Watch Out for These Private Practice Pitfalls Establishing a private practice? Here are some common mistakes to avoid, as offered by Stuart Trembath in an ASHA live chat. Overheard
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Overheard  |   December 01, 2017
Watch Out for These Private Practice Pitfalls
Author Notes
  • Stuart Trembath, MA, CCC-A, is co-chair of ASHA’s Health Care Economics Committee and co-owner of Hearing Associates in Mason City, Iowa. He is an affiliate of ASHA Special Interest Groups 6, Hearing and Hearing Disorders: Research and Diagnostics; 7, Aural Rehabilitation and Its Instrumentation; 8, Audiology and Public Health; 9, Hearing and Hearing Disorders in Childhood; and 18, Telepractice. trembath@cltel.net
    Stuart Trembath, MA, CCC-A, is co-chair of ASHA’s Health Care Economics Committee and co-owner of Hearing Associates in Mason City, Iowa. He is an affiliate of ASHA Special Interest Groups 6, Hearing and Hearing Disorders: Research and Diagnostics; 7, Aural Rehabilitation and Its Instrumentation; 8, Audiology and Public Health; 9, Hearing and Hearing Disorders in Childhood; and 18, Telepractice. trembath@cltel.net×
Article Information
Practice Management / Professional Issues & Training / ASHA News & Member Stories / Overheard
Overheard   |   December 01, 2017
Watch Out for These Private Practice Pitfalls
The ASHA Leader, December 2017, Vol. 22, online only. doi:10.1044/leader.OV.22122017.np
The ASHA Leader, December 2017, Vol. 22, online only. doi:10.1044/leader.OV.22122017.np
Participant: If you had to narrow it down to the top three, what would be the three pitfalls to avoid?
Stuart Trembath: Probably the biggest is not having a sound business plan to follow and re-adjust what you are doing throughout the course of the year. Second is not following up with your accountant to make sure that everything is going according to plan, and third, I would say to make sure you are comfortable, to a certain extent, with what you are doing.
Participant: You mentioned more types of insurance policies are needed now compared to 30 years ago. Are there questions you recommend we ask a broker that may better guide which types of insurance we may need?
Trembath: As a business owner there are so many different types of policies that are available and many are necessary. It’s important to have a trusted advisor to guide you through the process. My accountant and my attorney have been very helpful, along with my insurance advisor. There are many things today that you would have never thought of needing years ago.
Participant: I am starting a private practice and am not sure whether to take insurance. Is it a mistake to only do fee-for-service when starting up a practice?
Trembath: There are a number of insurances that you simply have to have. Malpractice insurance is crucial. Obviously you have to pick and choose what you can afford and balance that with what you absolutely have to have. Again, your accountant, attorney and insurance advisor will all be helpful in that regard. As far as choosing fee-for-service, not knowing your situation or what type of practice you have, it’s difficult for me to even presume to indicate whether or not you are making a mistake. The people helping you start up your business are the ones to ask that question to.
Participants: Are there any templates for small business plans?
Trembath: Business plans are unique to each practice. There are suggestions for how to put a business plan together in a number of business books as well as books about starting a private practice. When we started our practice, our accountant was incredibly helpful in helping us formulate our business plan so that when we went to the bank looking for financing, we were prepared.
Participant: It seems that you have to have an attorney, an accountant, an insurance agent, a marketing company and possibly a payroll company doing services for you when in a private practice large enough to pay your own bills. How much in percentage of your gross income from the practice should you budget for these services?
Trembath: At this point, our marketing budget is without a doubt the largest component of our annual budget outside of payroll. A rule of thumb for marketing is to have approximately 10 percent of your budget set aside for marketing activities. That’s an old-school rule since today there are so many different free social media marketing opportunities to take advantage of. Obviously, setting aside 10 percent is not a guarantee that your marketing will work. Also, you need to take a look at your marketplace and decide what is appropriate. At this point, the amount of legal fees that I have on an annual basis are tiny and make up less than half a percent of our annual budget. My accountant’s fees are ongoing and are a necessary part of doing business. As far as needing a marketing company or payroll company, that depends upon how big you become. We currently are doing our marketing in-house and our accounting firm manages our payroll.

Without a doubt, the best marketing is word-of-mouth. Having happy clients tell others about how wonderful you are is worth a pot of gold.

