Image Alt Text
Running a business

A manager's guide to practice management

Health care is an issue for everyone.

Many people get health insurance coverage through work, while self-employed workers purchase insurance policies on their own. Even those without insurance receive health care services through emergency rooms and non-profit organizations.

There’s also widespread confusion regarding health care.

A Policygenius 2019 survey found that many Americans are foregoing medical care, because they’re unsure about what’s covered by their health insurance. Over 27% of respondents stated that they avoided medical treatment, due to confusion about coverage.

A well-managed medical practice can improve the well-being of patients, and serve as a trusted advisor to their customers. Medical practice management requires an office manager with a number of important skills.

What is practice management?

A practice manager oversees the finance and administration function of a medical practice, including physician practices, dental offices, and other health care firms.

Meet Julie, a practice manager

As an example throughout, we’ll discuss Julie, who is the office manager for Lakeside Medical. Lakeside is one of several private practices in the area, and the firm includes ten internal medicine physicians.

Here are the steps required to deliver patient care and effectively manage the daily operations of the practice.

The patient experience

Julie manages each of the steps in this process:

  1. Patient records: Lakeside uses EHR (electronic health record) software to securely manage patient records. If a doctor has set up a follow up visit for a patient, the office calls the patient and also emails an appointment reminder. Lakeside also follows up with no-shows by phone and email.
  2. Check-in: When a patient arrives, the office staff verifies the patient’s insurance coverage and makes updates to the individual’s health information. Each patient signs a form confirming their rights to health information privacy under  HIPAA law . Finally, the patient submits a co-payment, using cash, credit card, or debit card.
  3. Patient care: Next, the patient meets with a nurse, or a physician’s assistant to discuss the reason for the visit. The doctor reviews the patient records, the updated health information form, and examines the patient. The doctor may write a prescription during the visit.
  4. Treatment: If procedures must be performed, either by the internist or a specialist, the insurance companies are contacted for eligibility verification purposes.
  5. Billing process: Lakeside confirms the insurance payer (insurance company, Medicare, etc.) before the patient is treated. The medical billing department uses the ICD-10 codes to classify each type of treatment, and to bill insurance providers.
  6. Collections: The revenue management cycle includes cash flow from co-payments, and payments from insurance providers.

There are a number of other procedures discussed below, but these are the steps that closely relate to patient care.

If Julie can streamline the practice management system, Lakeside can improve the patient experience and provide a higher level of care. If the staff can spend less time on bureaucracy and more time with patients, health care outcomes can improve. These changes will create a loyal customer base.

Improve the experience, increase profits

Here are some customer experience statistics that every practice should consider:

  • This 2018 study reports that 73% of companies with “above average” customer experience outcomes perform better financially than their competitors.
  • Wallethub’s 2019 Small Business Owner survey found that acquiring new customers is the biggest challenge for business owners. If you can improve practice management, you can build stronger relationships with patients.

Developing long-term patient relationships can have a big financial payoff. The term “customer lifetime value” is a measurement of how valuable a customer is to a practice over an unlimited time span.

If Lakeside can find patients and provide a great experience, the patient will stick with the practice for years – even decades. Repeat customers generate more predictable revenue for a practice, and reduce the marketing costs incurred to find new patients.

Improvements in technology have changed customer expectations about service. Consumers demand faster response times, and expect problems to be resolved quickly. McKinsey’s 2017 research noted that three-quarters of online customers expect help within five minutes.

If Lakeside can improve the customer experience, leverage technology, and meet patient expectations, the firm can increase profits.

Julie has a number of other responsibilities that she must address to manage successful practice.

Operating the practice

Practice managers are the experts who keep the trains running on time, so that medical professionals can provide care. The biggest challenge for the practice may be health care regulations.

Regulatory requirements

In addition to HIPAA requirements and ICD-10 coding rules, Lakeside must follow Current Procedural Terminology (CPT) guidelines. CPT is a uniform process used by doctors for coding medical services. The goal of CPT is to streamline medical reporting, and to increase efficiency and accuracy.

