72
Practice Management
Eric M. Haas
Key Concepts
• Lack of awareness about practice management could lead
to poor career decisions, financial distress, and surgeon
burnout.
• If joining a hospital model, a surgeon may have benefits
of a work RVU-based compensation, as well as the sup-
port and resources of the institution. However, the sur-
geon may need to align their personal goals to the goals of
the institution and accept lack of autonomy for purchas-
ing and decision-making.
• In the private practice model, the physician is essentially
self-employed, their goals and practice mission are basi-
cally aligned, and decisions are made real-time to meet
the immediate needs of the practice. However, the finan-
cial state of the practice figures into decision-making and
can limit the physician’s ability to realize their goals.
• Revenue in the private practice model is based on profes-
sional fee collections and ancillary investments, while the
hospital model generates revenue through professional
fees, facility fees, downstream revenue, market share, and
outcome incentive programs.
• Effective marketing and networking are necessary to
develop and maintain relationships with patients and
referring physicians.
Introduction
While solid medical knowledge and sound surgical skills are
paramount for colorectal surgeons, practice management is
an essential—and often overlooked—consideration for a
successful career. Practice management is a broad term that
covers all daily operations of a surgical practice, including
the practice model, office operations, financial planning,
patient interaction, personnel, technology, medical records,
marketing and business development, coding, billing,
© Springer International Publishing 2016
S.R. Steele et al. (eds.), The ASCRS Textbook of Colon and Rectal Surgery, DOI 10.1007/978-3-319-25970-3_72
reimbursement, practice set up, and compensation. Most
commonly, the principles of practice management are not
considered at the start of one’s career, and many of the key
concepts are not addressed in residency or fellowship. The
subject of the “business of medicine” is often thought of as
distasteful, and therefore not discussed among young sur-
geons. As a result, new surgeons may not be aware of many
considerations and the implications of their decisions when
accepting a job and joining a specific practice model.
Patients are consumers, and consumers demand high qual-
ity care at a low cost to be satisfied. To meet these needs,
physicians and practice administrators must think outside of
the box when designing their practice model. They need to
look to a model that is reliable, efficient, and effective at pro-
ducing a high quality outcome and a happy customer. That
ideal business may be a fast-food chain restaurant. Fast-food
restaurants are a demanding, high-volume, customer-focused
industry. Proper management in these chains has a system of
consistent, reproducible products and customer satisfaction
in place before the restaurant opens, and management con-
tinues to oversee the daily operations to ensure the systems
meet pre-determined goals at every level. Regardless of the
time of day, geographic location, or franchise specifics, they
are a model of efficiency, reproducibility, standardization,
and excellent customer service to meet expectations. A cus-
tomer can walk into a McDonald’s in Houston, Texas at 6 am
or a McDonald’s in Cleveland, Ohio at 6 pm, place the same
order, and receive the same product at the same price with
the same overall experience. This cannot occur without a
system of process control, standards, check and balances,
and quality improvement. The same concepts apply to medi-
cal practice management.
In reality, the paradigm that discussing the business of
medicine is uncouth should be replaced with the model that
unawareness of practice management could lead to poor
career decisions, financial distress, and surgeon burnout.
Awareness of the many business-related aspects of practice
management can help meet the current challenges with
1259
1260
patient satisfaction, physician satisfaction, and financial sol-
vency. In today’s practice environment, the business of medi-
cine may dictate one’s ultimate aspirations, achievements,
and job satisfaction. Burnout is a critical issue, impacting an
estimated 25 % of surgeons [1]. Studies have demonstrated
burnout is directly associated with a diminished quality of
life, quality of practice, and quality of care provided, by
increasing the likelihood of medical errors [1–3]. Without
addressing the root causes, more serious complications can
result, including depression, suicidal ideation, and alcohol
abuse [1–3]. Practicing in an unfit environment is a main fac-
tor leading to burnout, as physicians cannot achieve their
optimal work-life balance needed for personal and profes-
sional career satisfaction [4]. Colorectal surgery has been
reported as the surgical specialty with the highest job satis-
faction in young surgeons within their first 10 years after
board certification [5]. Thus, understanding practice man-
agement and guiding colorectal surgeons to the best fitting
practice model to continue reports of high job satisfaction
and high performance is a challenge for the American
Society of Colon and Rectal Surgeons.
While surgeons can control outcomes in the operating
room, understanding practice management is essential to
actually practicing medicine and running a successful opera-
tion in line with one’s expectations and goals. This chapter
cannot replace the detailed books and course offerings essen-
tial when setting up a practice; however, it’s a good introduc-
tion to the fundamental key concepts of practice management.
This chapter also uniquely focuses on the physician and phy-
sician satisfaction. The concentration is on finding the best
environment for the surgeon to start and maintain a success-
ful practice, with the assumption that a surgeon must be con-
tent, comfortable in their environment, and working in line
with their own expectations in order to provide quality surgi-
cal care and produce excellent patient outcomes and satisfac-
tion. In this chapter, we aim to describe the key principles of
practice management for colorectal surgeons. Unlike other
chapters in this text, “Practice Management” is not written
based on the history, evidence, and published literature on
the topic. The chapter is written based on personal experi-
ences, anecdotal learning, best practices, and pearls from
colleagues in private practice, hospital, and academic set-
tings on opening, developing, and practicing in an ideal
colorectal surgery practice model.
Practice Models
For the purposes of this chapter, there are two main practice
models in which a colorectal surgeon can practice: institution-
based and private practice. The institution-based model
encompasses hospital, university, and academic institutions.
Under this broad umbrella are the environments of hospital
employee and university employee. Integrated Health Care
Models, such as Kaiser Permanente, which offer not-for-
E.M. Haas
profit health plans and insurance, a tax-exempt shelter for the
for-profit medical groups, and physician-owned for-profit
partnerships, are also considered in the institution-based cat-
egory [6]. Private practice models include solo and group
practices, including single specialty and multispecialty group
practices. Each model has unique merits and limitations and
regardless of which model you work in, there are common
considerations. To simplify, we will refer to the models as
“hospital” and “private practice” throughout this text.
Practice Philosophies in Hospital
and Private Practice Models
There are several philosophic differences between the hospital
and private practice models that are important to understand
and consider before deciding which pathway to follow. Entering
into an agreement without fully understanding and addressing
the philosophical and practical components of the work envi-
ronment is what often leads to physician discontent, underper-
formance, and burnout. When choosing a practice model,
multiple factors must be taken into consideration including the
overall mission and goals of the workplace, the practice envi-
ronment, compensation and benefits packages, future opportu-
nities and job advancement, performance and production
expectations, and levels of autonomy. With the various models
and considerations in mind, one can choose the best fitting
model for their individual needs, professional expectations, and
career success. A summary of the distinctions between the hos-
pital and private practice models is seen in Table 72-1.
