The 3 Common Mistakes NPs Make Starting Their Practice

Maybe you are thinking about starting a practice or are in the process of starting one.

Either way, there are countless things to do and consider before you can open your doors. And naturally, you want to do it in the shortest time possible without making mistakes.

But unfortunately, it’s tough to avoid making mistakes when starting a practice. Mistakes can happen at any point and across all aspects of building the business.

However, there are three mistakes NPs commonly make when starting a practice; they are in the areas of credentialing, finances, and marketing.

1. Not Understanding the Credentialing Process

Sometimes, NPs don’t fully understand what happens during the credentialing process and may run into problems.

When a provider gets credentialed with different insurance companies, an affiliation between the insurer and the provider is established. Once credentialed, the provider may deliver healthcare to subscribers of the insurance company and accept third-party reimbursement for care delivered.

For various reasons, some NPs don’t want to take insurance and get credentialed.

While it is a personal and perhaps a business decision, consider the following.

  • Most patients already pay for their insurance and prefer to use it.  
  • The most significant growth in those needing healthcare is the geriatric population, and most of them will have Medicare and seek providers accepting Medicare. (By the way, all providers, by law, must accept Medicare unless they intentionally and formally opt out. For more details, listen to podcast episodes #65 and #20 at NPBusiness.org.)
  • Being credentialed with insurance companies will help build your practice faster. The exposure you get from being listed on insurance websites helps build an initial patient base, giving you time to implement your marketing strategies.

There are several misconceptions about credentialing.

While many see the credentialing process as complicated, for the most part, credentialing is a straightforward process. However, it can be tedious, time-consuming, and lengthy.

One common mistake is turning over the credentialing process to an agency or individual without monitoring the process.

You can always do your own credentialing. However, if you choose to go with a third party, be sure to monitor the process closely.

We have seen too many cases where the credentialing was done wrong, never completed, and, in some cases, not even started, and the NP had to start all over again. You could lose your hard-earned money and precious time if you don’t monitor the progress.

Even if you pay someone to credential you, you still have to gather all the documentation and upload it to them. Why not just gather and upload all the documentation to the CAQH site yourself? If you do, make sure to follow up!

Other common mistakes are underestimating the time it takes to get credentialed and submitting incomplete documentation.

As mentioned above, credentialing can be lengthy, and missing or wrong documentation will increase the time needed to complete the process.

And finally, another major mistake NPs make is not getting credentialed with NPI-1 and NPI-2.

The NPI-1 identifies you as an individual provider, whereas the NPI-2 is an organization identifier.

If you fail to get your business credentialed with the NPI-2, not only are you in violation of HIPAA, but you may also run the risk of not getting paid. If you were previously employed or are currently employed, the insurance company may send reimbursements to them instead of you.

To learn more about why an NPI-2 Matters”, listen to podcast Episode #80 here.

Credentialing is not that difficult, and many NPs have done it themselves. However, it can be tedious and does require you to follow up.

If you want more information on doing it yourself, here is a link to our short course that 100s of NPs have used to get credentialed.

2. Not Understanding The Numbers They Need To Research

To run any type of business, you need to understand the numbers.

  • What is it going to cost you to start a practice?
  • What will be the estimated operational costs… no matter if you see patients or not?
  • What services will you offer, and how much will you charge?
  • What can you expect in revenue in the first month, three months, six months, one year, etc.?
  • When can you expect to break even?
  • When can you expect to be profitable in your practice?
  • What happens if you don’t hit your revenue goals?
  • What happens if you underestimate your costs?
  • What are your backup plans?

Keep in mind that both expenses and revenues are initially based on assumptions. Also, remember that the numbers for both are influenced by location.

For example, office space in New York will be far more expensive than the same-sized space in a small town, regardless of state. Therefore, research cannot be general but needs to be tailored to the location.

Since we tend to be optimistic and overestimate initial results, business experts suggest doubling costs and cutting revenue in half when looking at initial projections.

Before charging ahead with your practice, you must have a solid understanding of your expected revenue and expenses and if the numbers will work.

Otherwise, it’s back to the drawing board. You must determine how to adjust the assumptions and identify what needs to change to make the numbers work.

When planning for your practice, create a list of MUST haves, nice to haves, and dealbreakers. This will help you narrow down what you must include in your research. And try to think outside of the proverbial box.

Even though you may have been told you need a lot of money to start a practice, rent an ample office space, and buy all new equipment, you don’t. There is no need to mortgage your house or take out a large loan.

You can start small and build your practice with a small initial investment. But it all comes down to knowing what you need and the numbers!

3. Not Understanding Who They Need To Market To

Marketing-related problems tend to fall into different categories.

Some NPs don’t do any marketing, and some NPs do the wrong marketing.

Some NPs wait far too long before they start marketing their practice. Ideally, you want to start marketing your practice before you open your door.

What you don’t want to do is wait for months before engaging in any marketing efforts… because, by then, it could be too late.

And if you’re actively marketing your practice, congratulations!

But sometimes, providers use a “spray and pray” approach in marketing. Their marketing is too broad; they try to appeal to everyone but end up talking to no one.

You must know your ideal customer to create and implement effective marketing strategies.

To be successful in your marketing, you must identify who you are marketing to. You must know your target market.

This is particularly important when you have a clear focus and work with a specific population. For example, if you focus on working with children, you probably want to market to the parents and not everyone in the community.

You could identify various parent groups on social media and try to market to them. You could post content, run ads, and engage with others.

However, posting to social media once a week is enough; social media may be part of your marketing efforts, but it should not be the only thing you do.

Be sure to identify effective marketing strategies beyond social media and implement them consistently and continuously.

In Conclusion…

We all make mistakes; that’s how we learn.

At the same time, we can learn from the mistakes of others, which saves us time, money, and headaches.

Once we know the mistakes to watch out for and what to do instead, building a practice should be a bit easier.  

So, be on the lookout for credentialing traps, do your due diligence with your financial projections, and commit to a marketing strategy to build your practice… and stick with it.

What are your experiences with credentialing, marketing, and NPIs?

We’d love to know; share your experience with us by leaving your comment below.

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