Both small practices and large offices must secure company records, and comply with all applicable regulations. Practice management software allows a firm to meet regulatory requirements and maintain office productivity.

Using technology

According to Weebiquity, leveraging information technology allows you to complete routine tasks faster, and improve consistency.

Cloud computing can help Lakeside maintain data security. Industry software will provide customized reporting capability, so that doctors can evaluate and treat patients more efficiently. Many practices use technology to give patients access to personal medical records online, in real-time.

Practice management software allows the entire staff to perform routine tasks in less time.

A medical practice also requires a dedicated staff.

Managing staff

Every business needs a comprehensive system to interview, hire, and evaluate staff.

The office manager is typically responsible for hiring non-medical professionals, including receptionists, administrative staff, and billing services employees. The doctors, with input from the office manager, hire nurses, physicians assistants, and other health care providers.

To deliver great patient care, a practice must commit to staff training. Doctors and other professionals are required to take professional continuing education. The non-medical staff must be trained on office procedures, in order to minimize employee mistakes and to meet regulatory requirements.

The number one focus of the practice is patient care, and Julie can make changes to improve the level of care Lakeside provides.

Productivity, patient care

A practice manager should discuss patient care with the entire staff, and find ways to maximize each doctor’s time spent with patients.

Technology is part of the answer. All of the data collected for each patient must be easy for the doctor to access. Software can provide a dashboard that makes locating patient records easier. These improvements reduce the amount of time a physician spends hunting for information.

Julie can work to minimize the meetings that doctors must attend, and provide support so that each doctor can spend less time on paperwork.

If you can free up more time, your physicians can focus on chronic diseases and conditions that impact patients.

No practice can operate without sufficient cash inflows. Billing and insurance is complex, and a practice manager must stay on top of these issues.

Billing and insurance

Minimize cash transactions, and encourage patients to use credit cards or debit cards.

Customers are using less cash, and moving toward electronic transactions.The  Federal Reserve  notes that 60% of U.S. consumers prefer using credit cards instead of cash.  ShopKeep  found that 10% of US consumers don’t carry cash at all.

Cash management is the single biggest problem for small businesses, according to  The Balance . Make the payment process easy, and you’ll collect money sooner and improve cash flow. If a patient has an outstanding balance, give them the option of paying by credit card or debit card while in the office.

A medical practice must work with a number of payors, including Medicare, and private insurance companies. To collect the money owed, Lakeside must file paperwork and track reimbursements for dozens – or even hundreds – of patients.

Using technology and training the billing staff is the most effective way to work productively.

Lakeside’s practice also has a number of third party relationships that must be managed.

Managing relationships

The office manager is the contact person for all of these third parties:

  • Vendors: Lakeside purchases medical equipment, supplies, and pharmaceuticals from a number of vendors.
  • Hospitals: The doctors refer patients to specialists, and they admit patients and make rounds at several hospitals in the area.
  • Attorneys : Each of the doctors has medical malpractice insurance, and will work with an attorney if a patient files a lawsuit regarding medical care. Attorneys also provide advice on contracts and other legal agreements.
  • IT consultant: The practice outsources its technology needs to an IT company. The outside firm manages data storage and cyber security, among other needs.
  • Accountants: An outside accounting firm prepares the tax returns for the business.

Julie manages a part-time accountant, who posts the company’s accounting transactions, reconciles the bank account, and handles receivables and payables. The accounting firm reviews the transactions posted to the  accounting software , and uses the data to generate and review monthly financial statements.

Lakeside also outsources the payroll function to a third party. The payroll company uses Lakeside’s payroll information to calculate the dollar amount of withholdings for federal and state income taxes. Net pay is computed for each employee, and the payroll firm pays each worker by direct deposit or using a physical check.

Using a payroll firm saves Julie a great deal of time, and the liability for calculating tax withholdings is held by the payroll company.

Every business should create a budget before the start of each year.