The Hospital Model
The primary mission of the hospital or institution-based
model centers around serving the needs of the community to
improve overall patient care and offering value over com-
petitors in the marketplace. These lofty goals are not neces-
sarily aligned with the individual needs and goals of the
employed surgeon. The hospital administrators’ goals are for
the hospital system to be profitable, serve the community,
achieve local, regional, and national recognition, and advance
research and teaching. In theory, this will lead to increased
patient market share, physician resources, institutional name
recognition, and professional growth for both the institution
and the physician. Many of the components for success in
the hospital model may not result in the individual surgeon’s
personal job satisfaction. Once part of the larger hospital
model, the surgeon may need to conform their personal goals
and agenda to the goals of the division, department, and
institution. When joining a hospital model, the physician is
an employee and, as such, loses the ability to make indepen-
dent decisions regarding staffing, purchasing, recruiting,
growth and expansion, and office administration and pro-
cesses. Even when afforded certain levels of decision-
making, there are generally layers of bureaucracy in place,
72. Practice Management 1261

Table 72-1. Distinctions between the hospital and private practice models
Overall gestalt Carry out the global goals of the hospital’s strategic mission
Role of the hospital Employed
Practice philosophy Physicians exist to help meet the mission of the hospital and
assure the hospital is profitable
Management CEO, CFO, Board of Directors, Vice Presidents, and many
clinical/administrative department, division, and group heads
Decision-making process Formal processes of committees, administration, and the Board
of Directors; decisions take a longer time to make and are met
with resistance, and often require negotiation for action
Time frame of action Weeks to months for action; layers of bureaucracy to navigate
through and consideration of the hospital’s strategic plan and
budget cycles
Communication Bureaucratic, numerous meetings, and politics
Resources More resources available, but acquisition more difficult
Culture Group, formal organization
Staffing Run by the institution’s Human Resources department. Formal
processes for hiring and firing, which may interfere with
physician’s staffing preferences
Compensation Salary, Relative Value Unit (RVU) based
Outcome metrics Data acquisition and reporting supported by the hospital system
and data widely available; source of revenue for the hospital
Concentrate on patient care and the needs of the doctors
Self-employed; voluntary medical staff member to
facilitate patient care
Hospital exists to help me care for my patients
Managing partner, practice administrator, office manager
Made by individual or group of physicians; decisions
often be made to address immediate needs
Real-time implementation to address current needs
Autonomist, consensus decision-making
Limited resources based on financial state of the practice
Individual, informal organization
Physician has direct control over staffing decisions
Collections based
Data acquisition not feasible: expensive and labor
intensive

which delay adaptation of changes. In the typical employed
environment, the surgeon is accountable to a direct boss, and
multiple levels of supervisors—many of which are not physi-
cians—and may not always see patient care and professional
needs through the eyes of the surgeon.
Physician advancement in the hospital model is generally
based on a combination of performance evaluations and
financial productivity. Institutions may also provide incen-
tives for high patient satisfaction, clinical outcomes, aca-
demic achievements, and participation in graduate medical
education. Financial productivity is assessed on meeting the
budgetary calculations of the employed surgeon’s proforma,
their individual total “cost” with salary, benefits, and over-
head. The proforma is composed of the surgeon’s calculated
cost center, which factors in overhead, salary, and benefits.
The concept of a cost center is important to understand and
is germane to most institution’s budget calculations. A sur-
geon’s cost center is the total costs based on calculated direct
and indirect costs attributed or assigned to each individual
employed physician. The components of one’s cost center
may vary from hospital to hospital, but is imperative to
understand what overhead is assigned into one’s budget.
Achievement of cost neutrality based on one’s individualized
budget will be assessed at a quarterly and yearly basis and, if
not achieved, may result in salary reductions and other nega-
tive consequences. Clinical outcome metrics are typically
measured using federal programs, such as the National
Surgical Quality Improvement Program (NSQIP) and the
Centers for Medicare and Medicaid Physician Quality
Reporting System and Readmission Reduction Program [7–
10]. Some institutions offer bonuses or incentives for the sur-
geon to achieve at or above expected outcomes benchmarks.
Additionally, patient satisfaction is often measured using the
Hospital Consumer Assessment of Healthcare Providers and
Systems (HCAHPS) survey of patients’ perspectives of hos-
pital care [11, 12]. HCAHPS are important for hospitals to
realize national incentives.
There are numerous benefits specific to joining a hospital
model. First, in the current unstable healthcare environment,
being employed by a hospital or institution lends stability and
security. Contracts range from 3 to 5 years, and many surgeons
find the appeal of “guaranteed” income outweighs the poten-
tial for higher income in private practice. The hospital model
provides layers of support, experience, and expertise, allowing
for multidisciplinary care of complex surgical patients that
would be difficult to achieve in the private practice model.
With that support comes layers of administrative help to miti-
gate the non-medical responsibilities of the physician, and
experts in the legal, compliance, and coding fields to attenuate
exposure to scrutiny and liability. There is also the prestige of
association with an established, recognized hospital system. In
addition, there are greater opportunities for mentoring,
research, and career development in the hospital model than a
private practice due to the sheer size, funding, and infrastruc-
ture of the institution. The hospital model has greater market
share and holds significantly more leverage over payers,
resulting in much higher contracted fee schedules for reim-
bursement than private practice. This can further translate into
a stable environment in regards to salary expectations. There
are additional benefits, such as the built-in referral base from
the large number of referring doctors employed by the hospi-
tal. Lastly, hospital models usually offer robust benefit pack-
ages and a resource-based relative value scale compensation
model that will be addressed in the next section.
1262
The Private Practice Model
In private practice, the mission of the practice and physician
are basically aligned at every level. However, the financial
state of the practice can limit the physician’s ability to realize
many of their goals and aspirations. The primary goal of a
private practice model is to provide a working environment
that fosters best practices in patient care and satisfaction
among patients, staff, and physicians—all while proving to
be a viable and profitable arrangement. The private practice
administrator’s goals are to provide a sound workflow, a
profitable system for the doctors, and high rates of job satis-
faction. This will ultimately lead to high patient satisfaction,
which will bring in more patients and lead to continued
growth to successfully compete in the community and ser-
vice area. The philosophy of a private practice is to meet the
immediate needs of the doctors and the patients with the sur-
geon as autonomous. Surgeons in private practice are self-
employed and serve as a voluntary medical staff member at
the hospital to facilitate patient care. Decisions are made in
the best interest of the practice, and made real-time to meet
the immediate needs of the practice. The practice may make
expenditures without a formal review or budget approval
regarding the financial consequences. In contrast, institu-
tions will usually need to justify the cost, benefit, budget, and
cost centers at multiple levels before making any decisions
or purchases, leading to frustrating delays. The private prac-
tice physician usually needs to seek a consensus from their
associates or partners, but there is little bureaucracy govern-
ing needs, rationing requests, or granting permissions.
In private practice, physician advancement is typically
based on the individual’s productivity measured in patient col-
lections and the time they have been a part of the practice.
Although national recognition and academic pursuits into
graduate medical education and scientific research may be an
important part of a private practice, these components are sec-
ondary to the financial success of the practice. The support
systems that are offered by the hospital model cannot be dupli-
cated in the setting of private practice. Private practice models
lack the infrastructure, economic resources, and incentives to
perform intensive data collection and reporting efforts for for-
mal benchmarking programs. Private practices generally do
not measure clinical outcomes, patient satisfaction, or produc-
tivity against national standards. Clinical outcomes are fol-
lowed anecdotally and measured through conference
participation, such as multidisciplinary tumor boards and mor-
bidity and mortality to gauge individual outcomes. Patient sat-
isfaction is measured from individual relationships with
patients, colleagues, referral sources, and Internet-based
patient reviews rather than federal HCAHPS programs.
Productivity metrics and financial viability of the practice is
also generally addressed with the practice accounting firm in a
less formal process compared to the hospital setting. Monthly
accounting-based metrics are personalized to the practice
needs and rarely involve a formal budgetary process.
