Is there a doctor in the house?

By seeking out medical practice clients, one CPA has built a successful and expanding niche.

If you really enjoy management consulting and you're as comfortable with computers as you are with people, there's a group of high-earning professionals who need your management guidance and your computer knowledge. What's more, they know they need your expertise and they're happy to pay for it. They're our nation's doctors-- and if you choose to serve this niche, you'll never have a more satisfying and rewarding relationship with any other client group.

Doctors want to practice medicine-not manage a practice. They hire office managers to handle scheduling and billing and leave them free to do what they do best--maintain their patients' health. But the face of medical practice is changing rapidly. Insurance carriers are introducing an unending stream of new caps and conditions on coverage. Hospitals are undergoing a major restructuring in the way they deliver medical services. As a result, doctor groups are forming, breaking up, reforming and restructuring in an ongoing attempt to meet the new demands of insurers and hospitals, attend to patients' medical needs and somehow improve the bottom line throughout it all.

There has never been a time of greater change and confusion for the medical profession, which means that doctors have never had a greater need for CPAs' services. But how do you get started in this new and lucrative niche?

ONE CPA's START

At my first firm, computer billing as a part of practice management was just gaining importance. The senior partners were less than eager to learn this new field, so it became part of my responsibilities to learn about computer hardware and software and respond to client questions.

The billing software back then was fairly limited and the hardware, by today's standards, was even more so. But, since I'd always enjoyed compute' s, it was pretty easy for me to learn the basics of a few systems and become the house expert. And as the billing software and hardware became more powerful and complex, I grew right along with it. After a while, I focused on a few billing systems that I felt did the best job for each type of client. For doctors, I settled on The Medical Manager practice management software, published by Personalized Programming, Inc., and put in a lot of time learning everything I could about this software and the hardware that would run it best.

My research put me in some unusual situations. For instance, I frequently found myself having to talk clients out of spending too much on hardware. They would be convinced they needed a $50,000 computer and I would tell them that a $10,000 computer with a few thousand dollars' worth of peripherals could do the job. More than a few times, this caused them some real concern and gave them serious doubts about me.

Frankly, in the early years, it was often only my adamancy that convinced a client to try it my way-- that and the fact that their billing systems were in such a mess they were willing to try anything to get them running right. So I'd put in the hardware, load the software, train the orifice staff and then sit back and wait. The results have been almost unqualified amazement from my clients. They found that the software really does run better on less expensive computers. I came off looking like a genius, but I'm not--I'm just a hardworking accountant who took the time to learn some of the latest technology in order to apply some of the oldest and most venerated principles of sound accounting.

CHANGING PRACTICES

Today I am a principal in a seven-person CPA firm that has a niche in medical consulting. I prepare financial statements and tax returns and perform business consulting for all types of clients, including medical, but I also install, offer training for and support computer systems separately and in conjunction with other CPAs.

My first contact with new clients is still most often helping them sort out problems with their software-hardware configurations. But, in addition to being recognized as someone with billing expertise, I am being seen more and more as someone knowledgeable in the management of doctors' practices and groups. I have made this switch by paying attention when I go out on an engagement. So, while I'm teaching a doctor's staff about software, I may find out that the doctor is considering joining a group practice--or leaving one. I point out a few of the issues either move entails. A few days later, I will often get a call from the doctor, who wants to discuss the issues in detail. By getting my foot in the door as an expert in computers, I get the opportunity- to move to a fully developed client relationship.

A case in point: I recently got a call for help from a clinic in the Southwest that was having serious trouble with its receivables. In fact, the owners were about to settle for a buyout of $900,000 because their billing system was in disarray. I listened to their problems and knew right away what was the matter. I flew in and spent a few days reconfiguring their system and training the staff. They still opted for the buyout, but the figure was now $1.5 million. The client was thrilled. I made a good initial profit and added both a new- client and, even more important, a new and enthusiastic reference for my services. And what did I need to achieve these results.; Just the knowledge of some billing software and hardware.

Like many medical practices, the owners of this one were convinced that their needs were so special and their software so complex that almost no one could help them. But the truth is, there is nothing really unique about medical billing. Billing is billing whether you're entering columns of figures by hand in a ledger book or punching a keyboard. All that's changed is how the information is entered and how many more ways it can be retrieved. And it really all comes down to knowing what keystrokes work in which situations. Your clients will think it's magic, but you'll know it's just what accountants have been doing for their clients for hundreds of years. You'll both be happy.

