billing and management of accounts receivable, Kovacek stresses that private practice owners need to have processes in place that will assure full reimbursement.

“This involves dealing with third-party payors and negotiating a fair compensation package,” he says. “Billing and accounts receivable systems should be driven by the patient interaction and documentation. We as a profession are horrible at documentation. We don’t want to do it, and often it is unable to be understood because the handwriting in the charts is illegible,” he says.

“In coding and billing, we also need to get the charges entered into accounting and make sure that the notes match what is billed,” he says. “This is not a fancy procedure, but it is very important.”

Clinicians should have full control over the billing that is submitted, and have readily available reports on exceptions to anticipated activity. Productivity should flow from this step, and should be easily adjusted for changes in reimbursement policy, including those made by individual payors.

The system also should allow for payor- and site-specific analysis of practice and payment. This step as well as all the others helps in the fourth aspect of business, an analysis of outcomes and process improvement. This element of practice management applies to all aspects of business and clinical operations, and is the process put into place to learn from the implemented systems.

Analyzing Outcomes

“We should be analyzing our outcomes, both clinically and from a business perspective, all along the way,” Kovacek says. “As the rehabilitation environment changes, our ability to adapt is dependent on our ability to learn from our successes and from our failures.”

These systems should have readily available exception reports and statistical analysis of collected data, which can be used in comparison to published benchmarks in similar practice settings and analyzed for their predictive capabilities. The system must use previously collected data for analysis and interpretation to be effective. Anything done on the outcome side has to come from your documentation, not a separate system. “The challenge is to take the data you are collecting and have it be useable in a reasonable time frame,” he says.

“Across the board—with some notable exceptions—we don’t do well on this last step,” Kovacek says. “This step is crucial in knowing how you know what you do, but many practice owners would rather not have to worry about that. We do have to worry about that, because we have bills to pay. “What we have to do and do better than anyone else is get patients in the door, treat them, get the bills out, and collect the money,” Kovacek says. “From a purely business standpoint, if we fail in any of those, it will show up elsewhere. We are encouraging the individual practice owner to look at those four things and see how well they do each one.”

Before a new practice owner can put these ideas into play, however, they first must be sure that private practice is something they are prepared to do. For someone just starting out on their own, Kovacek says that defining “what you want to do when you grow up” is key. “If someone wants to make a million dollars, have 10 clinics, be the best orthopedic therapist in their market—they tend to take action toward that goal. With each action, there are trade-offs,” he says. “As people reach their goals, for instance, they may realize that those goals were not the most important thing after all. So it is important to decide how much is enough. What are your indicators of success? What are you willing to trade off?”

Knowing what you are trying to accomplish is the single most important issue for new practice owners.

“There may be times when you have to work 3 weeks solid on a project, but then you must go back to a regular lifestyle. This has to be a sane way of living,” he says.

“It all goes back to ‘how much is enough?’ I don’t think it is as easy for a lot of folks to shut off their work and have a private life,” Kovacek continues. “A lot of entrepreneurs do not have a work life and a personal life, they just have a life. If you are not careful, that can become a 100% work life.

“Even when there are no patients, there are other things to do. The office is shifting very dramatically in the last few years to a 24-hour workday and a 7-day workweek. You find downtime when you can, so there are tendencies for workaholism there. That is true of any change in society: there are casualties.”

An additional transition for the new practice owner is what Kovacek refers to as the “rapid and often painful epiphany of cash flow.

“As an employee, cash flow is every second Friday when you get your paycheck. As an entrepreneur, you do the work and don’t get the rewards yet,” he says. “I have been entrepreneurial since 1992, and I’ve learned that just because I am busy does not mean I will have an income. When you work for yourself, it is an investment and that can be tough.”

Liz Finch is a contributing writer for Rehab Management.

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