Running A Restaurant Like A Medical Practice?

A sound financial policy that clearly defines your practice’s expectations for the patient/parent will help a practice inform parents of the rules of the game, so to speak.

Private practice, in many ways, is unique to other business. One particular distinction is that doctors are not paid at the time of service, but rather after a long administrative and burdensome effort.


Funny Reimbursement Model

I’ve always found the whole physician reimbursement model odd. It would be like going to a restaurant, eating a full meal, handing over a “card,” as some sort of good faith gesture of payment, and leaving the restaurant having only paid a tip (co pay).


Running a restaurant like a medical practice?

Meanwhile, the chef, not really knowing if the card the patron presented fully covers the cost of the meal, has to submit the patron’s check to a third party and wait to be reimbursed. Weeks go by, maybe even a few months (supposing the “card” was a government assistance card) a complicated form comes back in the mail explaining the details of what part of the meal is covered and what is not. The letter (aka the EOB) depicts the discount the restaurant has to give to the patron (which is not decided by the restaurant, but rather by the party that issued the card), what part of the meal the third party will cover, and what part is the patron’s responsibility. Now the chef must send an invoice to the patron requesting payment for her part of the meal she had two months ago.

Absurd when you look at it from a different perspective; don’t you think?

We’ve lost our leverage

The real problem begins when one starts trying to collect weeks – and sometimes-even months – after the services were rendered. After all, the patient feels better. She was cured. Is there any incentive to pay the doctor for something that happened so long ago? And the parent ask, “I showed my card. The card should have covered my daughter’s doctor bill…” “right?” 

At this point, the practice has lost its leverage. The patient is gone and they may never see the patient again. And if the parent is not aware of what is expected of them in terms of their financial responsibilities to the practice, the practice is in essence at the mercy of the parent. Unless the parent is aware of the consequences for non-payment, many patients will dismiss their financial obligation to the practice.

What can the practice do to avoid having parents disregard their bills? Create a sound financial policy.


Setting expectations

A sound financial policy that clearly defines your practice’s expectations for the patient/parent will help a practice inform parents of the rules of the game, so to speak. A financial policy is an essence a contract between the practice and the patient, thus setting the tone for the relantionship. Let’s take a look how a financial policy can help.

        A financial policy can:

  1. Set parent’s expectations in terms of their financial obligations to the medical practice.
  2. Explain clearly the consequences of not adhering to the financial rules of the practice.
  3. Inform patients of the billing process. For example, copayments due at the time of service; practices sends out monthly statements; claims will be submitted on patient’s behalf to insurance; balances are patient responsibilities.
  4. Help the office staff enforce the rules and reference the financial policy. “Our financial policy is clear. Co-payment is due at the time of service.”
  5. Enable the practice to apply rules consistently. In other words, same rules are applied to every patient.


Unfortunately, many practices do not enforce their financial policies. And doing so can create a problem because the practice is not setting expectations properly. If the financial policy says the practice collects copays at the time of service and the staff collects them sometimes, the parent then has not reason to believe you will send her to collections for non-payment despite stating in your policy that you will.

Another important task often overlooked is reviewing the policy yearly. We’ve changes our policy a couple of times because we’ve found, for example, that certain parts of the policy were not clear to parents. Rewording the policy addresses parent’s confusion. Other times parents have issues that are not accounted for in the policy. During our review, we make sure to address those issues to avoid further problems.

I’ve include a link to the financial policy our practice uses here. Feel free to use it or modify it in any way you’d like to create your own. Also, feel free to make any recommendations, changes or suggestions. I don’t pretend it is a perfect financial policy, nonetheless, it is better than not having one.

If you have any ideas related to creating a financial policy, I’d love to hear them. Post your comments down below.


7 thoughts on “Running A Restaurant Like A Medical Practice?”

  1. “most doctor’s offices are not managed like a business”

    Ding, ding, ding, ding! Right on the money. I would even say that physicians don’t practice medicine. Instead, they run a business. Without a VIABLE BUSINESS, she can not practice medicine! It behooves docs to LEARN and APPLY relevant business concepts in her practice. The concept of Lean is especially relevant in smaller private practices.

    1. John,

      I think medical practices will start changing how they run their practices. Our current economical conditions will alert them that health care is in fact a business.

      Thanks for the comment.


  2. Just discovering your blog. Really enjoying your take on the business. Our practice is just over a year old, and we’ve been amazed at how many of the things the “experts” told us before we started were wrong. Nice to see some “common” sense applied to medicine

    1. Kevin,

      My wife and I opened the practice 5 years ago. We started out not having a clue how to manage a private practice. And the experience is really what this blog is about.

      Thanks for stopping by and checking out the blog. I appreciate the feedback

  3. Nice policy! I am writing an eBook on establishing a front-end collection/financial counseling program and establishing a patient payment policy is the first step. I’ve arranged mine in a grid, because I find people can follow grids more easily. The grid is separated into three columns – the first for the type of insurance/no insurance, etc. The second is what we expect of the patient and the third is what the practice agrees to do (check benefits, file insurance, etc.)

    I would welcome any feedback from others about this format.


    Mary Pat

    1. Thanks for the post Mary. I think a book like that is much needed. As I’ve always said, most doctor’s offices are not managed like a business. We need to help them. And an ebook that talks about the importance on collection/financial counseling will definitely be of benefit; even more in today’s economy.

      Make sure to keep us posted.


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