E.M. Haas
There are specific benefits to the private practice model.
There is the freedom of being your own boss, making your
own decisions, and implementing changes to meet the imme-
diate needs of the patients and the practice. The physician
can maintain personal goals, preferences, and identity with-
out the need to negotiate with third part administrators. There
is also no restriction on the ability to invest in ancillary health
care services, such as outpatient surgery or endoscopy cen-
ters, which have become a significant source of additional
income for many practicing surgeons. In contrast, hospital
model doctors rarely have the ability to participate in physi-
cian-owned businesses or maintain entrepreneurial interests
in future developments. Lastly, one can maintain the intel-
lectual property and patents on any research or devices in the
private practice model. These rights are usually owned by the
hospital when employed.
The Basics of Payment, Compensation,
Profits, and Billing
To first understand compensation, it is important to under-
stand the financial platforms from the perspective of the pri-
vate practice and hospital models. In private practice, the
financial relationship with the hired surgeon is based primar-
ily on collections from professional fees generated by the sur-
geon. Professional fees are relatively universal and based
primarily on Medicare and federal allowable rates, as well as
negotiated rates from third party commercial payors. In the
private practice model, salary and compensation plans are
closely linked to the profitability of the surgeon, which is
reflected in the amount of collections they bring into the prac-
tice, less the overhead attributed to that surgeon. Maximizing
workflow, efficiency, and productivity financially rewards the
surgeon. Although professional fee collections are the main
source of practice income, many private practice surgeons
seek outside healthcare-driven investments as secondary
income sources. These secondary sources of revenue are gen-
erally physician-owned or physician-partnered surgery,
endoscopy, or ancillary service organizations. There are many
financial, legal, and ethical considerations that factor into a
decision to partner with an investment entity. Although there
are many successful and profitable agreements, there is a cer-
tain level of risk and exposure with any agreement, and pro-
fessional accounting and legal investigation of the investment
is paramount regardless of how tempting the investment may
appear. In general, outside investment opportunities are not
offered until the practice surgeon has established a sound
patient base and reputation.
While the private practice model bases revenue streams on
professional fee collections and, to a lesser extent, ancillary
investments, the hospital model has several major avenues to
generate revenue including professional fees, facility fees,
downstream revenue, market share, and outcome incentive
72. Practice Management
programs that are not available in the private practice setting.
Professional fee reimbursement is usually a percentage
higher than private practice since the hospital or institution
usually has market share, which allows them to negotiate a
higher allowable fee schedule. Facility fee reimbursement is
the allowable amount of fee that a hospital collects for hav-
ing the procedure or encounter performed at their institution.
Facility fees are multiples of the professional fees, making a
tremendous profit for the hospital facility with each proce-
dure and visit. In addition, downstream revenue adds further
to the profitability. Downstream revenue is the revenue gen-
erated through the patient’s utilization of hospital services
during their encounter, including radiology, pathology, radi-
ation oncology, medical oncology, cardiac catheter labs, and
other services. The professional fees generated from consult-
ing doctors are also a source of downstream revenue if those
doctors are hospital-employed physicians. Hospitals also
generate profit by gaining market share of a service area.
Once a hospital accrues a critical mass of physicians, it has a
sizable market share and can represent physicians collec-
tively to negotiate with third party commercial carriers for
reimbursements above Medicare rates and even above pri-
vate practice negotiated rates. Finally, the fifth source of rev-
enue stream is realized through federal incentives and
reimbursement programs by accumulating and reporting
data points of outcomes and satisfaction metrics. The greater
the volume of patient encounters, the greater the ability to
receive incentives based on the volume of data points.
Employed physicians should understand the multiple ways
hospitals gain profitability through their employment rela-
tionship to gain negotiating leverage.
The downside of employing a surgeon from the hospital
perspective is the high associated costs and inefficiencies of
management and administration of a doctor’s practice.
Hospitals are notorious for abundant and excessive layers of
administration and human resources with resulting higher
indirect costs that far exceed those of a private practice
model. The overhead of the employed surgeon usually out-
weighs the revenue generated from the professional fee col-
lections. Although there are many variations by institution,
for each employed colorectal surgeon, the hospital may
assume an estimated loss of up to $200,000 per year. The
goal of the hospital administrator is to achieve cost neutral-
ity, where the overhead of the surgeon is equal to the revenue
generated from professional fees alone. In this scenario, the
Table 72-2. Pros and cons of the hospital versus private practice model
Model Hospital
Pros – Stable environment
– Prestige of institution
– Mentoring and research opportunities
– Favorable benefits, RVU compensation
– Federal incentives for participation in data collection and outcomes metrics
Cons – Cannot invest in ancillary care centers
– Own the individual’s intellectual property, research, and patents
1263
hospital achieves pure profit from the other revenue streams
generated from every patient encounter that the surgeon
brings to the hospital through facility fees, downstream rev-
enue, market share, and incentives programs. The pros and
cons of the two main models are seen in Table 72-2.
There are other models that exist where the hospital system
functions as an academic center, with well established direct
and tertiary referrals independent of the surgeon employee. In
this setting the surgeon is usually offered a salary and incen-
tives that may be independent of financial productivity.
Compensation
There are several different compensation models used in
practice. Depending on the practice model, various models
may be offered. In this section, we will address the most com-
mon types for each practice model, with emphasis on the rela-
tive value scale system, which plays a role in all models.
Relative Value Scale System
Hospital models usually follow a Resource-based relative
value scale (RVU). The RVU system was developed by the
Centers for Medicare and Medicaid Services in 1992, based
on the Medicare Physician Fee Schedule, to assign numeric
value to encounters and procedures based on the difficulty of
the service provided, the risk involved, and the overall care
requirements of the patient [13]. In the USA, Medicare uses
RVUs and nearly all health maintenance organizations
(HMOs) to determine how much money providers should be
paid for physician services, including office visits and surgical
procedures [14]. Every procedure and Current Procedural
Terminology (CPT) procedure code has an RVU assigned to it
for reimbursement rates. Each RVU has three components
associated with calculation for payment: physician work (54
%), practice expense (41 %), and malpractice overhead (5 %).
The work component reflects the physician’s relative time and
intensity associated with furnishing a service and is known as
work RVU (wRVU). The practice expense component reflects
the costs of maintaining a practice, including costs for office
space, supplies and equipment, and staff. The malpractice
overhead piece represents the costs of malpractice insurance.
Each of the three RVU components is adjusted by geographic
region (GPCI) to create a compensation level for that service.
Private practice
– Maintain freedom, autonomy, and personal goals and aspirations
– Better total compensation
– Opportunities to supplement income with outside investments
– Maintain intellectual property over research and devices
– No formal benchmarks for outcomes or satisfaction
1264
RVU-Based Compensation
While the RVU system was initially developed as a payment
method for the Medicare fee schedule, the role of RVUs has
expanded and been adapted for physician compensation and
productivity. Many institutions use the work component of
the RVU system as the basis of their compensation package.