Participant: I am a startup, what do you mean by discussing the legal options of establishing a business with an attorney? I already have a DBA (Doing Business As), FEIN (Federal Employer Identification Number), business license and liability insurance. My credentials are up to date. Are there other things to consider?
Trembath: In setting up your DBA, did you discuss this with your attorney and was this the best structure for your business as a startup? Liability insurance is obviously important, as is insurance on your place of business, as well as the equipment in your place of business.
Participant: What is the best way to find an attorney who specializes in working with private practices for speech therapy? I’m asking because my old attorney did not specialize in that and was so expensive!
Trembath: Perhaps the biggest key here is whether or not the attorney is familiar with small businesses. Sometimes it is helpful to ask others in your practice and find out who they may have worked with. I must admit that we spent a fair amount of time educating both our accountant and our lawyer in regard to what audiology was. In the end, having familiarity with small business was incredibly helpful and I don’t think we overspent getting their advice.
Participant: I’ve been paying myself just what is left over each month from the business. I need some more clients to meet my monthly goal income. In the meantime, should I take a loan out so that I can pay myself enough and pay off my business credit card or keep giving myself a small paycheck?
Trembath: That is a great question. One of our biggest mistakes in starting our practice was not setting aside enough money for taxes. At the end of the year we had to scramble to meet our tax obligations. As far as whether or not you should take out a business loan, you need to follow the advice of your team. In taking out loan, you will need to have a business plan in place to show how you’re going to generate the business necessary to pay the loan back. I think your accountant can help you answer that question best.
Participant: How do you budget for legal and accounting services? Do your attorney and accountant typically charge you per visit with them?
Trembath: Both my attorney and my accountant charge me by each tenth of an hour. In starting up, you may be able to negotiate a package with your attorney or your accountant so that you can budget accordingly. It’s really important when you are interviewing for your accountant and your attorney that you recognize you are the one hiring them, and, as a result, you need to feel comfortable with their advice and trust that it is in your best interest. We struggled with an accountant for a couple of years and finally came to the conclusion that it was time to look for a new accountant. In the end I’m glad we did.
Participant: What type of marketing did you find produced the most referrals and clients: Internet, newspapers, social media or direct mail?
Trembath: Without a doubt the best marketing is word-of-mouth. Having happy clients tell others about how wonderful you are is worth a pot of gold. It’s crucial that we as professionals learn how to ask all our satisfied patients to refer people that they know to us. I find that my newest employees really struggle with asking for referrals. Beyond that, you need to find what works in the area of the country that you are practicing. I have a practice in a very small CBS market. Because of the size of our market, we are able to do television advertising, which would be impossible in a large marketplace. Our most recent direct mail campaigns targeting charitable giving have been incredibly successful. You need to make a commitment to following a marketing plan and don’t stop just because one activity was unsuccessful. Remember that someone has to see your name at least seven times before they even know they saw it.
Participant: Any tips on ways to get those first few clients? I know word-of-mouth is best, but I have to start somewhere!
Trembath: Depending upon what type of practice you have, looking for physician referrals may be a great way to start. Physician referrals are second to client referrals as far as a testament to your capability as a clinician. I find myself asking both my employees and my friends, why do you choose a service and what goes into decision-making? That may be helpful in knowing where to start.

Make a commitment to following a marketing plan, and don’t stop just because one activity was unsuccessful. Remember that someone has to see your name at least seven times before they even know they saw it.

Participant: I live in a community that appears to support small business. Are there resources you suggest through local Chambers of Commerce?
Trembath: I’m sure your chamber has all sorts of opportunities for linking to other businesses. I currently belong to two chambers—both have business after hours which I try to attend. At these events, it gives me an opportunity to be seen in the business community as a member. I have generated multiple referrals as a result of having a drink with somebody at these after-hours events.
Participant: How do we let physicians know we are looking for clients?
Trembath: The first place to start is with your own personal physician. Let this physician know what you do and how you can provide benefit to their patients. It’s crucial when talking to physicians that you talk about what you can do for them not what they’re going to do for you. Having some kind of leave-behind literature about the various services that you offer is very important. Once you’ve met with your physician and had a chance to introduce yourself to this type of activity, it becomes much easier to reach out to other physicians. You need to remember that you cannot waste anybody’s time. Time is the most valuable asset each and every one of us has. As a result, make sure you have a short presentation about how you can benefit their patients and make their lives easier. As a startup, I would recommend trying to make numerous physician calls through the course of a week. Sometimes it’s possible to meet with a number of physicians within a practice during an early morning meeting. Be persistent and good things will happen.
Participant: I am retired and am thinking of doing a solo practice (LLC) again. I remember having several contracts going at the same time to fill up my caseload between 9 a.m. and 3 p.m. I also remember being able to write off many things that were expenditures in the business (computer, co-payer, paper, subscriptions etc.). It actually came to almost a third of what I was making. Is this still the case?
Trembath: Whether or not you should be an LLC or some other type of business entity, this is best left to your accountant and your attorney. There are multiple things you do in the course of business that are business expenses and can be written off. Before we can write off much, you need to be making money. Multiple contracts are a great way to tailor a practice. As you negotiate the contract, you can work it into your practice how you see fit.
Participant: Are there any rules about reaching out to physicians or does this depend on the state?
Trembath: There are codes of ethics that all physicians abide by. At this point in time, you really can’t provide any gifts or trinkets for the physician. All of us as members of the various professional organizations we belong to are also bound by a code of ethics. I am not sure if certain states have additional rules or requirements written in code.
Participant: What if you are not a contracted provider for insurance companies? How do you ensure stating this does not look like a “waste of time” for physicians?
Trembath: It depends upon your area and how prevalent any one insurer may be in that marketplace. Obviously if you are trying to talk to a physician that is part of a managed care organization, you may be wasting their time initially. There are many patients or clients who are willing to go outside of network so it will not be a total waste of time.
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December 2017
Volume 22, Issue 12