HOW DOES IT WORK?

Based on my experiences, the development path for this niche begins with the CPA spending a lot of time and energy finding the billing systems to do the job best (hint: Look at Medical Manager first). Then, the CPA must invest more time and some money getting the word out about his or her skills.

When you start meeting potential clients, be prepared for them to be in crisis. The practice's system is malfunctioning and the person who sold it to them can't fix it. By having the needed knowhow, CPAs can differentiate themselves and provide a valuable service during such crises. Once you've solved all of a client's problems, you will be showered with gratitude, but you will still be recognized only as a billing expert.

The next step is to look for opportunities to let your new clients know that you are a full-service CPA, one who can offer the management advice and guidance your medical clients really want and can easily afford. Encourage happy clients to make referrals; they are still the best advertising money can't buy. In addition, I run several user groups in which my clients meet and share their successes and frustrations in using Medical Manager. I encourage them to invite other users who aren't clients. Often, these users become my clients because they experience for themselves what it's like to have a familiar face to whom they can turn when they need to know which button to push.

Once you've established a reputation, you'll start getting fewer panic calls and more requests to speak, write or demonstrate. Never pass up any of these opportunities if you can help it. When you have 50 or so clients, you'll want to hire and train an assistant to handle routine matters. The ideal potential assistant-trainee for this niche market would be a support person in a larger medical practice who already knows the medical billing system in which you specialize and who has real familiarity with the practice's in-house computer system. It also helps if the person has experience training other personnel.

THE NEXT OPPORTUNITY

Doctors are individualists. Their practices traditionally have been made up of a number of patients for whom they are the sole primary care provider. Practice groups are new, foreign and often intimidating to them. They may recognize the financial need to join, but they have an ever greater need to be shown how to function as part of a group. They need someone to show them how to form a group, get into one--or leave one.

A large part of my service to clients is helping them with the formation of groups, structuring of buyout agreements, profit analyses of hospital and insurance carrier contracts--in other words, the same type of services CPAs have always provided. In addition, hospitals historically have added up all the costs of treatment and administration, added a certain percentage and printed a bill. They know- next to nothing about incentive pay, but new approaches to medical treatment mean hospitals need to increase their cost-effectiveness--a very new concept to most large institutions. They can use CPAs to help them with the transition to incentive-based payment. (For more on offering expanded services, see the sidebar above.)

Most of my medical clients are delighted to have an accountant who understands their special needs. Of course, their basic business needs are not special, but they do have some special informational needs because of the changes in their profession. So it's just as important for me to keep up with the latest changes in insurance carrier practices, hospital practices and medical coverage issues, as it is to stay current on Medical Manager and related hardware. CPAs who enter this niche must accept the learning curve as a regular part of your diet. Read the new books, subscribe to the magazines, participate in seminars. You will never know it all because of constant changes and improvements in everything you thought you knew. And never forget that all you're really doing is what accountants have always done--only now you're using the latest technology.

TAKING THE PLUNGE 

Here's what you need to enter this profitable market niche:

1. Great people skills. If you don't enjoy consulting, this work is not for you.

2. Good computer aptitude. This means feeling comfortable with everything from configuring and installing a system to using the software. When you build a client list, you can start farming out the hardware servicing, but initially you'll need either to do this yourself or to know' enough to be able to select a competent consultant.

3. An insatiable appetite for knowledge. The most time-consuming part is keeping up with the steadily increasing stream (read flood) of new or improved hardware and software. It really is difficult to say which hardware package is going to perform best over the long haul because everything is just so new. And software upgrades often contain as many new bugs as new abilities. So I still read everything I can get my hands on, familiarize myself with each new upgrade and attend every seminar possible. This is the only real downside to this niche--you have to make a firm commitment to staying ahead of the steep curve of change, innovation and upgrades.

4. An unflappable personality. Most new clients you meet will be in the middle of a crisis: "Our system crashed! I don't even know who has appointments today!" The CPA must be reassuring and confident.