In this model, a base salary is calculated based on an expected
amount of production measured as wRVU. Annual compen-
sation reports and benchmarked trends are available annually
from the Medical Group Management Association (MGMA)
and the American Group Medical Association (AGMA) [15,
16]. Recent surveys estimate the 50th percentile salary for
colorectal surgeons in the first 5 years of practice between
$262,000 and $360,000, [17, 18], and the median wRVUs at
approximately 6500 [19]. Based on these estimates, hospi-
tals will generally set the wRVU expectations or threshold at
50 % MGMA, then use the MGMA salary data to offer a
salary commiserate with the 50 % level for colorectal sur-
geons. RVUs are weighted to reflect patient complexity and
standardized nationally, so they can also serve as a valid met-
ric for clinician productivity [13]. The hospital will reassess
these benchmarks at the end of each year, and may adjust the
wRVU threshold, which will affect the base salary. Some
contracts allow a 2- or 3-year ramp up period in which to
achieve the threshold wRVU without incurring reductions in
salary.
When negotiated appropriately, the wRVU-based com-
pensation model serves the employed physician well, and
can be a major advantage of joining a hospital practice.
Benefits of the wRVU-based system are that physicians can
concentrate more on patient care and less on uninsured rates
or insurance type. Since the hospital model usually assigned
the coding and billing to a separate center out of the immedi-
ate control of the employed surgeon, there is comfort in that
actual collections does not directly effect the surgeon’s com-
pensation. It is important for new physicians to realize they
will likely not attain their wRVU threshold in their first year
after entering practice. A common mistake in the wRVU-
based model is to set one’s wRVU threshold low for fear of
not meeting goals. The disadvantage here is that income will
also be reduced, as the wRVUs are linked to a specific salary.
We recommend setting the wRVU level at least at the 50th
percentile, and having a contract stipulating no penalties for
not meeting threshold during the initial 2 years.
Production-Based Compensation
The second model is “production-based compensation.” In
this model, compensation is closely linked to surgeon’s
actual collections rather than wRVU. A surgeon joining the
practice will usually be offered a starting salary based on
established MGMA values for the first year or two and then
is offered partnership or a compensation plan where the sal-
ary is proportionate to collections less overhead. There are
rarely any wRVU calculations figured into this model, as it is
E.M. Haas
Table 72-3. Example of wRVU payment formula for common
colorectal procedures
wRVU value Medicare
Common colorectal procedures per unit allowable
CPT 99203—New patient visit, moderate severity 1.42 $110.09
CPT 46221—Rubber band ligation 2.36 $278.46
CPT 45378—Screening colonoscopy 3.69 $223.34
CPT 46260—Surgical hemorrhoidectomy 6.73 $493.84
CPT 44204—Laparoscopic-segmental colectomy 26.42 $1604.27
CPT 44145—Open low anterior resection 28.58 $1728.83
The conversion factor is 35.7547 for Houston, TX
the actual collections that translate into profitability. Table
72-3 demonstrates Medicare allowables for common colorec-
tal procedures. Bonus plans are based on excess cash flow
once collections attributed to the surgeon are offset by the
surgeon’s salary and attributed expenses. In this model, the
surgeon needs to be very involved in billing and collections
because unlike the hospital model, where wRVU-based com-
pensation is received regardless of billing, in the production-
based compensation model actual collections received by the
practice are the most important factor.
Non-Production Based Compensation
Non-production based compensation is typically a salary-
based plan seen in the university academic setting. The
incentive plan is based on various determinants—patient
care production in the form of wRVU, education, research,
and academic endeavors. Academic centers set the average
compensation on MGMA or AGMA benchmarks, then
adjust the overall salary based on the percentage of time
attributed to each of the parameters. For instance, a surgeon
scientist may have 30 % of their salary dedicated to research
and education requiring a lower wRVU threshold by 30 %.
Other centers offer a baseline salary that is set according to
the level of scholarship, and offer bonus incentives based on
academic achievements.
Bonus Structure
Bonus payments may also differ between hospital and pri-
vate practice models. Hospital-based bonuses are usually
wRVU-based. Once one reaches the threshold wRVU estab-
lished in their contract, a bonus is calculated by multiplying
each wRVU above the threshold level by a conversion factor.
For example, with an individual’s threshold of 6500 wRVU,
each wRVU above that level will be multiplied by a conver-
sion factor ranging from 20 to 75 dollars per wRVU, result-
ing in the bonus. The conversion factor differs significantly
among institutions. Some institutions build in a security
gap—an arbitrary, set number of wRVUs above your thresh-
old where no bonus is paid out until exceeded. For instance,
in the individual with a threshold of 6500 wRVU, if a gap of
500 wRVU is set, they will not realize their bonus until 7000
wRVU has been achieved. From the hospital’s vantage point,
72. Practice Management
this gap helps guard against losses from wRVUs that may not
be reimbursed, such as indigent care.
The second form of hospital-based bonuses is a collection-
based model. In a collection-based structure, the surgeon
recoups a percentage of collections minus expenses once the
threshold wRVU number is attained. This model places risk
on the surgeon, who has little control over collections in the
hospital setting and should be avoided when possible.
Private practice bonus models usually begin 1 or 2 years
after employment and correspond with the surgeon’s ability
to bring in revenue above expenses. Some practices have a
formal partnership offer after 1–3 years. The downside is
that most of these partnerships come with a “buy-in” provi-
sion. The concept of partnership varies significantly among
practices and the surgeon candidate should fully understand
the partnership arrangements before signing the initial
employment contract.
In summary, for a hospital-based model, the most favor-
able contract is production based using a wRVU model with
threshold that is at the 50th percentile of national bench-
marks for base salary. We recommend a wRVU-based bonus
structure because it guarantees a bonus after reaching thresh-
old regardless of the uncertainty of reimbursement, allowing
the colorectal surgeon to maintain a level of control. In the
private practice model, beginning salary should be at MGMA
levels and once the surgeon is able to attain collections above
expenses, they should be eligible for bonus structure.
Budgets, Billing, and Collections
In a hospital model, a budget is created by the hospital,
including expected income and expenses, with quarterly
reviews. As a hospital employee, you have limited control
over multiple parts of the budget, especially indirect costs,
and you will be held accountable for staying in the black. In
the hospital model, the surgeon also surrenders control over
billing and collections. There are dedicated departments to
code and bill. This can be advantageous in that these respon-
sibilities can be cumbersome and at times overwhelming as
long as collections do not directly affect your pay scale as it
does in private practice. It is still highly recommended to be
knowledge of billing and coding fundamentals and to be able
to review what the hospital is processing. Even if not directly
linked to your salary, under-coding and under-billing for
your work will reflect poorly on your budget in one way or
another.
In private practice, there is no budget per se. There is a
dynamic balance sheet that tracks the current state of the
practice’s finances without holding any individual account-
able for the financial state. Billing is the engine of the ship
for private practice models. Whether to have an in-house
billing department or outsource billing is a very important
decision to consider. Establishing an in-house billing depart-
ment should be the final step of independent practice man-
agement. Initially, outsourcing billing is recommended as it
1265
gives the surgeon proper time to dedicate to developing a
practice, establishing patient flow, and all having all aspects
of the business process in place before taking on the respon-
sibilities of billing, coding, and compliance. Outsourcing
also provides a valuable learning resource in the billing com-
pany to help the physician understand the billing, coding,
and revenue cycles. The ultimate goal is to transition the bill-
ing tasks in-house, as no third party billing company has the
personal stake in collections for your practice that you do.
Ensure you understand the basics and have your practice sys-
tem running smoothly before making this change to ensure
efficient and effective billing practices.
