Business 101 for Medical Practices

If a medical practice is a business and for-profit, why is the business aspect of running a practice ignored in medical schools? I also want physicians who are business-savvy to stay independent while controlling the physician/patient relationship. There are some exceptions to the “business education” shortcomings. It was assumed by most medical teaching programs that when the physician started in the practice/business of medicine, he or she was smart enough to learn the business of medicine through exposure and trial and error. Whether this was true in the past or not is irrelevant; it certainly is not true today. The healthcare industry today and tomorrow is much too complicated to expect business concepts to work.

Business 101 

In order to grasp and apply the concepts of the business of medicine utilizing Provider Production Optimization, the business concepts will have to include profit vs. overhead.

That is why more and more providers are no longer trying to bother with running the practice as a business, and would rather sell out to a health group (hospital) and just become an employee. Is that due to the physicians never having learned “Business 101,” or is it because running a medical practice is becoming harder and harder? While both arguments are valid reasons for physicians to get out of running a medical practice’s business, it is a dangerous situation for the providers and patients equally, for the following reasons:

  1. We will see healthcare is turning into a monopoly, or at least to a chain, similar to what happened with fast food.
  2. Hospitals will create a closed system where payers (insurance companies) will no longer credential outside physicians to start medical practices in the future.
  3. It is borderline illegal (Stark Law) to have a physician that is employed by a hospital only be able to refer patients and medical procedures to be done by the closed network and hospital equipment.
  4. It is not rocket science to assume all of the above will result in higher healthcare costs with fewer options.
  5. Follow the money: fewer and fewer smart students will ever want to go to medical school to become physicians.
I know that the above is not why you went to medical school, even if you were thinking economically as well as altruistically. Economics (money) ultimately drives almost everything and almost every decision in some way, whether you want it to or not. Healthcare is no exception. You as the owner (or co-owner) of your practice have the dollar allocation power and will ultimately determine whether you and your practice survive and prosper or not. It is perfectly OK to think of your medical practice as a business that needs to be profitable.