5. Availability: When a crisis occurs, you've got to be there as soon as possible. I now respond to client needs up and down the entire West Coast, often in person. Allow yourself enough flexibility, to be able to go to your client's office when needed and stay there until the problem is fixed.

6. An ability to teach. At first you'll need to teach the doctor's office staff how to use the system you fix or install. Later, you'll need to teach your own assistant enough to handle routine questions so you can stay free to handle the serious problems.

THE IDEAL CLIENT?

I know all this sounds very basic, but to most doctors and hospital managers, this is new information. Learning what kinds of help your medical clients need is a big part of establishing a successful business in this niche. And if you do enter this area, expect to enjoy high remuneration and something I suspect we overlook for ourselves all too often--really high job satisfaction.

Your medical clients need you and they know it. They are sophisticated enough to understand that you're worth every penny of what you charge because you make their professional lives easier and significantly improve their bottom line. They are potentially ideal clients.

This month, the Journal launches a regular series of articles spotlighting small CPA practitioners. Among other things, this section will cover CPAs who have developed unique niches or who have found innovative solutions to common practice problems. In this issue, an Oregon practitioner describes how he carved out a lucrative and fast-growing practice niche.

EXECUTIVE SUMMARY

* THERE HAS NEVER BEEN a time of greater change and confusion for the medical profession, which means that doctors have never had a greater need for CPAs' services. Insurance carriers are introducing an unending stream of new caps and conditions on coverage. Hospitals are undergoing a major restructuring in the way they deliver medical services. As a result, doctor groups are forming, breaking up, reforming and restructuring to meet the new demands of insurers and hospitals, attend to patients' medical needs and somehow improve the bottom line throughout it all.

* PRACTITIONERS INTERESTED IN A NEW NICHE in medical consulting must begin by learning about medical billing systems. Be prepared to meet potential clients who are in the midst of a crisis.

* THE NEXT STEP is to look for opportunities to let your new clients know that you are a full-service CPA, one who can offer the management advice and guidance your medical clients really want and can easily afford.

* PRACTICE DEVELOPMENT STRATEGIES include conducting seminars, starting users' groups, writing articles and demonstrating products.

* TO SUCCEED IN THIS NICHE CPAs must have great people skills, good computer aptitude, an insatiable appetite for knowledge, an unflappable personality, a willingness to travel and teaching abilities.

GARY GALBICK, CPA, is a principal of Evans, Slight, Klimowicz & Galbick in Roseburg, Oregon.

Firm Profile

Evans, Slight, Klimowicz &
Galbick
Year opened: 1975
Location: Roseburg, Oregon
Total personnel: 7
Number of partners: 3
Number of CPAs: 4
Areas of concentration: Full
array of services to closely held
businesses
Percentage of fees in
 Accounting: 15%
 Tax: 50%
 Consulting and PFP: 35%
Size of clients: Generally under
$20 million in annual sales
Type of clients: Closely held
businesses and their owners; pro
-fessionals
Advertising and marketing
programs: Television and print
Best thing we did in the last
five years: Invest the time and
energy needed to develop a med
-ical consulting practice

Priming the Pump

CPAs with medical billing systems expertise can build a lucrative niche, but it's important to let clients know about your other skills. Here's how I make the transition from solving a crisis to serving a full-time client.

* While the initial problem is being solved, I stay attentive for opportunities to discuss tangential issues in managing a practice or group. Then I offer some advice to let the client know I can be of assistance in other areas.

* I invite the new client to become part of one of my user groups and encourage him or her to invite other nonclients who are using the same billing system to attend.

* I send out regular newsletters to all my clients in which I share news about upgrades, new hardware and software, answers to the most frequently asked questions, etc.

* I try to teach at least one seminar per year through the local community colleges and give demonstrations of products or techniques at seminars offered by local chambers of commerce, hospitals, medical societies, etc.

* I try never to miss an opportunity to write an article or give an interview, whether to local newspapers, newsletters or magazines, and I advertise on television and in newspapers.

* I make full use of our advertising agency to make sure that my newsletters, interviews and articles have the same polish and precise targeting as my ads.

THE SMALL PRACTITIONER

For more information...

Integrated Health Care: Case Studies, by Dean C. Coddington and Barbara J. Bendick, Center for Research and Ambulatory Health Care Administration.

Periodicals

Medical Economics

PC Magazine

UNIX World