When moving the billing system in-house, ensure a billing
manager is appointed to oversee the financial side of the
practice. A financial “Checks and Balance” system should
also be in place. We recommend three levels where numbers
and revenue cycles are evaluated to minimize risk of expo-
sure and theft from the practice. Options to assess the num-
bers are a professional accountant, the billing manager, the
surgeon, and the practice manager. We caution against hav-
ing any one person evaluate the numbers alone. Finally, the
role of the front office should be stressed in billing. The front
office staff is responsible for verifying insurance coverage
and creating a “superbill” for each office visit, so education
on billing and collections should include this part of the
practice.
Billing and Coding
Billing and coding are an essential part of today’s medical
practice, and a basic comprehension of these principles is
essential fund of knowledge for a colorectal surgeon in any
practice model. There are many facets to billing and coding
for time and procedures, and the systems are continually
undergoing modifications, so the colorectal surgeon needs to
understand the basics and stay on top of new developments.
While coding may be auto-generated through electronic
Practice Management Systems, the surgeon should be as
familiar with the coding points, levels, and compliance as
they are with staging of colon cancer. If encounters are over-
or under-coded, you could expose yourself, your practice,
and your institution to scrutiny. Regardless of the model in
which you practice, it is recommended that you code for
patient encounters and procedures yourself. In the hospital
model, compliance officers and coding personnel will review
the operative reports and patient encounters to generate the
codes to submit to payors. It is important that the employed
surgeon assumes an active role in this process and reviews
the codes, as well as provides feedback to the coding offi-
cers. This is the ideal collaborative model, as the surgeon
enlightens the coders of the technical aspects of the encoun-
ters and procedures, while the certified coding personnel
understands tips and tricks to optimize reimbursement.
While this will initially be time consuming, it’s an important
part of practice management to do this regularly. Furthermore,
1266
the process will become streamlined quickly, as the coding
team becomes familiar with your practice and common pro-
cedures, and the surgeon learns the key elements to include
in the documentation process. In the private practice model,
the billing departments may outsource to a third party billing
company; in this scenario, the coding process is similar to
that of the hospital. In private practice models where billing
is performed in-house, it is important to consider having a
certified coder as part of the billing department to perform
self-audits and review coding practices. There are educa-
tional resources on billing and coding for the surgeon,
including the American College of Surgeons CPT Coding
Workshops [20]. Often more than one course is needed to
learn the full breadth of technical billing details. At a mini-
mum, the physician should aim to learn from these courses
(1) how to bill for office visits and be compliant with regula-
tions, and (2) how to bill for surgery.
There are two main types of billing and coding for reim-
bursement that applies to surgeons—one reflects patient
encounters in the office or hospital setting, called Evaluation
and Management, and the other represents surgical proce-
dures, called CPT codes. Evaluation and Management (E/M)
codes are the billing codes used to document the patient–
doctor encounter such as a history and physical exam. They
were introduced in the 1992 update of Physicians’ CPT, with
published documentation guidelines updated in 1997 by the
Centers for Medicare and Medicaid Services. Full documen-
tation for the 1992 and 1997 guidelines is available online in
the Evaluation and Management Services Guide provided by
the Centers for Medicare and Medicaid Services [21]. The
E/M codes have very specific reporting, documentation, and
compliance guidelines. The codes for each encounter are
detailed on a “superbill,” an itemized record of services gen-
erated by the office for an outpatient visit and the main data
source for creation of healthcare claim. It is strongly recom-
mended to become very familiar with the guidelines to
ensure proper coding and compliance.
For surgical procedures, CPT procedure codes are used.
CPT was developed by the American Medical Association,
and new editions are updated annually. Each procedure is
assigned a CPT code with descriptors. CPT codes for surgery
of the digestive system include 40490–49999. Regardless of
whether an E/M or CPT code is used, all codes require a diag-
nosis code. For diagnosis, International Statistical
Classification of Diseases and Related Health Problems, ninth
edition (ICD-9) codes are currently used, but will be evolving
to ICD-10 codes. ICD-9 codes are similar to E/M and CPT
codes, except that they identify the diagnosis on the claim, not
the procedure performed. These codes link the diagnosis to the
patient encounter, and it is imperative to document the appro-
priate codes to avoid denials from the insurance plans.
Common ICD-9 codes for colorectal surgery are seen in Table
72-4. The importance of proper coding cannot be emphasized
enough. If the CPT or E/M codes and the ICD-9 diagnosis
codes are not properly chosen, the claims may be deemed
medically unnecessary and not covered by payors.
E.M. Haas
Table 72-4. Common ICD-9 diagnosis codes for colorectal surgery
(078.11) Condyloma acuminatum
(211.3) Benign neoplasms/polyps of the colon
(211.4) Benign polyps of the rectum or anal canal
(153) Malignant neoplasm of colon
(154) Malignant neoplasm of rectum and anus
(455.2) Internal hemorrhoids with other complication
(455.4) External thrombosed hemorrhoids
(455.9) Residual hemorrhoidal skin tags
(555) Regional enteritis
(555.0) Crohn’s, small intestine
(555.1) Crohn’s, large intestine
(556.9) Ulcerative colitis, unspecified
(562.1) Diverticulosis of colon
(562.11) Diverticulitis of colon, NOS
(564.01) Slow transit constipation
(564.02) Outlet dysfunction constipation
(564.1) Irritable bowel syndrome
(565) Anal fissure and fistula
(565.0) Anal fissure nontraumatic
(566.0) Abscess perianal
(569.1) Rectal prolapse
(569.3) Bleeding rectal
(787.6) Incontinence of feces
(787.99) Change in bowel habits
The approval or denial of services will be relayed to
patients in an Explanation of Benefits (EOB). An EOB is
how the insurance company processes a claim. After an
encounter or surgical procure, an EOB statement will be gen-
erated and sent by the health insurance company to the cov-
ered patient and provider explaining the treatments and
services covered by the payor. It is good practice for physi-
cians to review EOBs frequently to better understand how
the system actually works and appreciate the patient’s point
of view when undergoing a medical encounter. The EOB
will show the surgeon’s codes and allowable reimburse-
ments, as well as the adjusted rates and any reasons for deni-
als of the claim. By reviewing EOBs often, the surgeon will
gain a better appreciation of the work entailed with insurance
processes and enrich their understanding of how to code and
bill appropriately and effectively.
In summary, it is essential for the physician to be familiar
with E/M, CPT, and ICD-9 coding, as well as billing docu-
mentation, such as the superbill and the EOB to ensure
proper practice management. We also recommend the physi-
cian participates in billing and coding to stay actively
involved in reimbursement and proper compliance for their
procedures and services.
Setting Up Your Office
Starting a practice and setting up your office in any model
requires many considerations in order to be successful. When
you sign a contract and join a practice or hospital, patients
and referrals are not usually lined up at your door. There is a
fine art to recruiting and retaining patients, fostering rela-
tionships with referral sources, colleagues, and staff. This
72. Practice Management
section discusses the basics of contracts, how to attract
patients and referral sources, as well as joining and leaving a
practice.
Attracting Patients
Healthcare is a business, and patients are the customers;
without them, the practice will fail. The classic three A’s of
medicine continue to be true and pertinent—a physician
must be available, affable, and able. In reality, attracting and
retaining patients goes far beyond the classic A’s, and is an
essential part of practice management. There are four main
methods to attract patients: physician referrals, insurance
referrals, word of mouth, and marketing. The paramount
referral source is from fellow physicians, however, there are
many obstacles in this path. Most established physicians
have already developed strong bonds and referral relation-
ships with other surgeons that will be difficult to tap into.