Create an annual budget

The budgeting process forces you to consider each line item in your company’s balance sheet and income statement. You can identify potential problems and address them before the year starts. Once the bullets start flying, you’ll be busy and distracted, and problems may not get solved as quickly.

Here’s an example:

Julie reviews the accounts receivable activity for the year, and she notes one insurance company that pays Lakeside 30 days later than other insurance carriers. That raises several questions:

  • Procedures: Are the payments slower because Lakeside is submitting incorrect data? That’s a question for the billing department.
  • Share of revenue : How much of Lakeside’s revenue is dependent on the late-paying insurance carrier? If the percentage is large, or if business through the insurance company is expected to grow, Lakeside has a cash management problem.

Assume that the billing department is submitting data correctly. Julie discusses the late payment issue with the insurance carrier and determines Lakeside cannot speed up cash collections. The firm must use the vendor to serve patients, and they’re stuck with the slow payments.

To manage cash flow, Lakeside negotiates a higher line of credit (LOC) with the bank. Julie can borrow from the LOC, if slow insurance reimbursements are affecting cash flow.

If Julie doesn’t think through the accounts receivable issue during the budget process, she’ll have to address it once the year begins. With so many daily distractions, she may not make an informed decision, and cash flow may suffer.

Make the commitment to create an annual budget. Fortunately, there are some great  online tools  that you can use to make the process easier.  Paro  explains that managers should also review the budget during the year, and decide if budget assumptions still hold true. If not, update your budget as needed.

As Julie addresses each task that must be performed, she needs to document the steps to complete each task.

Procedures manual

procedures manual  is a roadmap for running a medical practice.

The manual lists every routine task that must be completed in the office. Lakeside must collect patient data, submit detailed billings to insurance companies, and process payroll, along with other tasks.

A procedures manual clarifies how each task is completed, and minimizes confusion. The manual also serves as a great training tool for new employees, and for existing employees who must learn a new task.

Julie should also have a written plan for major changes in the business, including:

  • Office relocation
  • Physician retirement, or adding a new doctor
  • Practice merger or acquisition

Now, these plans aren’t in final form, but Julie must use her experience and industry knowledge to think through these potential changes and document her ideas. If a big change is on the horizon, Julie can pull out her notes and add to them.

Managing a practice may feel overwhelming, so where do you start?

What to do next

Take action to improve your medical practice.

Agree on the mission

Why does the practice exist, and where are you headed? Get your doctors together and agree on a specific mission. Is the goal to add more professionals in a specific medical field, or is the current staff of doctors sufficient?

The mission drives many of your activities moving forward, including the patients you see, and the new people you hire. Decide on a mission statement and write it down.

How does work get done?

The starting point for your procedures manual is to find out how each task is currently performed. Talk with everyone on your staff, and ask for specifics.

You may be in for a surprise.

How work actually gets done may be dramatically different than what you expected, and that may present an opportunity for improvement. If your billing staff are spending a large amount of time on tasks that could be automated, you can make changes to increase productivity.

Use your results to create a procedures manual, and share the document electronically.

Ask for buy-in

Change is difficult.

Asking your team to change how they do business will make people uncomfortable, and emotions can run high.

Start with the “why”.

Go back to that mission statement, and explain how a particular change will improve patient care, or increase a doctor’s time spent with patients. If your staff understands the why, they’re more likely to go through the discomfort and make a change.

A medical practice can be a difference-maker in the lives of the patients they serve. Use these tips to move forward with confidence.

Recommended for you

Mail icon
Get the latest to your inbox
No Thanks

Get the latest to your inbox

Relevant resources to help start, run, and grow your business.

By clicking “Submit,” you agree to permit Intuit to contact you regarding QuickBooks and have read and acknowledge our Privacy Statement.

Thanks for subscribing.

Fresh business resources are headed your way!

Looking for something else?


From big jobs to small tasks, we've got your business covered.

Firm of the Future

Topical articles and news from top pros and Intuit product experts.

QuickBooks Support

Get help with QuickBooks. Find articles, video tutorials, and more.