Younger, less established doctors may be more open to
developing relationships with new surgeons; however, they
usually do not have large patient base. In addition, there are
now outside pressures on many referring physicians to direct
referrals to certain locations and surgeons depending on the
economic environment they practice in. For instance, refer-
ring physicians may participate in a hospital or outpatient
partnerships and will tend to refer patients to other partici-
pant surgeons in that entity. Hospital employees may also be
directed to refer to other fellow employees. Despite this real-
ity, physician referrals are by far the most valuable referral
source. Primary care physicians and gastroenterologists are
the major focuses for a colorectal surgeon. A busy gastroen-
terologist will refer out an estimated 2–4 patients per month
in need of a colorectal resection. Try to identify these gastro-
enterologists in your community and align yourself with
them. Most will refer to a set list of surgeons. The estab-
lished gastroenterologist will usually initiate basic anorectal
and straightforward referrals to a new surgeon in the com-
munity to develop a comfort level with their patient care
before referring patients for colon resections. If one posi-
tions themselves as the eager recipient of all referrals, you
will quickly establish a very positive reputation with referral
sources.
Another avenue to develop relationships with referring
physicians is to find physicians who may not have an estab-
lished, “go-to” colorectal surgeon. Gynecologists and urolo-
gists are potential sources of many referrals, which may be
open to establish a relationship with you. These specialties
are highly concentrated on preventive care and screening,
which could be a rich referral source for colonoscopy.
Another approach is to seek doctors outside of your immedi-
ate medical service area who do not have a colorectal sur-
geon in their community. These outside physicians need a
tertiary-level referral, have typically never met the referring
physician, and will instantly develop a special personal rela-
1267
tionship with you for giving them the respect of traveling out
for a face-to-face visit.
Networking is another essential way to meet and retain
referring doctors when starting in practice. There are two
main ways to network: office visits or working the doctor’s
lounge. An office visit can be frustrating, as the surgeon may
need to wait, reschedule their own activities to take time out
during the day, and meet opposition from the targeted physi-
cian’s staff for disrupting the office flow. Despite these
obstacles, it is very important to try to meet the doctors in
their office. If you make an office visit, be sure to make an
impression and try to make a personal connection to have
that impression last. Be especially cognizant in your interac-
tions with the office staff, as the front office personnel may
be in control of your cards and referrals. Ask specifically if
there is a referral coordinator or referral nurse. It would be
valuable to explain your line of service and make a connec-
tion with them. If you just leave cards or leave the office with
the feeling that the physician will not send you patients, the
premonition is likely correct. Additionally, realize that the
doctor’s staff may just as important as the doctor to obtain
future patients. The other valuable way to network is in the
doctor’s lounge of the hospital. New partners in our practice
are encouraged to put on the “Freshman 15” by making the
doctor’s lounge their home outside of the operating room,
being present for every meal there at every hospital they
work at. Networking and meeting the other doctors in the
hospital can bring a plethora of referrals. There are other
methods of networking to be aware of: insurance plans are a
minor referral source, as you will be listed as a provider for
all plans you accept, but a source nonetheless. Word of
mouth is a more powerful source of referrals. However, a
physician typically needs to be established in practice and
have earned a solid reputation from clinical outcomes and
patient experiences before word of mouth occurs.
Finally, marketing has great potential to bring in patients.
The effort you put into marketing will be directly related to
your outcomes. Consider hiring a consultant familiar with
the region of your practice to assist with networking and
business development in the community. It is essential to
provide a presence on the internet and have a landing page
linking your practice site to the hospitals website, where
potential patients can understand who you are, what you do,
and what might set you apart from other surgeons. The
importance of Internet presence cannot be over emphasized.
Harness the power of social media on sites like Facebook,
Twitter, LinkedIn, Google+, Doximity, Sermo, and doc2doc,
which allow direct connections and education to an unlim-
ited number of potential patients and referral sources. After
seeing satisfied patients, professionally direct them to online
ratings to share their experience and expand your name as a
quality colorectal surgeon in the community. Encourage sat-
isfied patients to write reviews, on physician and other popu-
lar review sites such as Vitals, Healthgrades, RateMDs, and
Ucompare. Review sites have become a key source to pick-
1268
ing a doctor, and are used by as many as 25 % of patients to
help choose physicians. A negative review is inevitable, and
best countered by having a plethora of positive reviews.
Finally, market yourself directly by giving grand rounds in
the hospitals, sponsoring community events, and working
with local chapter of relevant colorectal agencies, such as the
Colon Cancer Alliance and the Crohn’s & Colitis Foundation
of America.
Playing Nicely with Others
It is essential to learn how to practice effectively without
estranging referrals, as alienating other physicians can hurt
your reputation and bottom line. A prime example is colo-
noscopy by the colorectal surgeon. Since gastroenterolo-
gists’ per capita can be the largest referral source, a new
colorectal surgeon entering a practice area should be cau-
tious when performing colonoscopies. With this regimen,
you could alienate yourself from the established gastroenter-
ologists, who may feel you are attempting to cut into their
practice. Consider the consequences of promoting yourself
as performing routine, screening colonoscopies. If you
choose to perform a substantial volume of screening colo-
noscopies, a prudent option may be to perform the proce-
dures in a center where you are not directly competing with
established gastroenterology colleagues. Also, be very cau-
tious of performing future surveillance colonoscopy on a
patient who was referred to you for a colon resection by a
gastroenterologist. Often the colorectal surgeon is placed in
a precarious position as the patient will entrust the surgeon
for future care and insist they not return to the original refer-
ring gastroenterologist. In this situation, it is very important
to remain loyal to your referring doctor, and not assume the
future colonoscopies, or you could lose future referrals.
Another word of advice is to avoid performing upper endos-
copy procedures. While you are trained and may be profi-
cient in these procedures, performing upper endoscopy as a
colorectal surgeon is likely to be seen as a threat to your
referring doctors. For patients that require both upper and
lower scopes, consider referring them to a gastroenterology
colleague. This will strengthen your relationship with your
possible referral source, show respect for their line of work,
expertise, and established practice patterns, and the single
referral will come back to you in spades. It may also be ben-
eficial to refer patients who will require medical manage-
ment to gastroenterology initially, such as Crohn’s disease
patients, to scope, diagnose, initiate treatment, and medically
optimize. These situations are an opportunity to spare your
patients from repetitive procedures and build your relation-
ship with your referring doctor.
Another important consideration is your relationship with
the general surgeons. Colorectal surgeons are fully trained
and competent to perform most general surgery procedures
following fellowship. It may be tempting to market yourself
E.M. Haas
as a “full service” colorectal surgeon, who is happy to per-
form common general surgery procedures, such as a laparo-
scopic cholecystectomies and inguinal hernia repairs. One
may even choose to be in the general surgery call rotation, as
a means to keep busy, earn extra income, and establish rela-
tionships with consultants and referring doctors. However,
there are major consequences of including general surgery
duties in your practice, and this decision should be care-
fully considered. First, marketing yourself as a general and
colorectal surgeon may alienate the established general sur-
geons. While your goal may be to increase your overall case
volumes, network, and establish referrals, you may instead
cost yourself referrals, damage your reputation, and jeopar-
dize acceptance by established peers in your new practice
environment. A better strategy is to align yourself with the
general surgeons. Show your colleagues you are not a threat,
can work side-by-side with them, and even assist them with
undesirable cases, like the inevitable perianal abscess consult
in the middle of the night. With this strategy, before long,
the general surgeons will refer you the complex anorectal
and colorectal procedures as well. A second concern before
incorporating general surgery into your practice is that once
you develop the reputation as performing general surgery, it
will be difficult to transition to a colorectal-based practice.
Your general surgery referral sources that helped you get
busy initially will not take well to the fact when you inevita-
bly want to remove yourself from the general surgery arena.
In addition, as you move away from general surgery cases to
concentrate on colorectal cases, it will be very difficult for
you to pick and choose which referrals you will accept with-
out offending your referring physicians. If you cherry pick
your patients in this manner, you run the risk that your refer-
ral base could run dry for both general and colorectal cases.
Staff and Colleagues
In private practice, hiring and terminating staff and associ-
ates to ensure all patient needs are being met falls under the
role of practice management. Adding new staff to your prac-
tice is one of the most costly aspects of practice management
and can entail extensive research, interviewing, and training
to ensure that staff member is appropriate for the practice
and their position. When interviewing staff members, take
note of how often the candidate has moved from prior jobs,
their reasons for leaving, and their attitude towards prior
employers. A staff member with a history of a job changes
every few months is likely to continue that trend. Almost as
important as interviewing the candidate is communicating
with the candidate’s most recent employer and references
provided for a more in-depth view of the applicant and their
work habits. Be weary of the candidate who does not permit
you to contact their supervisor, under the pretense that their
employer does not know they are looking for a job and might
fire them for going out to interview. It is essential to com-
72. Practice Management
municate with a candidate’s current or prior employer so you
can make an informed decision about hiring them.
Successful practice management requires effective com-
munication from the staff with patients. The first impres-
sion a patient obtains of you is often through your staff and
often the patients misidentify your staff’s words as coming
directly from you. When your staff talks to a patient, the
patient often feels the information relayed is directly from
the physician, which is most often not the case. While it may
seem superficial, appearances matter and reflect the profes-
sionalism of the surgeon. Assure the potential staff member’s
appearance will be perceived as friendly, approachable, and
appropriate. Take the time to train staff on effective patient
communication techniques, as all medical office person-
nel come into contact with patients in some capacity. Also,
take the time to appropriately educate the staff on aspects
of colorectal surgery and your specific practice preferences.
Good patient communication at the office level will improve
customer satisfaction, reflect positively on the professional-
ism of the doctor, and often lead to positive feedback back
to your referring doctors. Conversely, poor or inappropriate
communication will often portray the surgeon as incompe-
tent, uncaring, and unprofessional, even though the surgeon
may have no idea that such conversations are occurring. You
might be surprised to hear your staff turn down potential
patient because they do not understand all of the services you
provide or give (un)solicited medical advise that goes well
beyond their duties and responsibilities. As a new surgeon,
take the time to educate your staff, listen to how they com-
municate with your patients, and give continuous feedback
until you are confident that your practice is being represented
appropriately.
Contracts
When joining any practice, an employment contract is part
of process. Having a contract attorney review the terms and
conditions before entering into any arrangement is a strong
recommendation. While considering a contract, there are
two main questions to answer: (1) What am I getting into,
and (2) What are the options if things do not go as planned.
The items to deliberate to answer the first question include
compensation, bonus structure, benefits, causes for termi-
nation, coverage duties and call responsibilities, cure period
to address and “cure” issues before termination, tail cover-
age and insurance, practice restrictions (confidentiality,
proprietorship), and the contract term (automatic renewal
versus set time frame). At the start of a surgeon’s career, it
is common to have a 2–3 year contract, and then different
terms offered thereafter. If a short-term contract is pre-
sented, you should try to negotiate the terms of the second
contract at the time of the original contract, as your negoti-
ating power is significantly diminished after signing the
original contract.
1269
How to exit a practice is an important but often overlooked
part of a contract. Regardless of how promising the opportu-
nity appears you should always understand all option and
consequences of early termination. Often these terms are not
discussed, reviewed, or understood until the physician is
ready to make a change. It is better to negotiate the possibil-
ity of leaving at the start of an exciting position than when
trying to exit, as the physician may be desperate and lack
negotiating power.
Finally, before entering into any contractual employment
agreement, it is essential to seek professional legal represen-
tation. There are specialized lawyers for the healthcare
industry who can explain the nuances of the language, terms,
conditions, and penalties detailed in the contract to assure
you fully understand what you are entering into before sign-
ing. All too often, young surgeons choose to bypass legal
consultation, either for the cost, time involved or belief that
it is just not necessary. This is an unnecessary risk that can be
very detrimental, especially at the start of ones career. Avoid
the risk and assure you obtain legal representation before
committing to an employment agreement. The essential
components of an employment contract and terms of termi-
nation are seen in Table 72-5. These variables are broken
down into two overall themes—terms of employment and
terms of termination of employment. These variables are not
meant to incorporate every aspect of a contract, but to direct
you to the key features that need to be addressed.
Considerations When Moving
Between Practice Models
An increasing number of physicians are selling their prac-
tices to hospitals and becoming hospital employees. Key
trends driving the increase are cuts in reimbursement, a rise
in the uninsured population, reform challenges, practice
expenses, and work-life balance [22]. Hospitals welcome the
trend, as physician employees enhance their competitive
position in local and regional markets, generate revenue and
patient volumes to maintain the financial strength of the hos-
pital, advance improvements in clinical and translational
research, achieve synergies among academic and clinical
program development activities, and leverage new models
for healthcare delivery and health services management [21].
There are many factors to consider when transitioning from
private practice to a hospital system. First, there is the change
in practice model philosophies. The private practice surgeon
will give up various degrees of autonomy. They will now
have a boss and levels of non-physician employees to report
to. The goals and success of the hospital are often not aligned
and independent of the physician’s goals and happiness.
Further, they may feel that the goals of their superiors
interfere with their practice. This will require understanding,
compromise, and preparation. The compensation model
1270 E.M. Haas

Table 72-5. Essential components of an employment contract

a. Terms of Employment:
Reporting structure
Partnership tract
Salary and compensation
Bonus structure
Benefits
Continuing medical education
(CME)
Intellectual property
Clinical duties and responsibilities
Academic responsibilities
Secondary income from healthcare
related interests
Consulting income
b. Terms of termination:
Causes for termination
Tail coverage
Cure period
Accounts receivable
Non-compete (restrictive covenant)
Non-solicitation of staff
Confidentiality agreement
Private
Hospital practice
model model Notes
X Responsible party or parties that you directly report to and the chain of command
X The criteria to become a practice partner; usually defined by time invested in the practice
X X Collections based versus RVU based
Various models exist and can be individualized based on your practice environment
X X Health and dental insurance, paid time off, retirement, medical malpractice, life, and
disability insurance
X X Allowance for continuing medical education, including conferences, travel, and housing
accommodations
X X Rights to research, patents, inventions, and other creations developed during terms of
employment
X X Service area of admitting hospitals and practice locations, call coverage
X Expectations of productivity, presentations, teaching, mentorship, and publications
X Ownership interests in surgical centers, hospitals, pathology labs, radiology centers, and
other healthcare entities
X Consulting, honoraria, educational courses and lectures, and expert witness legal fees
X X Defined causes for termination including loss of license, misconduct, fraud, failure to
perform duties defined in the contract
X X Malpractice coverage extending after employment to cover any claims made while
employed in prior coverage
X X A specified period of time to adequately and appropriately correct a material breach in
duties before termination
X The outstanding payments due to the doctor from patents and insurance companies for
charges submitted
X X The physician agrees not to practice in competition with their current employer for a
defined time and geographic scope
X X Agreement not to solicit employees to leave for the benefit of a competitor if
employment is terminated
X X Agreement forbidding disclosure of any confidential or proprietary information to a third
party in competition with the practice or hospital

usually shifts from a collection-based to RVU-based revenue
stream. At the end of the fiscal year, if one does not meet the
budget, compensation and bonus structure could be adjusted
accordingly. Staffing and administrative support are con-
trolled by the institution. Once your staff is brought to the
hospital, you lose the ability to make significant changes, so
choose wisely. The hospital model will almost always have
an electronic medical records (EMR) system in place. The
physician will need to transition to the new system, which
will decrease efficiency and productivity, increase work
hours, and consume tremendous amounts of staff and
resources during the transition phases. Negotiating a scribe
to assist with documentation while the physician becomes
proficient with the new EMR might be beneficial to all par-
ties. To transition the physical goods from private practice to
the hospital system, a Bill of Sales or Purchase Agreement is
required to negotiate the hard assets of the practice, includ-
ing furniture, exam tables, computers, manometric equip-
ment, and scopes. The hospital evaluates the equipment,
taking depreciation (approximately 20 % per year) into
account. The physician generally overvalues hard assets, so
they should be prepared for the purchase agreement to be
significantly less than expected. The physician should also
be aware that ancillary income sources could be restricted.
Ownership stakes in outpatient surgical centers and outside
medical ventures that supplement private practice compensa-
tion are commonly restricted or banned as a hospital
employee.
Conclusions
Practice management is a vital component of a successful
surgical practice. While there is little emphasis on the prin-
ciples of practice management during surgical training,
knowledge of these tenets is essential for every colorectal
surgeon to make informed decisions about their career.
Abasic understanding of practice management will help a
surgeon decide the best practice model to meet their personal
and professional goals, reimbursement and billing patterns in
each model, how to be professionally successful in their cho-
sen model, and, if needed, how to leave for other pursuits.
72. Practice Management
References
1. Chaput B, Bertheuil N, Jacques J, et al. Professional burnout
among plastic surgery residents: can it be prevented? Outcomes
of a national survey. Ann Plast Surg. 2015;75:2–8.
2. Shanafelt TD, Balch CM, Bechamps G, et al. Burnout and med-
ical errors among American surgeons. Ann Surg. 2010;251:
995–1000.
3. West CP, Huschka MM, Novotny PJ, et al. Association of per-
ceived medical errors with resident distress and empathy: a pro-
spective longitudinal study. JAMA. 2006;296:1071–8.
4. Balch CM, Shanafelt T. Combating stress and burnout in surgi-
cal practice: a review. Thorac Surg Clin. 2011;21:417–30.
5. Raptis DA, Schlegel A, Tschuor C, Clavien PA. Job satisfaction
among young board-certified surgeons at academic centers in
Europe and North America. Ann Surg. 2012;256:796–803. dis-
cussion 803–5.
6. McCarthy D, Mueller K, Wrenn J. Organized health care deliv-
ery system. Kaiser Permanente: bridging the quality divide with
integrated practice, group accountability, and health informa-
tion technology. The Commonwealth Fund. 2009;17.
7. Centers for Medicare and Medicaid Services. Physician Quality
Reporting System. Available online at: http://www.cms.gov/
Medicare/Quality-Initiatives-Patient-Assessment-Instruments/
PQRS/index.html?redirect=/PQRS/. Last accessed December
2014.
8. Centers for Medicare and Medicaid Readmissions Reduction
Program. 2012. Available online at: http://cms.gov/Medicare/
Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/
Readmissions-Reduction-Program.html/. Last accessed March
2015.
9. Khuri SF, Daley J, Henderson W, et al. The Department of
Veterans Affairs’ NSQIP: the first national, validated, outcome-
based, risk-adjusted, and peer-controlled program for the mea-
surement and enhancement of the quality of surgical care.
National VA Surgical Quality Improvement Program. Ann
Surg. 1998;228:491–507.
10. Fink AS, Campbell DA, Mentzer RM, et al. The National
Surgical Quality Improvement Program in non-veterans admin-
istration hospitals: initial demonstration of feasibility. Ann
Surg. 2002;236:344–53. discussion 353–4.
11. Iannuzzi JC, Kahn SA, Zhang L, Gestring ML, Noyes K,
Monson JR. Getting satisfaction: drivers of surgical Hospital
1271
Consumer Assessment of Health care Providers and Systems
survey scores. J Surg Res. 2015;197:155–61.
12. Centers for Medicare & Medicaid Services. HCAHPS Hospital
Survey. Available online at: http://www.hcahpsonline.org. Last
accessed February 2015.
13. Scoggins CR, Crockett T, Wafford L, Cannon RM, McMasters
KM. Improving clinical productivity in an academic surgical
practice through transparency. J Am Coll Surg. 2013;217:46–
51. discussion 51–5.
14. Medicare Physician Fee Schedule. Payment System Fact Sheet
Series. Available online at: http://www.cms.gov/Outreach-and-
Education/Medicare-Learning-Network-MLN/MLNProducts/
downloads/MedcrephysFeeSchedfctsht.pdf. Last accessed
April 2015.
15. Medical Group Management Association. Available online at:
http://www.mgma.com. Last accessed April 2015.
16. American Medical Group Association. Available online at:
http://www.agma.com. Last accessed April 2015.
17. Profiles- The Online Database of Graduating Physicians. 2013–
2014 Physician Salary Survey. Available online at: http://www.
payscale.com/research/US/Job=Colorectal_Surgeon/Salary.
18. PayScale Human Capital. Colorectal Surgeon Salary (United
States). Available online at: http://www.payscale.com/research/
US/Job=Colorectal_Surgeon/Salary.
19. AGMA Research and Benchmarking. Physician Compensation
2012 Colorectal Surgery. Available online at: http://cejka.force.
com/physiciancompensation. Last Accessed April 2015.
20. American College of Surgeons Practice Management CPT
Coding Workshops. Available online at: https://www.facs.org/
advocacy/practmanagement/workshops#sthash.PHs5VNhi.
dpuf. Last accessed April 2015.
21. Centers for Medicare and Medicaid Services. Evaluation and
Management Services Guide. Nov. 2014. Available online at:
http://www.cms.gov/Outreach-and-Education/Medicare-
Learning- Network-MLN/MLNProducts/downloads/eval_
mgmt_serv_guide-ICN006764.pdf. Last accessed June 2015.
22. American College of Medical Practice Executives Professional
Paper. The Impact of Physician Practice Acquisition on Practice
Managers. 2013. Available online at: http://www.mgma.com/
Libraries/Assets/Practice%20Resources/Publications/
Fellow%20Papers/2013/The-Impact-of-Physician-Practice-
Acquisition-on-Practice-Managers-manuscript-1.pdf?ext=.pdf.
Last accessed April 2015.